Commissioner of Income-tax Vs. Universal Steel and Alloys Ltd. - Court Judgment

Excerpt:
in the high court of delhi y.k. sabharwal and d.k. jain, jj. - 1. at the instance of the revenue, in respect of the assessment year 1976-77, the question referred for the opinion of this court is as follows :'whether on the facts and circumstances of the case, the tribunal was right in directing inclusion of value of work-in-progress for computing capital employed in the industrial undertaking for deduction under section 80j ?'2. since in our view the answer to the question stands concluded by a decision of the bombay high court, affirmed in appeal by the supreme court, we dispense with filing of the paper book.3. in the case before the bombay high court cit v. alcock ashdown & co. ltd. : [1979]119itr164(bom) , the question that has been ref erred at the instance of the revenue for opinion of the bombay high court was whether the amount representing the cost of plant and machinery not installed and the cost of workshop under construction could be taken into account in determining the capital employed in the undertaking for the purpose of granting relief to the company in terms of section 84 (now section 80j) of the income tax act, 1961 ('the act') for the assessment year 1962-63. the bombay high court after referring to various decisions, in particular the decision of the calcutta high court in cit v. indian oxygen ltd : [1978]113itr109(cal) answered the aforesaid question in favor of the assessed and against the revenue. the revenue took the matter in appeal to the supreme court. the judgment of the bombay high court has been upheld and the view of the calcutta high court and various other high courts as mentioned in para 12 of the decision of the supreme court as reported in cit v. alcock ashdown & co. ltd. : [1997]224itr353(sc) approved. it has been held that the moment an asset is acquired or purchased for the purpose of the business, it is the capital though the asset as such is not actually utilised or used during the account year. it has been held that the purchase or acquisition or, the asset by itself' entitles the assessed to get the relief and the employment of capital is done or over on such purchase or acquisition and the subsequent or later use including the actual user has nothing to do in the matter. as already noticed, in the question considered by the bombay high court, the aspect of cost of workshop was the aspect under consideration. in view of the aforesaid pronouncement, it is not possible to accept the contention urged by the learned counsel for the revenue that the capital employed on work-in- progress cannot be taken as the capital employed for the purpose of computation under section 80j.4. for the aforesaid reasons, the question is answered in the affirmative, in favor of assessed and against the revenue. no costs.