The main legal point established in the judgment is that the provisions of Section 80-I of the Income Tax Act do not prohibit the assessee from taking machinery or plant on hire for manufacturing activity.

B.P. Dharmadhikari, J.

1. This Reference on an application under Section 256[1] of the Income Tax Act, 1961 at the instance of assess refers following two questions:

“1. Whether on the facts and in the circumstances of the case, the Assessee is entitled to a deduction under Section 80-I of the Income Tax Act, 1961?

2. Whether on the facts and in the circumstances of the case and construction of provision of Section 80-I and 263 the Tribunal is right in sustaining the action of the C.I.T. U/s. 263?”

2. According to Shri Dewani, learned Counsel for the assessee, question no.2 must be first looked into and answered. He urges that if question no.2 is answered in favour of the assessee, answer to question no.1 may not be very relevant.

3. Shri Parchure, learned counsel for Revenue, however, submits that as both the questions are referred, both need to be appreciated and answered independently. According to him, effort of assessee to have answer to only question no.2 is erroneous.

4. Facts show that the assessee M/s. Vijay Udyog, is admittedly a partnership firm carrying on business in the manufacture of Pulses. It has engaged M/s. Vijay Dal Mills for crushing of the raw material at a fixed rate per quintal. It is not in dispute that the assessee makes payment of all the wages of the labourers, cartage and transportation expenses and has undertaken the liability towards various Labour Act, Factories Act and responsibility to repair machineries. It claimed deduction of Rs. 39,926/- under Section 80-I of the Income Tax Act. The Assessing Officer allowed it. C.I.T. invoked Section 263[1], and issued show cause notice to assessee proposing to set it aside on the ground that the assessee was not owner of a new industrial unit, and therefore, not entitled to claim deduction. It was found that the assessee had taken new unit on hire basis. Thereafter, the Commissioner passed order and enhanced the amount of income by Rs. 39,926/-. Assessee questioned it before ITAT. ITAT considered both the questions raised by the assessee and held that the acceptance of two opinions on any dispute would deny the lower authorities access to Section 154, but, it cannot stop the CIT from invoking the provisions of Section 263 of the Income Tax Act. It is in this background, that the above mentioned two questions have been referred.

5. Shri Dewani, learned counsel has relied upon four judgments to submit that when two views on any dispute exists, adoption of one view by the assessing officer cannot be faulted with under Section 263 of the Income Tax Act, and CIT does not get jurisdiction to take recourse to that provision.

Those four judgments are:

(1) (2007) 295 ITR 282 (SC) CIT .vrs. Max India Ltd.

(2) ITA No.604/2011 dated 12.09.2014 (Bombay High Court) CIT .vrs. LIC Housing Finance Ltd.

(3) (2010) 321 ITR 92 Grassim Industries Ltd. .vrs. CIT

(4) (1993) 203 ITR 108 (Bom) CIT .vrs. Gabrial India Ltd.

6. In order to show that the provisions of Section 80-I does not prohibit the assessee from taking machinery or plant on hire for the purpose of his manufacturing activity, he has relied upon the following three judgments.

(1) (1979) 119 ITR 145 (Cal). Griffon laboratories (P) Ltd. .vrs. CIT.

(2) (1978) 113 ITR 718 (Cal). Addl. CIT .vrs. A. Mukherjee & Co. (P) Ltd.

(3) (1996) 220 ITR 530 (Gau). Bezbaruah Tea Co. (P) Ltd. .vrs. CIT.

7. Attention is also invited to an unreported judgment of this Court in Income Tax Appeal No. 540/2012 dated 25.06.2014 in case of Commissioner of Income Tax-II, Mumbai .vrs. Shri Jyoti Prakash Dutta.

8. In the background of the judgments which hold that when two opinions or views are available and one of the possible view is reached by the Assessing Officer, recourse to Section 263 of the Income Tax Act is not open, Shri Parchure, learned counsel appearing on behalf of revenue prefers not to dispute this. He however, attempted to demonstrate that in the present facts, such two opinions were never possible. He contends tha