The Commissioner Of Income-Tax, Patiala v. M/S Meghan Paper Mills (P) Ltd., Sangrur

Income Tax Reference No.116 of 1999 IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Income Tax Reference No.116 of 1999 Date of Order: 10.12.2013 The Commissioner of Income-tax, Patiala ...Appellant Versus M/s Meghan Paper Mills (P) Ltd., Sangrur ..Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Ms. Savita Saxena, Advocatefor the appellant.Mr. Akshay Bhan, Advocate andMs. Samiya Singh, Advocate,for the respondent. RAJIVE BHALLA, J (Oral) The Income-tax Appellate Tribunal, ChandigarhBench, Chandigarh, has forwarded a question of law for ananswer, which reads as follows:- “Whether on the facts and in the circumstancesof the case, the ITAT was right in law in holdingthat the deficiency u/s 80-J could be carriedover for an indefinite period in view of theprovisions of Section 80-VVA(4) when the carryforward of deficiency u/s 80-J cannot be allowedbeyond the seventh year from the end of theinitial year?” -2- Counsel for the revenue submits that the Income TaxAppellate Tribunal and the CIT(A) have erred in granting benefitof eight years by excluding the initial assessment year. It iscontended that Section 80-J of the Income Tax Act (hereinafterreferred to as 'the Act'), clearly provides that benefit of deductionshall only be available for a period of seven years. In support ofthe said arguments, counsel for the revenue relies upon the firstproviso to Section 80-J (3) of the Act. Counsel for the assessee submits that a perusal ofthe proviso clearly reveals that deficiency or any part thereofshall not be carried forward beyond the seventh assessmentyear as reckoned from the end of the initial assessment year,thereby leaving no ambiguity that the initial assessment yearhas to be excluded. The order passed by the Income TaxAppellate Tribunal, affirming order passed by the CIT(A),therefore, does not suffer from any error of law as would requireinterference. We have heard counsel for the parties. Section 80-J as well as the first proviso to sub-section(3), read as follows:- 80J. Deduction in respect of profits and gainsfrom newly established industrial undertakingsor ships or hotel business in certain cases.--(1)Where the gross total income of an assessee includes any profits and gains derived from anindustrial undertaking or a ship or the businessof a hotel, to which this section applies, thereshall, in accordance with and subject to theprovisions of this section, be allowed, incomputing the total income of the assessee, adeduction from such profits and gains (reducedby the deduction if any, admissible to theassessee under Section 80HH or section80HHA) of so much of the amount thereof asdoes not exceed the amount calculated at therate of six per cent, per annum on the capitalemployed in the industrial undertaking or ship orbusiness of the hotel, as the case may be,computed in the manner specified in sub-section (1A) in respect of the previous yearrelevant to the assessment year (the amountcalculated as aforesaid being hereafter, in thissection, referred to as the relevant amount ofcapital employed during the previousyear): ........” 3(i) in no case shall the deficiency or any partthereof be carried forward beyond the seventhassessment year as reckoned from the end of the initial assessment year.” A perusal of the proviso, leaves no ambiguity as tolegislative intent that deficiency or any part thereof can becarried forward beyond the seventh assessment year asreckoned from the end of the initial assessment year. In theabsence of any ambiguity as to the meaning of the words andexpressions used in the aforesaid proviso, we find no reason tohold that the order passed by the ITAT affirming order passed bythe CIT(A) is contrary to the provisions of the Act or raises anyquestion of law much less the question forwarded for an answer.The reference is answered, accordingly. 3(i) in no case shall the deficiency or any partthereof be carried forward beyond the seventhassessment year as reckoned from the end of the initial assessment year.” A perusal of the proviso, leaves no ambiguity as tolegislative intent that deficiency or any part thereof can becarried forward beyond the seventh assessment year asreckoned from the end of the initial assessment year. In theabsence of any ambiguity as to the meaning of the words andexpressions used in the aforesaid proviso, we find no reason tohold that the order passed by the ITAT affirming order passed bythe CIT(A) is contrary to the provisions of the Act or raises anyquestion of law much less the question forwarded for an answer.The reference is answered, accordingly. (RAJIVE BHALLA) JUDGE December 10, 2013nt (DR. BHARAT BHUSHAN PARSOON) JUDGE