M/s E.G. Pharmaceuticals, Solan V. DCIT, Circle, Parwanoo

ITA 1046/CHANDI/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5133 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 22-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KIRAN DESH
• Assessee Lawyers: PUNEET GUPTA
• Section: 143(3); 80IB; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER ITA NO. 1046/CHD/2017 ASSESSMENT Y EAR: 2012-13 M/S E.G.PHARMACEUTICALS, VS. THE DCIT, VILLAGE MANDHALA, CIRCLE, TEHSIL-KASAULI, DISTT. SOLAN(HP). PARWANOO. PAN NO. AACFZ4176G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PUNEET GUPTA, CA RESPONDENT BY : SHRI KIRAN DESHPANDE, SR.DR DATE OF HEARING : 04.01.2018 DATE OF PRONOUNCEMENT : 12.03.2018 ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSA ILING THE CORRECTNESS OF THE ORDER DATED 28.04.2017 OF LD. CIT(APPE ALS) SHIMLA PERTAINING TO 2012-13 ASSESSMENT YEAR ON THE FOLLOWING GROUND : THE ID. CIT(A) IS WRONG IN DISALLOWING THE BENEFIT OF SUBSTANTIAL EXPANSION U/S 80IC(2) BY HOLDING THAT BENEFIT OF SUBSTANTIAL EXPANSION IS AL LOWABLE ONLY TO THE UNDERTAKING WHICH WERE EXISTING AS ON 07.01.2003. 2. AT THE TIME OF HEARING IT WAS A COMMON STAND OF THE PARTIES BEFORE THE BENCH THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSE E BY VIRTUE OF THE ORDER DATED 28.11.2017 OF THE HONBLE HIGH COURT DATED 28/11/ 2017 IN THE CASE OF M/S STOVE CRAFT INDIA VERSUS CIT-V AND OTHERS IN ITA 2 0 TO 24/2015. ACCORDINGLY, IT WAS THE PRAYER OF THE PARTIES THAT THE IS SUE MAY BE REMANDED TO THE AO WITH A DIRECTION TO GRANT NECESSARY RELIEF. 3. THE LD. AR SUBMITTED THAT THE AO IN 2015-16 ASSESSME NT YEAR VIDE ORDER DATED 20.12.2017 PASSED U/S 143(3) CONSIDERING THE CLAIM OF SUBSTANTIAL EXPANSION, HAS GRANTED NECESSARY RELIEF. ATTENT ION WAS INVITED TO THE COPY OF THE ORDER FILED. ACCORDINGLY, IT WAS HIS SUBMISS ION THAT NO VERIFICATION OF FACTS IS REQUIRED AS THEY ALREADY HAVE BEEN VERIFIED BY THE AO. 4. THE LD. SR.DR CONSIDERING THE ORDER OF THE AO PASSED PURSUANT TO THE DECISION OF THE HON'BLE HIGH COURT, HAD NO OBJECTION TO TH E GRANT OF RELIEF AT THIS STAGE. ITA 1046/CHD/2017 A.Y. 2012-13 PAGE 2 OF 3 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MA TERIAL ON RECORD. IT IS SEEN THAT THE ASSESSEE IN THE YEAR UNDER CONSIDE RATION CLAIMED 80IC DEDUCTION @ 100% ON ACCOUNT OF THE MANUFACTURING ACTIVITY OF THE PHARMA PRODUCTS CARRIED OUT FROM VILLAGE MANDHALA. PINJORE-BADDI HIG HWAY, TEHSIL KASAULI DISTT. SOLAN. THE CLAIM WAS RESTRICTED TO 25% IN VIEW OF THE FACT THAT THE ASSESSEE WAS FOUND TO HAVE ALREADY CLAIMED DEDUCTION @ 100% FOR FIVE YEARS STARTING FROM 2008-09 TO 2012-13 ASSESSMENT YEA RS. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION CLAIMED THAT IT HAD CARRIED OUT SUBSTANTIAL EXPANSION WHICH WAS DENIED BY THE AO RELYING UPON THE R EASONING THAT THE BENEFIT OF SUBSTANTIAL EXPANSION IS AVAILABLE ONLY TO THE EXIS TING UNITS I.E. UNITS THAT EXISTED AND WERE OPERATIONAL AS ON 07.01.2003 AND THE CLAIM OF SUBSTANTIAL EXPANSION IN THE FINANCIAL YEAR 2011-12 WAS CO NSIDERED TO BE INADMISSIBLE. THE CIT(A) CONFIRMED THE ACTION OF THE AO. HOW EVER, THE ISSUE IS NO LONGER RES-INTEGRA IN VIEW OF THE DECISION OF THE JURIS DICTIONAL HIGH COURT IN THE CASE OF M/S STOVE CRAFT & OTHERS (CITED SUPRA). A PERUSAL OF THE ORDER SHOWS THAT THE JUDGES CONSIDERING THE FACTS AS SET OU T IN PARA 51 OF THE SAID DECISION ALLOWED RELIEF VIDE PARA 55. IT IS SEEN THAT THE AO ALSO IN THE ASSESSMENT ORDER DATED 20.12.2017 FOR 2015-16 ASSESSME NT YEAR HAS HIMSELF CONSIDERING THE FACTS IN 2015-16 ASSESSMENT YEAR HAS ALLO WED THE CLAIM. FOR READY REFERENCE, THE RELEVANT FINDING IS REPRODUCED HEREUNDER : 4.1 THE ASSESSEE'S REPLY HAS BEEN CONSIDERED. THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT I.E. HON'BLE HIGH COURT OF HIMACHAL PRADESH W HEREIN THE HON'BLE HIGH COURT HAS DECIDED SUBSTANTIAL QUESTIONS OF LAW IN SIMILAR CAS ES IN THE CASE OF M/S STOVEKRAFT AND OTHERS IN IT A NO. 20/2015 DATED 28.11.2017. RELEVANT PAN OF ORDER IS REPRODUCED AS UNDER: '...THUS, IN VIEW OF THE ABOVE DISCUSSION, THESE AP PEALS ARE ALLOWED AND ORDERS PASSED BY THE ASSESSMENT OFFICER AS WELL AS THE APP ELLATE AUTHORITY AND THE TRIBUNAL, IN THE CASE OF EACH ONE OF THE ASSESSES'S ARE QUASHED AND SET ASIDE, HOLDING AS UNDER: (A) SUCH OF THOSE UNDERTAKINGS OR ENTERPRISES WHICH W ERE ESTABLISHED, BECAME OPERATIONAL AND FUNCTIONAL PRIOR TO 7.1.2003 AND HA VE UNDERTAKEN SUBSTANTIAL EXPANSION BETWEEN 7.1.2003 UP TO 1.4.2012, SHOULD B E ENTITLED TO BENEFIT OF SECTION 80-IC OF THE ACT, FOR THE PERIOD FOR WHICH THEY WERE NOT ENTITLED TO THE BENEFIT OF DEDUCTION UNDER SECTION 80-IB. (B) SUCH OF THOSE UNITS WHICH HAVE COMMENCED PRODUCTION AFTER 7.1.2003 AND CARRIED OUT SUBSTANTIAL EXPANSION PRIOR TO 1.4.2012 , WOULD ALSO BE ENTITLED TO BENEFIT OF DEDUCTION AT DIFFERENT RATES OF PERCENTA GE STIPULATED UNDER SECTION 80- IC. (C) SUBSTANTIAL EXPANSION CANNOT BE CONFINED TO ON E EXPANSION. AS LONG AS REQUIREMENT OF SECTION 80-IC(8)(IX) IS MET, THERE C AN BE NUMBER OF MULTIPLE SUBSTANTIAL EXPANSIONS. (D) CORRESPONDINGLY, THERE CAN BE MORE THAN ONE INITIAL ASSESSMENT YEARS. (E) WITHIN THE WINDOW PERIOD OF 7.1.20013 UP TO 1.4.201 2, AN UNDERTAKING OR AN ENTERPRISE CAN BE ENTITLED TO DEDUCTION @ 100% FOR A PERIOD OF MORE THAN FIVE YEARS. (F) ALL THIS, OF COURSE, IS SUBJECT TO A CAP OF TEN YEA RS. [SECTION 80-IC(6)J. (G) UNITS CLAIMING DEDUCTION UNDER SUCTION 80-IC SHALL NOT BE ENTITLED TO DEDUCTION ITA 1046/CHD/2017 A.Y. 2012-13 PAGE 3 OF 3 UNDER ANY OTHER SECTION, CONTAINED IN CHAPTER VI-A OR SECTION 10A OR 10B OF THE ACT [SECTION 80IB (5)]. SUBSTANTIAL QUESTIONS OF LAW ARE ANSWERED ACCORDING LY 4.2 WITH DUE REGARD TO THE JUDGEMENT OF THE HON'BLE HIGH COURT OF HIMACHAL PRADESH, REFERRED TO ABOVE, THE CLAIM OF DEDUCTION U/S 80IC @ 100% IN 8 TH YEAR IS ACCEPTED. THIS ACCEPTANCE OF THE ASSESSEE'S CLAIM O F DEDUCTION U/S 80IC @ 100% IN 8 TH YEAR WOULD, HOWEVER, BE SUBJECT TO THE OUTCOME OF THE SL P, WHICH, THE DEPARTMENT IS CONSIDERING TO FILE. 5.1 IN THE AFOREMENTIONED PECULIAR FACTS AND CIRCUMSTANCE S, SINCE THE ISSUE STANDS CONSIDERED BY THE AO HIMSELF IN THE SUBSEQUENT YEAR IN ASS ESSEE'S OWN CASE IN THE LIGHT OF THE DECISION OF THE HIGH COURT, THE AP PEAL OF THE ASSESSEE IS ALLOWED. THE AO IS DIRECTED TO GRANT THE NECESSARY R ELIEF. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MARCH,2018. SD/- (DIVA SINGH) JUDICIAL MEMBER POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT,CHANDIGARH.