JUDGMENT : R. C. Mankad, J. The assessee is a public limited company engaged in the business of manufacture and sale of glassware and glass bottles. It has factories at Baroda and Bangalore. The Bangalore factory is known as "Whitefield Factory". The said factory at Bangalore has two plants styled Unit No. 1 and Unit No. 2. The controversy involved in the present reference concerns only Unit No. 1 at Bangalore. The assessee was allowed relief under section 80J of the Income-tax Act, 1961 ("the Act" for short), in the earlier years. There was shortfall or deficiency referred to in sub-section (3) of section 80J in the earlier years, which had been carried forward. In the year under reference, i.e., the assessment year 1972-73, the assessee, inter alia, claimed set off of the deficiency of the earlier years. 2. The controversy involved in the present reference is with regard to the set off of the deficiency in respect of Unit No. 1 at Bangalore. The assessee's claim was rejected by the Income-tax Officer. In the appeal, however, the Appellate Assistant Commissioner, relying on the decision of the Income-tax Appellate Tribunal ("the Tribunal" for short) in the Income-tax Appeals Nos. 1711 and 1712/(Ahmedabad) of 1974-75, relating to the assessment years 1970-71 and 1971-72, allowed the claim of the assessee. It may be mentioned here that the assessee had not confined its claim merely to the set off of the deficiency, but it had also claimed relief under section 80J of the Act, on the basis of 6 per cent. of the capital employed in the business. Since this claim made by the assessee was not allowed, the assessee carried the matter in appeal before the Tribunal. However, when the assessee's appeals which related to the assessment years 1972-73 and 1973-74 came up for hearing, it was conceded on behalf of the assessee that it was not entitled to deduction under section 80J on the basis of 6 per cent. of the capital employed in the business, as the assessment year 1972-73 was the sixth year of the assessee's business while the assessment year 1973-74 was the, seventh year. The assessee restricted the claim to set off of deficiency for both the years. The Tribunal, therefore, held that the assessee would be entitled to the deficiency, if any, determined as a result of its decision in Income-tax Appeals Nos. The assessee restricted the claim to set off of deficiency for both the years. The Tribunal, therefore, held that the assessee would be entitled to the deficiency, if any, determined as a result of its decision in Income-tax Appeals Nos. 2262 and 2263 of 1976-77, decided on September 30, 1978. The Tribunal directed the Income-tax Officer to allow deficiency, if any, as stated above. 3. The Revenue, feeling dissatisfied with the decision of the Tribunal, sought reference and, at its instance, the following question has been referred to us, for our opinion, under section 256(1) of the Act : "Whether the Appellate Tribunal was right in law in holding that the assessee would be entitled under the provisions of section 80J(3) of the Act to carry forward of deficiency either wholly or in regard to the balance of seven assessment years as reckoned from the end of the initial assessment year ? and Whether the Appellate Tribunal was right in law in holding that the assessee would be entitled under the provisions of section 80J(3) of the Act to carry forward the balance for the seven assessment years as reckoned from the end of the initial assessment year in question being the sixth year of the assessee's business ? " 4. As observed above, the controversy in this reference is confined to set off of deficiency, as provided in sub-section (3) of section 80J, which reads as under : "80J.(3). " 4. As observed above, the controversy in this reference is confined to set off of deficiency, as provided in sub-section (3) of section 80J, which reads as under : "80J.(3). Where the amount of the profits and gains derived from the industrial undertaking or ship or business of the hotel, as the case may be, included in the total income (as computed without applying the provisions of section 64 and before making any deduction under Chapter VI-A) in respect of the previous year relevant to an assessment year commencing on or after the 1st day of April, 1967 (not being an assessment year prior to the initial assessment year or subsequent to the fourth assessment year as reckoned from the end of the initial assessment year) falls short of the relevant amount of capital employed during the previous year, the amount of such shortfall, or, where there are no such profits and gains, an amount equal to the relevant amount of capital employed during the previous year (such amount in either case, being hereafter, in this section, referred to as deficiency) shall be carried forward and set off against the profits and gains referred to in sub-section (1) (as computed after allowing the deductions, if any, admissible under section 80HH or section 80HHA and the said sub-section (1)) in respect of the previous year relevant to the next following assessment year and, if there are no such profits and gains for that assessment year, or where the deficiency exceeds such profits and gains, the whole or balance of the deficiency, as the case may be, shall be set off against such profits and gains for the next following assessment year and if and so far as such deficiency cannot be wholly so set off, it shall be set off against such profits and gains assessable for the next following assessment year and so on: Provided that- (i) in no case shall the deficiency or any part thereof be carried forward beyond the seventh assessment year as reckoned from the end of the initial assessment year ; (ii) where there is more than one deficiency and each such deficiency relates to a different assessment year, the deficiency which relates to an earlier assessment year shall be set off under this sub-section before setting off the deficiency in relation to a later assessment year : Provided further that in the case of an assessee being a co-operative society, the provisions of this sub-section shall have effect as if the words "fourth assessment year", the words "sixth assessment year" had been substituted." 5. It is not disputed that the deficiency that has been carried forward is of the earlier years. The only question is whether the assessee is entitled to set off the deficiency in the year under reference, i.e., the assessment year 1972-73. There is no dispute that the year under reference is the sixth year from the end of the initial assessment year. It will be seen that, under the proviso to sub-section (3) of section 80J, deficiency or any part thereof cannot be carried forward beyond the seventh assessment year as reckoned from the end of the initial assessment year. The assessment year under reference being the sixth year, the assessee is entitled to set off the deficiency. In the facts and circumstances of the case and the clear provisions of sub-section (3) of section 80J, we do not see any reason or justification to differ from the view taken by the Tribunal. 6. In the result, we answer both the parts of the question referred to us, for our opinion, in the affirmative and against the Revenue. Reference answered accordingly with no order as to costs.