- (1.) THE following questions of law have been referred for the opinion of this Court by the Tribunal, Chandigarh Bench, Question in R. A. No. 184 (at the instance of the Revenue) "Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in upholding the order of the learned CIT(A) allowing deduction under s. 80HH on the assessee before allowing deduction for investment allowance under s. 32A ? Questions in R. A. No. 194 (at the instance of the assessee) 1. Whether, on the facts and circumstances of the case, the Hon'ble Tribunal was justified in not allowing initial depreciation on Rs. 19,781 spent for workers' toilets ? 2. Whether, on the facts and circumstances of the case, the Hon'ble Tribunal was justified in not treating the pre - operative expenses as a part of the capital employed for the claim under s. 80J ? 3. Whether, on the facts and circumstances of the case, the Hon'ble Tribunal was justified in directing the assessing authority to look afresh into the assessee's claim of extra shift allowance on electric installations in spite of the fact that 1979, the Hon'ble Tribunal had already confirmed that the extra shift allowance is admissible on electric installations as well and also when the above decisions were brought to the kind attention of the Hon'ble Bench ? Questions in R. A. No. 195 (at the instance of the assessee) 1. Whether, on the facts and circumstances of the case, the Tribunal is justified in not allowing initial depreciation on the construction of cycle stand for the welfare of the workers ? 2. Whether, on the facts and circumstances of the case, the Hon'ble Tribunal was justified in holding stand cannot be said to be a shelter ? 3. Whether, on the facts and circumstances of the case, the Hon'ble Tribunal was justified in directing the assessing authority to look afresh into the assessee's claim of extra shift allowance on electric installations in spite of the fact that 1979, the Hon'ble Tribunal had already confirmed that the extra shift allowance is admissible on electric installations as well and also when the above decisions were brought to the kind attention of the Hon'ble Bench ? Questions in R. A. No. 196 (at the instance of the assessee) 1. Whether, on the facts and circumstances of the case, the Hon'ble Tribunal was justified in not allowing depreciation as per the amended rules retrospectively ? 2. Whether, on the facts and circumstances of the case, the Tribunal was justified in not treating the pre -operative expenses as a part of the capital employed for the claim under s. 80J -
(2.) A reference to the order of the AO shows that the assessee company was incorporated in the year 1973 and its purposes of deduction under s. 80HH of the Act. The company manufactured cotton, staples and synthetic yarn. The first segregated and it was found that the net result in the said unit was loss. However, in appeal, the CIT(A) accepted the interpretation of the assessee and held that investment allowance being in the nature of reserve was to form part of profits and gains of business and relief under s. 80HH of the Act was allowable before excluding this allowance from total profit. The Tribunal affirmed this view. Further, the AO held that the words "profits and gains" would mean profits and gains as calculated in accordance with the provisions contained in ss. 30 to 43A of the Act and since investment allowance was deductible under s. 32A of the Act, the same was taken into account for calculating profits and gains for the purposes of s. 80HH of the Act. The AO rejected the claim of the assessee for depreciation on amount of Rs. 19,781 spent on workers' toilets under s. 32(1)(iv) of the Act, which view was upheld by the CIT(A) as well as the Tribunal.
(3.) THE assessee claimed relief under s. 80J of the Act on the value of work -in -progress and preliminary expenses. The AO did not accept the claim with regard to pre -operative expenses. However, on appeal, the CIT(A) accepted the claim on the ground that pre -operative expenses were part of capital employed in business. The Tribunal set aside this view and held that pre -operative expenses could not be included in the "capital" employed in the business. There was retrospective change in the rules of depreciation which was held by the AO not to be applicable for the year in question and the said view has been affirmed by the CIT(A) as well as the Tribunal.;