Dipak Kumar Sen, J. - (1.) This consolidated reference arises out of the assessment of Union Carbide India Ltd., the assessee, to income-tax in the assessment years 1973-74 to 1975-76. On an application of the Revenue under Section 256(1) of the Income-tax Act, 1961 (" the Act"), the following question has been referred as a question of law arising out of the order of the Tribunal in the assessment year 1975-76 for the opinion of this court: " 1. Whether the Tribunal was justified in holding that capital work-in-progress in the industrial undertaking Electrolytic Manganese Company, should be included in the computation of 'capital employed' for the purpose of the relief under Section 80J of the Income-tax Act, 1961 ? "
(2.) On an application of the assessee under Section 256(1), the following questions have been referred as questions of law arising out of the orders of the Tribunal for the opinion of this court: For the assessment year 1974-75 : "2. Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that while computing the capital for the purpose of relief under Section 80J, the accrued proportionate interest on borrowed capital has to be excluded in view of the fact that the retrospective nature of the amendment of the Finance Act, 1980, has been challenged before the. Hon'ble Supreme Court ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in confirming the Income-tax Officer's action to deduct 'proportionate interest accrued in respect of borrowed funds' while computing the capital employed for the purposes of Section 80J, vide his order dated October 31, 1977, giving effect to the orders of the Commissioner of Income-tax under Section 263, dated January 20, 1976, and of the Appellate Tribunal, dated May 13, 1977, when no such direction was given by the Commissioner of Income-tax or the Tribunal in their aforesaid orders ?" For the assessment year 1975-76: " 4. Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that while computing the capital for the purpose of relief under Section 80J, the accrued proportionate interest on borrowed capital has to be excluded in view of the fact that the retrospective nature of the amendment of the Finance Act, 1980, has been challenged before the Hon'ble Supreme Court ? 5. Whether, on the facts and in the circumstances of the case, the Tribunal was right in confirming the Income-tax Officer's action to deduct 'proportionate interest accrued in respect of borrowed funds' while computing the capital employed for the purposes of Section 80J, vide his order dated October 31, 1977, giving effect to the order of the Appellate Assistant Commissioner, dated June 27, 1977, when no such direction was given by the Appellate Assistant Commissioner ?" For the assessment years 1973-74 and 1974-75 : " 6. Whether, on the facts and in the circumstances of the case, the Tribunal erred in not admitting the grounds relating to the computation of capital employed in several industrial undertakings taken before the Tribunal in cross-objections as an aspect of the computation of capital employed in the matter of allowing relief under Section 80J already considered by the Commissioner of Income-tax (Appeals) in his order dated October 28, 1978, and the plea raised in this behalf was purely one of law involving no further investigation ? "
(3.) On the question referred at the instance of the Revenue for the assessment year 1975-76, it has been found that the assessee set up a new industrial undertaking called " Electrolytic Manganese Company " in the relevant assessment year. The Income-tax Officer excluded the value of the capital work-in-progress in respect of the said undertaking in the relevant assessment year on the ground that on the basis of average, capital work-in-progress prior to its installation had to be excluded from the value of the assets. The Commissioner (Appeals) accepted the contention of the assessee and the matter thereafter came up before the Tribunal by way of further appeal by the Revenue. The Tribunal held that the controversy was covered by a decision of this court in CIT v. Indian Oxygen Ltd. [1978] 113 ITR 109 and following the said decision upheld the order of the Commissioner (Appeals).;