M/s Vigro Industries, Panchkula V. ACIT, Panchkula

ITA 1037/CHANDI/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3805 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 28-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: PUNEET GUPTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHES, CHANDIGARH BEFORE SH. N. K. SAINI, AM AND SH. RAVISH SOOD, JM ITA NO. 1037/CHD./2016 : ASSTT. YEAR : 2013-14 M/S VIRGO INDUSTRIES, H. NO. 129, SECTOR-10, PANCHKULA, HARYANA VS ASSTT. COMMISSIONER OF INCOME TAX, PANCHKULA, HARYANA (APPELLANT) (RESPONDENT) PAN NO. AAEFV9154A ASSESSEE BY : SH. PUNEET GUPTA, AR REVENUE BY : SH. MANJ IT SINGH, SR. DR DATE OF HEARING : 20.12.2016 DATE OF PRONOUNCEMENT : 20.12.2016 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 29.07.2016 OF LD. CIT(A), PANCHKULA. 2. THE ONLY EFFECTIVE GROUND RAISED IN THIS APPEAL READS AS UNDER: THE LD. CIT(A) IS WRONG IN DISALLOWING THE BENEFIT OF SUBSTANTIAL EXPANSION U/S 80IC(2) AND CONFIRMING THE DEDUCTION U/S 80IC ONLY TO THE EXTENT OF 25% AS AGAINST 100% BY HOLDING THAT BENEFIT OF SUBSTANTIAL EXPANSION IS ALLOWABLE ONLY TO THE UNDERTAKING WHICH WERE EXISTING AS ON 07.01.2003. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE E-FILED THE RETURN OF INCOME ON 30.09.2013 DECLARING AN INC OME OF RS.10,12,840/-. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IC OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) @ 100% FOR THE YEAR UNDER CONSIDERATION AS 8 TH YEAR BEING ITA NO. 692/CHD./2013 CHET RAM RA VI KUMAR 2 SUBSTANTIAL EXPANSION DONE BY THE ASSESSEE DURING T HE FINANCIAL YEAR 2010-11 RELEVANT TO THE ASSESSMENT Y EAR 2011- 12. THE ASSESSEE FURNISHED PHOTOCOPIES OF BILLS FOR PURCHASE OF MACHINERY DURING THE FINANCIAL YEAR 2010-11 FOR RS.3,22,16,771/- WHICH WAS MORE THAN 50% OF TOTAL B OOK VALUE OF PLANT & MACHINERY (BEFORE TAKING DEPRECIAT ION IN ANY YEAR) AS ON 01.04.2011, TO THIS EFFECT, THE ASS ESSEE HAD REFLECTED DETAILS OF VALUE OF INCREASE IN PLANT & M ACHINERY IN THE YEAR OF SUBSTANTIAL EXPANSION AMOUNTING TO RS.3,22,16,770/- WHICH WAS DULY CERTIFIED BY THE AU DITOR IN THE AUDIT REPORT IN FORM NO. 10CCB. THE AO NOTICED THAT THE ASSESSEE STARTED ITS BUSINESS ACTIVITY/OPERATIO N IN JULY, 2005 AND INITIAL ASSESSMENT YEAR FOR CLAIM OF DEDUC TION U/S 80IC OF THE ACT WAS ASSESSMENT YEAR 2006-07 AND THA T THE ASSESSEE CLAIMED DEDUCTION @100% FOR THE YEAR UNDER CONSIDERATION AS 7 TH YEAR BEING SUBSTANTIAL EXPANSION WHICH WAS BASED ON THE EXPANSION DONE DURING THE FINANCIA L YEAR 2010-11. THE AO WAS OF THE VIEW THAT THE ASSESSEE W AS ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT TO THE E XTENT OF 100% FOR 5 YEARS PERIOD OF ASSESSMENT YEAR 2006-07 TO ASSESSMENT YEAR 2010-11. HOWEVER, 100% DEDUCTION AG AINST ELIGIBLE PROFIT WAS CLAIMED FOR THE ASSESSMENT YEAR 2013-14, WHICH WAS 8 TH YEAR OF ITS PRODUCTION. HE, THEREFORE, ASKED THE ASSESSEE TO FURNISH JUSTIFICATION FOR CLAIMING DEDU CTION U/S 80IC OF THE ACT @100% IN THE 8 TH YEAR. IN RESPONSE, THE ASSESSEE SUBMITTED THAT THE YEAR UNDER CONSIDERATIO N WAS A THIRD YEAR INSTEAD OF 8 TH YEAR OF PRODUCTION OF THE ASSESSEE BECAUSE SUBSTANTIAL EXPANSION WAS MADE DURING THE F INANCIAL YEAR 2010-11. IT WAS FURTHER STATED THAT AN ENTITY WOULD CLAIM ITA NO. 692/CHD./2013 CHET RAM RA VI KUMAR 3 DEDUCTION FOR 100% OF THEIR PROFITS FOR FIRST 5 YEA RS AND THEREAFTER WHENEVER IT CARRIED OUT THE SUBSTANTIAL EXPANSION OF THE SAME UNIT THEN IT COULD HAVE CLAIMED 100% DE DUCTION FOR NEXT 5 YEARS. THE AO, HOWEVER, DID NOT FIND MER IT IN THE SUBMISSIONS OF THE ASSESSEE BY OBSERVING THAT IN TH E ASSESSEES OWN CASE FOR THE PRECEDING YEAR, THE ITA T CHANDIGARH HAD REJECTED THE PLEA OF THE ASSESSEE FO R CLAIMING SUBSTANTIAL EXPENSES. ACCORDINGLY, THE CLAIM OF THE ASSESSEE WAS DENIED BY OBSERVING IN PARA 1.10 OF THE ASSESSM ENT ORDER DATED 10.12.2015 WHICH READ AS UNDER: 1.10 FROM THE ABOVE DISCUSSION, IT CAN BE SAFELY CONCLUDED THAT THE BENEFIT OF SUBSTANTIAL EXPANSION IS AVAILABLE ONLY TO THE EXISTING UNITS I.E. THE UN ITS THAT EXISTED AND WERE OPERATIONAL AS ON 07.01.2003 IN ORDER TO MAKE THEM ELIGIBLE FOR 100% DEDUCTION UNDER SECTION 80IC FOR FIRST FIVE YEARS AND IS NOT AT ALL MEANT FOR THE UNITS THAT CAME INTO BEING ON OR AFTER THE INTRODUCTION OF THE SCHEME I.E. 07.01.200 3. KEEPING THE ABOVE DISCUSSION IN MIND, THE ASSESSEE'S CLAIM OF SUBSTANTIAL EXPANSION IS DENIED . THE ASSESSEE FIRM SHALL BE ALLOWED TO CLAIM DEDUCTION U/S 80IC TO THE TUNE OF 25% OF ELIGIBLE PROFITS FROM A.Y. 2013-1.4. HENCE, DEDUCTION U/S 801C OF THE INCOME TAX ACT, 1961 IS ALLOWED @ 25% OF RS, 17,10,51,658/- OF THE ELIGIBLE PROFIT FO R COMPUTATION OF DEDUCTION THEREFORE THE ASSESSEE ELIGIBLE U/S 80IC OF RS. 4 ; 27,62,914/-, THEREFORE THE BALANCE AMOUNT OF RS. 12,82,88,743/- IS TAXABLE AND ADDED BACK IN THE INCOME OF THE ASSESSEE U/S 80IC OF THE I.T. ACT, 1961. 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO DECIDED THE ISSUE AGAINST THE ASSESS EE BY FOLLOWING HIS OWN DECISIONS FOR THE ASSESSMENT YEAR 2011-12 AND 2012-13 VIDE ORDER DATED 19.09.2014 AND 09.09.2 015 RESPECTIVELY. HE ALSO FOLLOWED THE DECISION OF THE ITAT ITA NO. 692/CHD./2013 CHET RAM RA VI KUMAR 4 CHANDIGARH BENCH IN THE CASE OF HYCRON ELECTRONICS VS ITO IN ITA NO.798/CHD./2012 AND 374/CHD./2014 WHEREIN I T WAS HELD AS UNDER: IN VIEW OF THE ABOVE DETAILED DISCUSSION WE HOLD TH AT THE ASSESSEE BEFORE US I.E. M/S HYCRON ELECTRONICS IN ITA NO. 798/CHD./2012 IS ENTITLED TO ONLY 25% OF DEDUCTION DURING THE PRESENT YEAR BECAUSE THE ASSESSEE HAS ALREADY AVAILED THE PERIOD OF FULL DEDUCTION @100% IN THE EARLIER FIVE YEARS I.E. FROM ASSESSMENT YEAR 2004-05 TO 2008-09. IN THIS BACKGROUND, WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND WE UPHOLD THE SAME. ACCORDINGLY, ASSESSEES APPEAL IS DISMISSED. 5. NOW THE ASSESSEE IS IN APPEAL. THE LD. LD. COUNS EL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW BUT COULD NOT REBUT THE AFORESAID FINDINGS GIVEN BY THE LD. CIT(A). 6. IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUP PORTED THE IMPUGNED ORDER PASSED AND FURTHER SUBMITTED THA T THE LD. CIT(A) FOLLOWED THE DECISION OF THE ITAT CHANDIGARH BENCH IN THE CASE OF HYCRON ELECTRONICS VS ITO IN ITA NO. 798/CHD./2012 AND 374/CHD./2014 WHEREIN THE FACTS I NVOLVED WERE IDENTICAL AS ARE IN THE ASSESSEES CASE, THERE FORE, THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE O N THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE LD. CIT(A) DENIED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE D ECISION OF THE ITAT CHANDIGARH BENCH IN THE CASE OF M/S HYCRON ELECTRONICS (SUPRA) WHERE IN THE FACTS ARE SIMILAR TO THE FACTS OF THE ASSESSEES CASE. WE, THEREFORE, DO NOT SEE A NY VALID ITA NO. 692/CHD./2013 CHET RAM RA VI KUMAR 5 GROUND TO INTERFERE WITH THE FINDINGS GIVEN BY THE LD. CIT(A) AND ACCORDINGLY, DO NOT SEE ANY MERIT IN THIS APPEA L OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 20/12/2016) SD/- SD/- (RAVISH SOOD) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED: 20/12/2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR