COMMISSIONER OF INCOME TAX, PATIALA vs PATIALA FLOUR MILLS CO. PVT. LTD., PATIALA

The Supreme Court interpreted Section 80J of the Income Tax Act, 1961, holding that profits of a new industrial undertaking must be computed in accordance with the Act's provisions. It ruled that if losses, depreciation allowances, and development rebates from past years have been fully set off against profits from other businesses, they cannot be adjusted again against profits of the new undertaking. The Court upheld the Tribunal's decision that the assessee was entitled to deduct capital employed and past deficiencies from the current profits, affirming the High Court's ruling in favor of the assessee.