An assessee is entitled to deduction under section 80j for the previous assessment years in which it had made no profit, even if it did not make any claim in those years.

( 1 ) THE question referred to us by the Income-tax Appellate Tribunal, Hyderabad, for our opinion is :"whether, on the facts and in the circumstances of the case, the assessee is entitled to relief under section 80j (3) ?"

( 2 ) THE brief facts to the extent they are relevant to the said question are that the petitioner is a new industry which went into production for the first time in March, 1967. The first assessment took place for the assessment year 1968-69 No profit was made in that year. In fact the petitioner had suffered loss. Hence, no claim was made for deduction under s. 80j. Even for the assessment years 1969-70, 1970-71 and 1971-72, no profit was made and, hence, no claim was made under s. 80j by the assessee. For the first time in respect of the accounting year relevant to the assessment year 1972-73, the assessee made a profit and a claim under s. 80j was made by the assessee not only for that assessment year, but also for the previous four assessment years. The claim for the benefit in so far as the previous assessment years was concerned was disallowed by the ITO on the ground that no such claim was made in those assessment years and inasmuch as the assessment orders in respect of those years have become final, the benefit cannot be granted. He, however, rectified under s. 154 the assessment orders for the years 1969-70, 1970-71 and 1971-72 on applications made by the assessee and granted the benefit. But, in so far as the assessment year 1968-69 is concerned, he refused to rectify the order on the ground that that assessment year falls beyond the four years period prescribed under s. 154. As against the order of the ITO refusing to rectify the assessment order relating to the assessment year 1968-69, the assessee preferred an appeal to the AAC, who allowed the appeal. The Revenue filed an appeal to the Tribunal against the same. It was pending. At that stage the Commissioner invoked his powers under s. 263 of the Act and revised the rectified orders of the ITO with respect to the assessment years 1969-70, 1970-71 and 1971-72. He held that there were no grounds for granting rectification and, accordingly, set aside the said orders. Against the order of the Commissioner, the assessee filed an appeal before the Tribunal. The Tribunal was of the opinion that inasmuch as no profit was made by the assessee for the assessment years 1968-69 to 1971-72, there was no occasion or necessity for the assessee to make the claim under s. 80j and that for the assessment year 1972-73, when for the first time the assessee made a profit, he is entitled to make a claim for all the four years and that, in such a case, the ITO is bound to grant the benefit for the previous years as well. The Tribunal was of the opinion that the resort to s. 154 was uncalled for and superfluous in the facts and circumstances of the case. Accordingly, the Tribunal allowed the appeal preferred by the assessee and held that the assessee is entitled to deduction under the said section for all the previous assessment years. Thereupon, the Revenue asked for and obtained this reference.

( 3 ) IT is uniformly held by the Allahabad, Calcutta and Madras High Courts in Addl. CIT v. Sheetalaya [1979] 117 ITR 658 (All), Indian Aluminium Co. Ltd. v. CIT [1980] 122 ITR 660 (Cal) and CIT v. Bluemount Ceramics Ltd. [1980] 123 ITR 385 (Mad), that for the years in which there was no profit, the assessee is under no obligation to claim deduction under s. 80j. It is also held that even though no such claim is made, the ITO ought to have granted the benefit under the said section in the year in which profit is made. Sub-s. (3) of s. 80j, which is the relevant sub-section herein, does not expressly require that a claim should be made by the assessee even when no profit is made. Indeed, the said sub-section provides that where there are no profits or gains made for that assessment year or where the deduction exceeds the profits and gains made, the whole or