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Commissioner Of Income-Tax v/s Kansal Hosiery Works


Company & Directors' Information:- J G HOSIERY PRIVATE LIMITED [Active] CIN = U18101TZ2001PTC009707

Company & Directors' Information:- K D S HOSIERY PRIVATE LIMITED [Active] CIN = U18101PB2001FTC024327

Company & Directors' Information:- R M H HOSIERY PRIVATE LIMITED [Active] CIN = U17125DL2007PTC167271

Company & Directors' Information:- P T M HOSIERY PVT LTD [Active] CIN = U52322WB1994PTC062394

Company & Directors' Information:- M G HOSIERY PRIVATE LIMITED [Active] CIN = U17124TZ2002PTC010195

Company & Directors' Information:- D D HOSIERY PVT LTD [Active] CIN = U18101WB1973PTC028694

Company & Directors' Information:- M. B. HOSIERY PRIVATE LIMITED [Active] CIN = U18101WB2008PTC125110

Company & Directors' Information:- R R HOSIERY PRIVATE LIMITED [Active] CIN = U18101MH1984PTC034394

Company & Directors' Information:- K K HOSIERY PRIVATE LIMITED [Active] CIN = U18204MH2014PTC251777

Company & Directors' Information:- B B HOSIERY PRIVATE LIMITED [Strike Off] CIN = U74999MH2015PTC267158

Company & Directors' Information:- M C S HOSIERY PRIVATE LIMITED [Strike Off] CIN = U51311WB2001PTC093781

Company & Directors' Information:- S P HOSIERY PVT LTD [Strike Off] CIN = U51311PB1985PTC006113

    Decided On, 13 March 1989

    At, High Court of Punjab and Haryana

    By, THE HONOURABLE MR. JUSTICE GOKAL CHAND MITAL & THE HONOURABLE MR. JUSTICE S.S. SODHI

    For the Appearing Parties: Ajay Mittal, Ashok Bhan, Hira Lal Sibal, S.C. Sibal, Advocates.



Judgment Text

(1.) THE matter here concerns deduction under Section 80j of the Income-tax Act, 1961, with reference to the capital employed by the assessee in the branch industrial undertaking.

(2.) THE assessee, Messrs. Kansal Hosiery Works, is engaged in an industrial activity in its branch unit. The accounts at its head office showed a credit balance of Rs. 15,60,987, and there was also development rebate reserve of Rs. 75,750, the total of these amounts being Rs. 16,36,737. The claim of the assesses was for deduction under Section 80j of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), with reference to this amount as capital in the branch unit. The Income-tax Officer, taking into account the capital of the partners including reserve surplus at the head office and the debit balance in their current account, worked out the net capital of the partners including reserve at Rs. 13,87,875, He eventually allowed deduction under Section 80j of the Act at the rate of 6 per cent. on only Rs. 2,59,619 as against Rs. 16,36,737 as claimed by the assessee.

(3.) ON appeal, the Commissioner of Income-tax (Appeals) held that, the assessee was entitled to deduction under Section 80j of the Act with reference to the capital of Rs. 13,87,875. This order was later confirmed in appeal by the Tribunal. This is what constitutes the factual background leading to the following question being referred for the opinion of this court: "whether, on the facts and in the circumstances of the case, the Tribunal was right in upholding the order of the Commissioner of Income-tax (Appeals) that the assessee was entitled to deduction under Section 80j of the Act on the capital employed in the branch industrial undertaking as computed at Rs. 13,87,875 and not taking the partners' capital and borrowed capital at the head office proportionately ?"

(4.) THE answer to the question posed is provided by the judgment of the Supreme Court in Lohia

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Machines Ltd. v. Union of India [1985] 152 ITR 308 and in terms thereof, the reference is hereby answered in the negative, in favour of the Revenue and against the assessee. There will, however, be no order as to costs.
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