HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Ahmedabad Manufacturing and Calico Printing Co. Ltd. and Another v. A. V. Joshi
Civil Appeal No. 1044 of 1979
[1996] 3 SCR 150 ·
Income-tax Act, 1961: sections 80J, 80K and 197(3)
Sources & disclosures includedDownload original judgment / order
Three-judge bench; judgment delivered by B. N. Kirpal, J. · J. S. Verma, J. · N. P. Singh, J. · B. N. Kirpal, J.
Assessment years: 1978-79
01 · Facts of the case
The assessee established a Polyester Fibre Plant at Baroda and later a Sulzer Plant at Ahmedabad. Their section 80J qualification was not disputed. For assessment year 1978-79 the company declared dividends and sought a certificate under section 197(3) read with section 80K. The company had nil total income after brought-forward losses and depreciation; the Polyester plant earned profit while the Sulzer plant showed a business loss. Revenue restricted the certificate and denied section 80K treatment for the loss-making plant. The Gujarat High Court dismissed the company's writ petition despite recognising support from Coromandel Fertilizers (SCR pp.150-153; PDF pp.1-4).
02 · Discussion by the Hon’ble Court
Section 80K turned on the company's entitlement to deduction under section 80J, not on whether the deduction was actually absorbed in assessable profits for that year. Coromandel Fertilizers therefore governed: even if the new undertaking had no assessable profit or gains, section 80K relief remained available where section 80J entitlement existed. Decisions interpreting other provisions did not justify refusing to follow that direct section 80K authority (SCR pp.153-155; PDF pp.4-6).
03 · Judicial decision
The High Court's judgment was set aside. Revenue was directed to issue a certificate in accordance with law showing the exempted portion of dividend for both the Polyester Fibre Plant and Sulzer Plant; the assessee received costs (SCR p.155; PDF p.6).
04 · Outcome / in whose favour
In favour of the assessee-company. The absence of assessable profit in the Sulzer undertaking did not defeat the historical section 80K certificate where section 80J entitlement was accepted.
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: where one provision cross-refers to an entitlement under another, distinguish legal eligibility from the amount actually absorbed or allowed in a particular year. That distinction decided the historical section 80K issue. Because both sections were later removed, use this case as an interpretation example only after identifying a genuinely comparable current cross-reference.
Source & verification
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Statutory scope
Sections 80J and 80K were historical provisions. This decision does not create a present exemption for dividends or certify any equivalent treatment under later law.
Later treatment
Source checked 2026-10-11. Later treatment and current statutory applicability were not comprehensively checked; no current-law or citator clearance is represented.
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