JUDGMENT
N.D. Ojha, C.J.
1. The Income-tax Appellate Tribunal, Indore Bench, Indore, has referred the following question to this court for its opinion under Section 256(1) of the Income-tax Act, 1961, hereinafter referred to as “the Act” :
“Whether, on the facts and in the circumstances of the case, on the formation of this assessee-firm by Shri Vinod Sonpar and by bringing his assets and liabilities by way of his own capital in this assessee-firm, the Tribunal was correct in law in holding that the assessee’s claim was hit by Section 80J(4)(ii) and, therefore, the assessee was not entitled to deduction under Section 80J at Rs. 12,560 ?”
2. The matter related to the assessment year 1975-76. The assessee is a registered firm deriving income from manufacture of fibreglass which was supplied to the Bharat Heavy Electricals Ltd., Bhopal. For the assessment year in question, the assessee claimed deduction of a certain amount under Section 80J of the Act. A similar deduction had been claimed in the assessment year 1974-75 also. It was disallowed by the Tribunal on the finding that Shri Vinod Sonpar, who was doing business earlier in his individual capacity, had subsequently transferred machinery to the assessee-firm and since the assessee-firm was a new business, the provisions of Section 80J(4)(ii) of the Act were attracted and the benefit of Section 80J consequently could not be claimed by the assessee. Relying on its finding given in the order relating to the assessment year 1974-75, the Tribunal disallowed the claim of the assessee in the relevant assessment year 1975-76 also. However, at the instance of the assessee, the Tribunal has referred the aforesaid question to this court for its opinion.
3. Having heard learned counsel for the parties, we are of the opinion that the findings recorded by the Tribunal that the business carried on by the assessee was a new business and that Shri Vinod Sonpar had transferred machinery belonging to his individual business are essentially findings of fact. In view of those findings, there seems to be no doubt that the provisions of Section 80J(4)(ii) of the Act are clearly attracted and the Tribunal cannot be said to have committed any error in taking the view which it did. Our answer to the question referred to us, therefore, is in the affirmative, against the assessee and in favour of the Department. In the circumstances of the case, however, there shall be no order as to costs.