ACIT, C-4(1), Chandigarh V. M/s Health Biotech Ltd., Chandigarh

ITA 1103/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0002 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 24-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR ASHISH GUPTA
• Keywords: Set aside
• Section: 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A CHANDIGARH , ! . ' . . . # , $% ! BEFORE: SMT. DIVA SINGH, JM & DR. B.R.R.KUMAR, AM ./ ITA NO. 1103/CHD/2018 / ASSESSMENT YEAR : 2011-12 THE ACIT, CIRCLE 4(1), CHANDIGARH. VS M/S HEALTH BIOTECH LTD., SCO 162-164, TOP FLOOR, SECTOR 34A, CHANDIGARH. ./ PAN NO: AABCH1876K / APPELLANT / RESPONDENT / REVENUE BY : DR. ASHISH GUPTA, CIT-DR / ASSESSEE BY : NONE ! ' # / DATE OF HEARING : 09.05.2019 $%&' # / DATE OF PRONOUNCEMENT : 28.05.2019 $& / ORDER PER DIVA SINGH THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A SSAILING THE CORRECTNESS OF THE ORDER DATED 20.06.2018 OF CIT(A) -2, CHANDIGARH PERTAINING TO 2011-12 ASSESSMENT YEAR. 2. AT THE TIME OF HEARING, NO ONE WAS PRESENT ON BE HALF OF THE ASSESSEE. THE APPEAL WAS PASSED OVER. IN THE SECOND ROUND AL SO, POSITION REMAINED THE SAME. 3. THE LD. CIT-DR WAS HEARD. 4. THE SHORT ISSUE RAISED BY THE REVENUE BY WAY OF THE GROUNDS AGITATED IN THE PRESENT APPEAL IS THAT THE DECISION OF THE J URISDICTIONAL HIGH COURT IN THE CASE OF M/S STOVE CRAFT INDIA VERSUS CIT-V AND OTHERS IN ITA 20 TO 24/2015 HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SLP HAS BEEN FILED BEFORE THE APEX COURT. ITA 1103/CHD/2018 A.Y. 2011-12 PAGE 2 OF 4 5. THE FACTS ON RECORD IN THE YEAR UNDER CONSIDERAT ION ARE THAT FOR MANUFACTURING ACTIVITY AT BADDI (HP) THE ASSESSEE W AS FOUND TO HAVE AVAILED OF DEDUCTION U/S 80IC OF THE ACT @ 100% ON ITS ELIG IBLE PROFITS FROM 2006-07 TO 2010-11 ASSESSMENT YEAR, ACCORDINGLY, IN THE 6 TH YEAR, THE CLAIM WAS RESTRICTED. THE CLAIM MADE ON THE GROUND OF HAVING CARRIED OUT SUBSTANTIAL EXPANSION IN VIEW OF THE DECISION OF THE ITAT IN TH E CASE OF M/S HYCRON ELECTRONICS V ITO IN ITA 798/CHD/2012 DATED 27.05.2 015 WAS HELD TO BE STILL NOT ALLOWABLE AS THE DECISION WAS NOT ACCEPTE D. 6. THE CIT(A) RELYING UPON DECISION OF THE JURISDIC TIONAL HIGH COURT GRANTED RELIEF REFERRING TO PARA 55 OF THE SAID DEC ISION EXTRACTED BELOW : 55. THUS, IN VIEW OF THE ABOVE DISCUSSION, THESE APPEAL S 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 ASSESSEES, ARE QUASHED AND SET ASIDE, HOLDING AS UNDER: (A) SUCH OF THOSE UNDERTAKINGS OR ENTERPRISES WHICH WER E ESTABLISHED, BECAME OPERATIONAL AND FUNCTIONAL PRIOR TO 07/01/2003 AND HAVE UNDERTAKEN SUBSTANTIAL EXPANSION BETWEEN 07/01/2003 UPTO 01/04/2012, SHOUL D BE 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 07/01/2003 AND CARRIED OUT SUBSTANTIAL EXPANSION PRIOR TO 01/04/20 12, 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 ONE EXP ANSION. AS LONG AS REQUIREMENT OF SECTION 80-IC (8) (IX) IS MET, THERE CAN BE NUMBER OF MULTIPLE SUBSTANTIAL EXPANSIONS. (D) CORRESPONDINGLY, THERE CAN BE MORE THAN ONE INITIAL ASSESSMENT YEARS. (E) WITHIN THE WINDOW PERIOD OF 07/01/2013 UPTO 01/04/2 012, AN UNDERTAKING OR AN ENTERPRISE CAN BE ENTITLED TO DEDUCTION @100% FO R A PERIOD OF MORE THAN FIVE YEARS. (F) ALL THIS, OF COURSE, IS SUBJECT TO A CAP OF TEN YEARS. [SECTION 80-IC(6)]. (G) UNITS CLAIMING DEDUCTION UNDER SECTION 80-IC SHALL NOT BE ENTITLED TO DEDUCTION UNDER ANY OTHER SECTION, CONTAINED IN CHA PTER VI-A OR SECTION 10A OR 10B OF THE ACT [SECTION 80-IB(5)]. 7. IT IS SEEN THAT THOUGH INITIALLY THE VIEW TAKEN BY THE JURISDICTIONAL HIGH COURT WAS NOT ACCEPTED BY THE APEX COURT IN TH E CASE OF CIT VS M/S CLASSIC BINDING INDUSTRIES & ORS. IN CIVIL APPEAL N O. 7208 AND OTHERS OF 2018 DATED 20.08.2018, HOWEVER, SUBSEQUENTLY THE PO SITION OF LAW AS ITA 1103/CHD/2018 A.Y. 2011-12 PAGE 3 OF 4 NOTICED BY THE APEX COURT IN THE CASE OF CIT VS M/S CLASSIC BINDING INDUSTRIES & ORS WAS REVIEWED BY THE APEX COURT IN THE CASE OF PCIT SHIMLA VS M/S AARHAM SOFTRONICS & OTHERS IN CIVIL A PPEAL NO. 1784 OF 2019 DATED 20.02.2019 (SUPRA). THE RELEVANT EXTRACT FROM THE SAID DECISION IS REPRODUCED HEREUNDER FOR READY REFERENCE: 22. IT WOULD BE PERTINENT TO POINT OUT THAT IN PAR A 20 OF THE JUDGMENT IN CLASSIC BINDING INDUSTRIES, THIS COURT OBSERVED THA T IF DEDUCTION @ 100% FOR THE ENTIRE PERIOD OF 10 YEARS, IT WOULD BE DOING VI OLENCE TO THE LANGUAGE OF SUB- SECTION (6) OF SECTION 80-IC. HOWEVER, THIS OBSERV ATION CAME WITHOUT NOTICING THE DEFINITION OF INITIAL ASSESSMENT YEAR CONTAIN ED IN THE SAME VERY PROVISION. 23. HAVING EXAMINED THE MATTER IN THE AFORESAID PERSPECTIVE, JUDGMENT IN THE CASE OF MAHABIR INDUSTRIES V. PRINCIPAL COMMISSIONER OF INCOME TAX WOULD, IN FACT, HELP THE ASSESSEE. THE FINE DISTINCTION POINTED OUT IN C LASSIC BINDING INDUSTRIES ELOPES THEREBY. TO RECAPITULATE, IN MAHABIR INDUSTRIES, IT WAS HELD THAT IF AN ASSESSEE GET 100% 2 CIVIL APPEAL NOS. 4765-4766 OF 2018 DECIDED ON MA Y 18, 2018 24 EXEMPTION UNDER SECTION 80-IB OF THE ACT FOR FIVE YEARS AND T HEREAFTER CARRIES OUT THE SUBSTANTIAL EXPANSION BECAUSE OF WHICH SAID ASSESSEE BECOMES EN TITLED TO EXEMPTION UNDER THE NEW PROVISION I.E. SECTION 80-IC OF THE ACT, THE AS SESSEE WOULD BE ENTITLED TO DEDUCTION @ 100% EVEN AFTER FIVE YEARS. THIS RULING WAS PREDI CATED ON THE GROUND THAT THERE CAN BE TWO INITIAL ASSESSMENT YEARS, ONE FOR THE PURPOS E OF SECTION 80-IB AND OTHER FOR THE PURPOSES OF SECTION 80-IC OF THE ACT. ONCE WE FIND THAT THERE CAN BE TWO INITIAL ASSESSMENT YEARS, EVEN AS PER THE DEFINITION THEREO F IN SECTION 80-IC ITSELF, THE LEGAL POSITION COMES AT PAR WITH THE ONE WHICH WAS DISCUS SED IN MAHABIR INDUSTRIES. 24. THE AFORESAID DISCUSSION LEADS US TO THE FOL LOWING CONCLUSIONS: (A) JUDGMENT DATED 20TH AUGUST, 2018 IN CLASSIC BIN DING INDUSTRIES CASE OMITTED TO TAKE NOTE OF THE DEFINITION INITIAL ASSESSMENT YEA R CONTAINED IN SECTION 80-IC ITSELF AND INSTEAD BASED ITS CONCLUSION ON THE DEFINITION CONTAINED IN SECTION 80-IB, WHICH DOES NOT APPLY IN THESE CASES. THE DEFINITIONS OF INITIAL ASSESSMENT YEAR IN THE TWO SECTIONS, VIZ. SECTIONS 80-IB AND 80-IC ARE MATERIA LLY DIFFERENT. THE DEFINITION OF INITIAL ASSESSMENT YEAR UNDER SECTION 80-IC HAS M ADE ALL THE DIFFERENCE. THEREFORE, WE ARE OF THE OPINION THAT THE AFORESAID JUDGMENT D OES NOT LAY DOWN THE CORRECT LAW. (B) AN UNDERTAKING OR AN ENTERPRISE WHICH HAD SET U P A NEW UNIT BETWEEN 7TH JANUARY, 2003 AND 1ST APRIL, 2012 IN STATE OF HIMAC HAL 25 PRADESH OF THE NATURE MENTIONED IN CLAUSE (II) OF SUB-SECTION (2) OF SECT ION 80-IC, WOULD BE ENTITLED TO DEDUCTION AT THE RATE OF 100% OF THE PROFITS AND GA INS FOR FIVE ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR. FOR THE NEXT FIVE YEARS, THE ADMISSIBLE DEDUCTION WOULD BE 25% (OR 30% WHERE THE ASSESSEE I S A COMPANY) OF THE PROFITS AND GAINS. (C) HOWEVER, IN CASE SUBSTANTIAL EXPANSION IS CARRI ED OUT AS DEFINED IN CLAUSE (IX) OF SUB-SECTION (8) OF SECTION 80-IC BY SUCH AN UNDERTA KING OR ENTERPRISE, WITHIN THE AFORESAID PERIOD OF 10 YEARS, THE SAID PREVIOUS YEA R IN WHICH THE SUBSTANTIAL EXPANSION IS UNDERTAKEN WOULD BECOME INITIAL ASSES SMENT YEAR, AND FROM THAT ASSESSMENT YEAR THE ASSESSEE SHALL BEEN ENTITLED TO 100% DEDUCTIONS OF THE PROFITS AND GAINS. (D) SUCH DEDUCTION, HOWEVER, WOULD BE FOR A TOTAL P ERIOD OF 10 YEARS, AS PROVIDED IN SUB-SECTION (6). FOR EXAMPLE, IF THE EXPANSION IS C ARRIED OUT IMMEDIATELY, ON THE COMPLETION OF FIRST FIVE YEARS, THE ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION AGAIN FOR THE NEXT FIVE YEARS. ON THE OTHER HAND, IF SUBS TANTIAL EXPANSION IS UNDERTAKEN, SAY, IN 8TH YEAR BY AN ASSESSEE SUCH AN ASSESSEE WOULD B E ENTITLED TO 100% DEDUCTION FOR ITA 1103/CHD/2018 A.Y. 2011-12 PAGE 4 OF 4 THE FIRST FIVE YEARS, DEDUCTION @ 25% OF THE PROFIT S AND GAINS FOR THE NEXT TWO YEARS AND @ 100% AGAIN FROM 8TH YEAR AS THIS YEAR BECOMES INITIAL ASSESSMENT YEAR ONCE AGAIN. 26 HOWEVER, THIS 100% DEDUCTION WOULD BE FOR REMAINING THREE YEARS, I.E., 8TH, 9TH AND 10TH ASSESSMENT YEARS. 25. IN VIEW OF THE AFORESAID, WE AFFIRM THE JUDGMEN T OF THE HIGH COURT ON THIS ISSUE AND DISMISS ALL THESE APPEALS OF THE REVENUE. LIKEWISE, APPEALS FILED BY THE ASSESSEES ARE HEREBY ALLOWED. 8. ACCORDINGLY, WE FIND THAT THE ISSUE IS NO LONGER RES-INTEGRA AS THE POSITION OF LAW IS WELL SETTLED. IN VIEW THEREOF, IN TERMS OF THE ABOVE DECISION, THE APPEAL OF THE REVENUE IS DISMISSED. S AID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.05.2019. SD/- SD/- ( . ' . . . # ) ( ) (DR. B.R.R. KUMAR) (DIVA SINGH) $% ! / ACCOUNTANT MEMBER ! / JUDICIAL MEMBER ' ( %( )* +* / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ! , / CIT 4. ! , )/ THE CIT(A) 5. *-. / , # / , 012.3 / DR, ITAT, CHANDIGARH 6. .2 4' / GUARD FILE %( ! / BY ORDER, 5 / ASSISTANT REGISTRAR