Section 80J

Section 80J — the law in short

What the courts have decided on section 80J, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v Karnataka Power Corporation Supreme CourtHelps taxpayerValidity unconfirmed
  My generating station building was designed and built so that the machinery cannot work without it. Is it a building or is it plant?
  It can be plant. The Supreme Court dismissed the Revenue's appeal and held that where it is found as a fact that a building has been so planned and constructed as to serve the assessee's special technical requirements, it qualifies as plant. The Commissioner (Appeals) had found that the generating station building could not be separated from the machinery and that the machinery could not work without that special construction, and the Tribunal and the High Court had affirmed. The Court also confined Anand Theatres to buildings used as hotels or cinema theatres, holding that its observations will not always apply otherwise.
• Bajaj Tempo Ltd v CIT Supreme CourtHelps taxpayer
  My new industrial undertaking runs from a leased building that was used for business before, and it took over a few old tools. Does that cost me the incentive deduction?
  No, not on these facts. The Supreme Court held that a provision granting an incentive to promote growth must be construed liberally, and so must the restriction on it, so as to advance the object rather than frustrate it. The disqualifying words are not formed by the transfer of a building, plant or machinery previously used in another business: the emphasis is on formation, not on use. Only a transfer without which the new undertaking could not have come into being takes it out of the section. A leased factory building and tools worth Rs 3,500 did not play a dominant part in forming this company.
• Textile Machinery Corporation Ltd v CIT Supreme CourtHelps taxpayer
  I set up a new foundry inside my existing engineering works and it mostly supplies my own divisions. The officer says it is only a reconstruction of my old business. Is he right?
  No. The Supreme Court held that the Steel Foundry Division and the Jute Mill Division were new industrial undertakings and not formed by reconstruction of the existing business. New plant, separate buildings, separate licences, separate books and substantial fresh capital made each a physically separate and identifiable unit that could exist on its own. That the bulk of what they produced was consumed by the assessee's own Boiler Division was not decisive. Reconstruction requires a transfer of the assets of the old business to the new undertaking; there was none here. The Calcutta High Court's contrary view was set aside.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.