Cit Vs. Hpsidc - Court Judgment

Excerpt:
- code of civil procedure, 1908.[c.a. no. 5/1908]. order 14, rule 2 [as amended by amending act of 1976]: [v.k. gupta, cj, deepak gupta & surjit singh, jj] preliminary issue of law and fact court framing all issues both of law and facts together and also tried all the issues together, including the issue relating to jurisdiction of court held, except in situations perceived or warranted under sub-rule (2) of rule 2 of order 14 where a court in fact frames only issues of law in the first instance and postpones settlement of other issues, clearly and explicitly in situations where the court has framed all issues together, both of law as well as facts and has also tried all these issues together, it is not open to the court to adopt the principle of severability and proceed to decide issues of law first, without taking up simultaneously other issues for decision. this course of action is not available to a court because sub-rule (1) does not permit the court to adopt any such principle of severability and to dispose of a suit only on preliminary issues, or what can be termed as issues of law. sub-rule (1) clearly mandates that in a situation contemplated under it, where all the issues have been together and have also been taken up for adjudication during the course of the trial, these must be decided together and the judgment in the suit as a whole must be pronounced by the court covering all the issues framed in the suit.1. the following question has been referred for the opinion of this court:1. whether, on the facts and in the circumstances of the case, the tribunal was right in law in allowing deduction under section 80j on the capital employed without reducing the proportionate liability of head office incurred in respect of units in which deduction under section 80j was claimed ?2. the brief facts are that the assessee had five units including the units of liquor bottling plant and television factory. the aforesaid two units were not eligible for purposes of deduction under section 80j. in respect of the other three units, deduction was held to be allowable but the assessing officer reduced certain liabilities from the total assets of the head office on proportionate basis. the assessee had only reduced the current liability whereas the assessing officer found it necessary to ascertain the proportionate liability of the head office in respect of the secured and unsecured loans used for the purpose of the units. this is how claim under section 80j was allowed at rs. 50,732 only.3. the assessee filed an appeal which was rejected. it then approached the tribunal and the tribunal agreed with the plea of the assessee that no liability of head office on proportionate basis was required to be reduced from the assets while working out deduction under section 80j. hence this question has been referred.4. a similar question arose for decision in it appeal no. 3 of 1997 decided on 8-7-1997 (reported as cit v. himachol pradesh mineral & industrial development corporatin (1999) 153 ctr (hp) 553 ed.) and connected matters where the question was whether the assessee was entitled to deduction under section 80j for the six units on the capital employed without reducing the same by the amount of loans raised from the head office. the contention of the revenue was rejected by the court. both the parties admitted that this case is squarely covered by the decision rendered in the aforesaid case. consequently, the reference is answered in favour of the assessee and against the revenue.