M/s R.R. Lamps, Solan V. DCIT, Shimla

ITA 1070/CHANDI/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3799 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 10-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.1070/CHD/2016 (ASSESSMENT YEAR : 2013-14) M/S R.R. LAMPS, VS. THE D.C.I.T., KIRPALPUR, PO NALAGARH, CIRCLE SHIMLA. DISTT. SOLAN (HP). PAN: AAIFR7427E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINEET KRISHAN RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 26.12.2016 DATE OF PRONOUNCEMENT : 30.12.2016 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA DATED 27/07/2016 FOR ASSESSMENT Y EAR 2013-14. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: 1. THAT THE ORDER PASSED UNDER SECTION 250(6) OF T HE INCOME TAX ACT. 1961 BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA IN APPEAL NO. 261/15- 2 SML DATED 27.07.2016 IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN UPHOLDING THE ACTION OF THE ID. ASSESSING OFFICER WHO HAD RESTRICTED THE CLAIM OF DEDUCTION UNDER SECTION 80IC TO 25% OF THE PROFITS A ND GAINS OF THE ELIGIBLE BUSINESS INSTEAD OF 100% OF SU CH PROFITS CLAIMED BY APPELLANT , WHICH LED TO ADDITION OF RS, 1,23,38,551/-. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN UPHOLDING THE STAND OF THE ID. ASSESSING OFFICER WHO HAD ERRED IN MISINTERPRETING THE PROVISIONS OF SECTION 8Q1C AND IN HOLDING THAT THE BENEFIT OF 100% DEDUCTION UNDER SECTION 80IC OF THE ACT FOR FIRST FIVE YEARS IN CASE OF SUBSTANTIAL EXPANSION IS AVAILABLE ONLY TO THE UNITS THAT EXISTED AND WHERE OPERATIONAL AS ON 07. 01.2003 AND SUCH BENEFIT IS NOT AT ALL MEANT FOR THE UNITS THAT CAME INTO BEING ON OR AFTER THE INTRODUCTION OF THE SCHEME OF SUCH DEDUCTION. 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) GRAVELY ERRED IN UPHOLDING THAT ONCE AN 'INITIAL ASSESSMENT YEAR' IS DETERMINED IN CASE OF AN UNDERTAKING CLAIMING BENEFIT U/S 801C OF THE ACT. IT CANNOT BE CHANGED EVEN IF SUCH UNDERTAKING COMPLETE S SUBSTANTIAL EXPANSION AD AGAIN QUALIFIES FOR DEDUCTI ON UNDER THE SAID SECTION ON THE BASIS OF QUALIFYING EXPANSION, RATHER THAN BASED ON QUALIFYING COMMENCEMENT. 5. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN UPHOLDING THE ACTION OF THE ID. ASSESSING OFFICER IN DISALLOWING PROPORTIONATELY INTEREST AMOUNTING TO RS.2500/- CALCULATED @ 3 10% ON SECURITY DEPOSIT OF RS.25000/-, WITH ETO BADDI, DISREGARDING THE SUBMISSION OF THE ASSESSEE THAT TH E AMOUNT HAS BEEN PAID DURING THE COURSE OF CARRYING ON BUSINESS. 7. THAT THE APPELLANT CRAVES TO ADD, AMEND OR ALTER AN Y GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL, WITH THE PERMISSION OF THE HON'BLE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH. 3. GROUND NOS. 1 AND 7 RAISED BY THE ASSESSEE ARE GENERAL IN NATURE AND NEED NO ADJUDICATION. 4. GROUND NOS. 2, 3, 4 AND 5 RAISED BY THE ASSESSE E ARE RELATED TO THE ISSUE OF RESTRICTION OF DEDUCTIO N UNDER SECTION 80IC OF THE INCOME TAX ACT, 1961 (HEREINAFT ER REFERRED TO AS ACT) TO 25% OF THE ELIGIBLE PROFIT S AS AGAINST 100% CLAIMED BY THE ASSESSEE. 5. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE YEAR DE CLARING INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80 IC OF THE ACT, AMOUNTING TO RS.1,64,51,402/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND THAT AS PER INFORMATION GIVEN IN FORM NO. 10CCB THE ASSESSEE HA D STARTED ITS BUSINESS ACTIVITY/OPERATION ON 27.09.20 06, CLAIMED ASSESSMENT YEAR 2007-08 AS ITS INITIAL ASSE SSMENT YEAR FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80I C OF THE ACT AND HAD ALREADY CLAIMED DEDUCTION TO THE E XTENT OF HUNDRED PERCENT OF ITS ELIGIBLE PROFITS FOR FIVE -YEAR PERIOD I.E. FROM ASSESSMENT YEAR 2007-08 TO ASSESSM ENT YEAR 2011-12. THE ASSESSING OFFICER THEREAFTER NOTI CED 4 THAT THE ASSESSEE FIRM HAD AGAIN CLAIMED HUNDRED PE RCENT DEDUCTION OF ITS ELIGIBLE PROFITS IN THE IMPUGNED ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2013-14, WHICH WAS THE 7 TH YEAR OF COMMENCEMENT OF PRODUCTION FOR THE ASSESSEE FIRM. THE ASSESSING OFFICER FOR DETAILED R EASONS MENTIONED IN THE ASSESSMENT ORDER STATED THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION, UNDER SECTION 80 IC, ONLY AT THE RATE OF 25% AND ACCORDINGLY RESTRICTED THE DEDUCTION TO THE EXTENT OF 25% OF THE ELIGIBLE PROF ITS. LD. CIT(APPEALS) UPHELD THE ORDER OF THE ASSESSING OFFI CER ON THIS GROUND FOLLOWING THE DECISION OF THE ITAT, CHA NDIGARH BENCH IN THE CASE OF M/S HYCRON ELECTRONICS VS ITO IN ITA NO. 798/CHD/2012 AND OTHER RELATED CASES DATED 27.5.2015. 6. BEFORE US IT WAS FAIRLY CONCEDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE IS COVERED AGAINST IT BY THE ORDER OF THE ITAT IN THE CASE OF HYCRON ELECTRONICS LIMITED (SUPRA). 7. HAVING HEARD THE CONTENTIONS, WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE CIT (APPEALS) ON T HIS ISSUE. ADMITTEDLY THE ASSESSEE HAS COMMENCED ITS BUSINESS OPERATIONS FROM 27.09.2006, CLAIMED THE INITIAL YEA R FOR DEDUCTION UNDER SECTION 80IC AS ASSESSMENT YEAR 200 7- 2008, AND HAS ALREADY CLAIMED DEDUCTION OF HUNDRED PERCENT OF ITS PROFITS UNDER SECTION 80IC FOR THE F IVE-YEAR PERIOD FROM ASSESSMENT YEAR 2007-2008 TO ASSESSMENT YEAR 2011-12. FURTHER IN THE IMPUGNED ASSESSMENT Y EAR 5 THE ASSESSEE IS CLAIMING DEDUCTION AT THE RATE OF H UNDRED PERCENT OF ITS PROFITS ON THE GROUND THAT IT HAS UN DERTAKEN SUBSTANTIAL EXPANSION AND THEREFORE ITS INITIAL ASS ESSMENT YEAR BECOMES THE YEAR IN WHICH IT UNDERTAKES SUBSTA NTIAL EXPANSION MAKING IT ELIGIBLE TO CLAIM DEDUCTION AT THE RATE OF HUNDRED PERCENT OF ITS PROFITS FOR A PERIOD OF A NOTHER 5 YEARS. 8. WE HAVE GONE THROUGH THE ORDER OF THE ITAT IN THE CASE OF M/S HYCRON LIMITED (SUPRA). WE FIND TH AT IDENTICAL ISSUE WAS DEALT WITH IN THAT CASE WHEREIN IT WAS CATEGORICALLY HELD THAT THERE CAN BE ONLY ONE INITI AL ASSESSMENT YEAR FOR THE PURPOSE OF CLAIMING DEDUCTI ON UNDER SECTION 80IC AND THAT A NEW UNDERTAKING WHICH COMES INTO EXISTENCE AFTER THE PROVISION OF SECTION 80 IC WAS BROUGHT ON THE STATUTE I.E. AFTER 01-04-2004 IS NOT ELIGIBLE TO CLAIM DEDUCTION ON ACCOUNT OF SUBSTANTI AL EXPANSION UNDERTAKEN BY IT, WHICH ONLY ELIGIBLE UNDERTAKINGS, WHICH WERE IN EXISTENCE PRIOR TO THE SECTION CAME ON STATUTE WERE ENTITLED TO. THE HONBLE ITAT HAS CATEGORICALLY HELD THAT ELIGIBLE UNDERTAKINGS ESTA BLISHED IN THE SPECIFIED AREAS/NOTIFIED AREAS IN THE STATE OF HIMACHAL PRADESH ARE ENTITLED TO DEDUCTION AT THE R ATE OF HUNDRED PERCENT OF THE PROFITS UNDER THE SECTION ON LY FOR A PERIOD OF FIVE YEARS AND THEREAFTER AT THE RATE OF 25% OF THE PROFITS ONLY. 9. SINCE THE ISSUE IN THE PRESENT CASE IS IDENTICA L TO THAT DEALT WITH IN THE CASE OF HYCRON LIMITED (S UPRA), 6 AND THE ASSESSEE UNDERTAKING HAS COME INTO EXISTENC E AFTER SECTION 80IC WAS BROUGHT ON THE STATUTE I.E A FTER 01- 04-2004,HAS ALREADY CLAIMED 100% DEDUCTION FOR FIVE YEARS TAKING AY 2007-08 AS THE INITIAL ASSESSMENT Y EAR, IT IS NOT ENTITLED TO CLAIM ANOTHER YEAR AS ITS INITIA L ASSESSMENT YEAR AND AGAIN CLAIM DEDUCTION @100% OF ITS PROFITS FOR THE NEXT FIVE YEARS THEREAFTER AS HELD BY THE ITAT IN THE CASE OF HYCRON LTD(SUPRA). WE HOLD THA T THE CIT(A) HAS RIGHTLY APPLIED THE RATIO LAID DOWN THER EIN IN THE PRESENT CASE AND RESTRICTED THE DEDUCTION OF EL IGIBLE PROFITS IN THE CASE OF THE ASSESSEE TO 25% AS AGAI NST 100% CLAIMED BY THE ASSESSEE. 10. GROUND NO.2, 3, 4 & 5 RAISED BY THE ASSESSEE ARE THEREFORE DISMISSED. 11. GROUND NO. 6 RAISED BY THE ASSESSEE IS AGAINST THE ACTION OF THE LD. CIT (APPEALS) IN UPHOLDING TH E ADDITION OF INTEREST AMOUNTING TO RS. 2500/-. 12. BRIEF FACTS RELATING TO THE ISSUE ARE THAT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD MADE SECURITY DEPOSI T OF RS.25,000/- WITH ETO AND NO INTEREST ON ACCRUAL BA SIS WAS SHOWN ON THE SAME BY THE ASSESSEE. THE ASSESSIN G OFFICER ADDED ACCRUED INTEREST TO THE INCOME OF THE ASSESSEE, CALCULATING THE SAME AT THE RATE OF 10% O F THE DEPOSIT MADE, AMOUNTING TO RS.2500/-. LD. CIT(APPE ALS) UPHELD THE ADDITION FOLLOWING THE DECISION OF THE 7 CIT(APPEALS) IN THE ASSESSEES OWN CASE IN THE PREC EDING ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2012-13. 13. BEFORE US LD. COUNSEL FOR THE ASSESSEE FAIRLY ADMITTED THAT THE ISSUE WAS COVERED AGAINST IT BY T HE ORDER OF THE CIT(APPEALS) IN THE PRECEDING ASSESSME NT YEAR. 14. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND THAT THE LD. CIT(APPEALS ), UPHELD THE ADDITION MADE ON THIS GROUND FOLLOWING T HE ORDER OF THE CIT(APPEALS) IN THE PRECEDING ASSESSME NT YEAR IN THE CASE OF THE ASSESSEE I.E. ASSESSMENT YEAR 20 12-13, WHEREIN THE ISSUE WAS DECIDED AS FOLLOWS: 5.4.1 THE SUBMISSIONS OF THE APPELLANT HAS BEEN CAREFULLY CONSIDERED. THE ASSESSEE IS HAVING AN FD OF RS. 25,000/-WITH ETO, BUT NO INTEREST THEREON ON ACCRUAL BASIS WAS CREDITED TO THE PROFIT AND LOSS OR DECLARED FOR TAXATION. THE FACT THAT THE APPELLANT HAS AN DEPOSIT OF RS. 25,000/-WITH ETO, BADDI, IS NOT DENIED. IT IS NOT THE CASE OF APPELLANT THAT THE DEPOSIT IS NOT INTEREST-BEARING. THE APPELLANT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. DOES ANY INCOME WHICH ACCRUES TO THE APPELLANT DURING THE YEAR UNDER CONSIDERATION IS REQUIRED TO BE TAKEN INTO CONSIDERATION WHILE COMPUTING THE TOTAL INCOME. THE AOS CORRECTLY BROUGHT TO TAX RS. 2250/-AS INTEREST ON ACCRUAL BASIS OF THE DEPOSIT WITH ETO BUDDY. THE APPELLANT HAS BROUGHT NOTHING ON RECORD OR IN SUBMISSIONS TO FILE ANY FAULT IN THE ORDER OF THE AO ON THIS ISSUE. 8 ACCORDINGLY THE ACTION OF THE ASSESSING OFFICERS UPHELD AND THE GROUND NO. 4 OF THE APPELLANT IS DISMISSED . 15. BEFORE US LD.COUNSEL FOR THE ASSESSEE CONCEDED THAT THE FACTS IN THE PRESENT CASE WERE IDENTICAL T O THAT IN THE PRECEDING YEAR. FURTHER IT WAS NOT BROUGHT TO O UR NOTICE THAT THE ORDER OF THE CIT (APPEALS) IN THE P RECEDING YEAR HAD BEEN CHALLENGED BEFORE THE ITAT. THEREFOR E, THE ASSESSEE HAS FOR ALL PURPOSES ACCEPTED THE ORDER OF THE CIT(APPEALS)) ON THIS ISSUE. IN VIEW OF THE SAME, W E HOLD THAT THE LD. CIT (APPEALS) HAS RIGHTLY UPHELD THE ADDITION FOLLOWING THE ORDER OF THE CIT (APPEALS) IN ASSESSEES OWN CASE IN THE PRECEDING YEAR. 16. GROUND NO. 6 RAISED BY THE ASSESSEE IS, THEREFORE, DISMISSED. 17. IN EFFECT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RAVISH SOOD) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH DECEMBER, 2016 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH 9