| Case ID |
09e4af9e-59c4-4e36-8d0f-1908b5768893 |
| Body |
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| Case Number |
CIVIL RULE No. 6564(W) OF 1974 |
| Decision Date |
Apr 29, 1976 |
| Hearing Date |
|
| Decision |
The court ruled that the assessment order made under the Income-tax Act for the assessment year 1972-73 was invalid due to the incorrect application of rule 19A(2) which limited the capital employed to the aggregate amount of the value of the assets on the first day of the previous year. The judge emphasized that the relief under section 80J should not be restricted to the assessee's own money but should include borrowed capital as well. The Income Tax Officer was directed to recompute the assessment based on the observations made in this judgment and in a previous case. The court also noted that rule 19A(3) was ultra vires as it unjustly excluded certain borrowed capital, thereby undermining the purpose of section 80J. |
| Summary |
In the landmark case of Century Enka Ltd. v. Income Tax Officer, the Calcutta High Court addressed critical issues surrounding the assessment of income tax under the Income-tax Act, 1961. The petitioner, a public limited company, sought relief under section 80J for the assessment year 1972-73. The court scrutinized the assessment order and found that the Income Tax Officer had disallowed the petitioner's claim based on an incorrect interpretation of rule 19A(2) of the Income-tax Rules, which limited the capital employed to the value of assets at the beginning of the previous year. The court held that the intent of section 80J was to encourage investment in new industrial undertakings and that borrowed capital should also count as capital employed. The ruling reinforced the principle that borrowed money becomes the company’s money once utilized, thus entitling the petitioner to relief under section 80J. The judgment is pivotal for businesses seeking tax deductions for new investments and clarifies the interpretation of capital employed in the context of income tax relief. Keywords associated with this case include 'Income-tax Act', 'tax relief', 'capital employed', 'section 80J', 'Calcutta High Court', 'Sabyasachi Mukharji', and 'tax assessment'. |
| Court |
Calcutta High Court
|
| Entities Involved |
Not available
|
| Judges |
Sabyasachi Mukharji, J.
|
| Lawyers |
Not available
|
| Petitioners |
Century Enka Ltd.
|
| Respondents |
Income Tax Officer
|
| Citations |
1977 SLD 1016,
(1977) 107 ITR 909
|
| Other Citations |
[1977] 107 ITR 123 (Cal),
Commissioner of Income-tax v. Taj Mahal Hotel [1971] 82 ITR 44 (SC),
Kerala State Electricity Board v. Indian Aluminium Co. Ltd. AIR 1976 SC 1031,
Indore Malwa United Mills Ltd. v. State of Madhya Pradesh [1965] 55 ITR 736 (SC),
Minister of Health v. The King [1931] AC 494 (HL),
Institute of Patent Agents v. Lockwood [1894] AC 347 (HL)
|
| Laws Involved |
Income-tax Act, 1961,
Income-tax Rules, 1962
|
| Sections |
80J,
19A(2),
19A(3)
|