M/s Security Products Pvt. Ltd., Baddi V. DCIT, Circle, Parwanoo

ITA 1152/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6503 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 17-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1152/CHD/2017 (ASSESSMENT YEAR : 2013-14) M/S SECURITY PRODUCTS PVT. LTD., VS. THE DCIT, CIR CLE, KHASRA NO. 677/1, GURUMAJRA, PARWANOO VILL. KISHANPURA, BADDI, DISTT. SOLAN (H.P) PAN NO. ABAFS658P (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SMT. CHANDERKANTA DATE OF HEARING : 19.12.2017 DATE OF PRONOUNCEMENT : 19.12.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS ), SHIMLA [HEREINAFTER REFERRED TO AS CIT(APPEALS)] DATED 20.05.2017 RELATING TO ASSESSMENT YEAR 2013-14. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER:- 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS), SHIMLA IS DEFECTIVE BOTH IN LAW AND FACTS OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH IS UNJUSTIFIED IN UPHOLDING T HE ORDER OF THE LD. ASSESSING OFFICER REGARDING 2 RESTRICTING THE CLAIM OF DEDUCTION U/S 801C TO 25% AS AGAINST 100% CLAIMED BY THE APPELLANT BEING THE INITIAL ASSESSMENT YEAR ON THE BASIS OF SUBSTANTIAL EXPANSION DONE DURING THE FY 2010-11 AFTER FULFILLI NG THE REQUISITE CONDITIONS U/S 80IC OF I.T. ACT, 1961 . THIS DISALLOWANCE IS UNCALLED FOR AND DESERVES TO B E DELETED. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH IS UNJUSTIFIED IN UPHOLDING T HE ORDER OF THE LD. ASSESSING OFFICER CONCLUDING THAT THE BENEFIT OF SUBSTANTIAL EXPANSION IS AVAILABLE ONLY TO THE PRE-EXISTING UNITS I.E. THE UNITS THAT EXISTED AND WERE OPERATIONAL AS ON 07-01-2003 AND NOT TO THE APPELLANT WHICH CAME IN EXISTENCE AFTER 07- 01-2003 WHICH IS DISCRIMINATORY AND UNJUSTIFIED AS THE SECT ION DOES NOT SPECIFY SO THAT THE BENEFIT OF SUBSTANTIAL EXPANSION IS AVAILABLE ONLY TO PRE- EXISTING UNITS OPERATIONAL AS ON 07-01-03. THIS OBSERVATION IS UNJUSTIFIED AND AGAINST THE SPIRIT OF THE LAW. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH IS UNJUSTIFIED IN UPHOLDING T HE ORDER OF THE LD. ASSESSING OFFICER CONCLUDING THAT ONCE AN INITIAL ASSESSMENT YEAR IS DETERMINED IN CA SE OF AN INDUSTRIAL UNDERTAKING CLAIMING BENEFIT U/S 8 0IC IT CANNOT BE CHANGED EVEN IF THE SAME UNDERTAKING COMPLETES SUBSTANTIAL EXPANSION WHICH IS UNJUSTIFIE D AS IT IS CLEARLY MENTIONED U/S 80IC(8)(V) OF THE I.T. ACT, 1961 THAT INITIAL ASSESSMENT YEAR MEANS THE ASSESSM ENT YEAR IN WHICH THE UNDERTAKING COMPLETES THE SUBSTANTIAL EXPANSION AS DONE BY THE APPELLANT IN A Y 2011-12 AND THERE CAN BE MORE THAN ONE INITIAL ASSESSMENT YEARS AS HELD BY THE HON'BLE DELHI TRIBUNAL IN THE CASE OF M/S TIRUPATI LPG INDUSTRIES LTD. VS. DCIT (151 ITD 1). 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH IS UNJUSTIFIED IN UPHOLDING T HE INTERPRETATION OF SECTION 80IC BY THE LD. ASSESSING OFFICER AS IT DOES NOT ADVANCE THE BASIC OBJECT OF THE ACT AND IS AGAINST THE BASIC LEGISLATIVE INTENT TO PROMOTE INDUSTRY IN BACKWARD AREAS. SUCH INCENTIVE BASED SECTIONS SHOULD BE CONSTRUED LIBERALLY AND WH ERE THERE ARE TWO POSSIBLE VIEWS THE ONE IN FAVOR OF TH E ASSESSEE SHOULD BE TAKEN AS HELD BY THE HON'BLE APE X 3 COURT IN THE CASE OF M/S GWALIOR RAYON SILK MANF. C O. PVT. LTD. (196 ITR 149) AND M/S BAJAJ TEMPO (196 IT R 188). 3. DURING THE COURSE OF HEARING BEFORE US, IT WAS B ROUGHT TO OUR NOTICE THAT THE ORDER OF THE ITAT IN THE CAS E OF HYCRON ELECTRONICS (SUPRA) HAD BEEN DECIDED IN APP EAL BY THE HONBLE HIMACHAL PRADESH HIGH COURT VIDE THEIR ORDER DT. 28 NOVEMBER 2017 IN THE GROUP OF CASES WITH THE LEAD CASE TITLED AS M/S STOVEKRAFT INDIA VS. COMMISSIONE R OF INCOME TAX, ITA NO.20 OF 2015, AND IT WAS POINTED OUT THAT THE HONBLE HIGH COURT HAD DECIDED THE ISSUE IN FAV OUR OF THE ASSESSEE, HOLDING THAT THERE IS NO BAR IN THE SAID SECTION DENYING THE BENEFIT OF HUNDRED PERCENT DED UCTION TO NEW UNITS UNDERTAKING SUBSTANTIAL EXPANSION. OUR ATTENTION WAS DRAWN TO THE RELEVANT CONCLUSIONS OF THE HONBLE HIGH COURT IN THIS REGARD AT PARA 55 OF THE ORDER AS UNDER: 55.THUS, IN VIEW OF THE ABOVE DISCUSSION, THESE APPEALS ARE ALLOWED AND ORDERS PASSED BY THE ASSESSMENT OFFICER AS WELL AS THE APPELLATE AUTHORITY AND THE TRIBUNAL, IN THE CASE OF EACH ONE OF THE ASSESSES, ARE QUASHED AND SET ASIDE, HOLDING AS UNDER: (A) SUCH OF THOSE UNDERTAKINGS OR ENTERPRISES WHICH WERE ESTABLISHED, BECAME OPERATIONAL AND FUNCTIONAL PRIOR TO 7.1.2003 AND HAVE UNDERTAKEN SUBSTANTIAL EXPANSION BETWEEN 7.1.2003 UPTO 1.4.2012, SHOULD BE ENTITLED TO BENEFIT OF SECTION 80-IC OF THE ACT, FOR THE PERIOD FOR WHICH THEY WER E 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 DIFFERE NT RATES OF PERCENTAGE STIPULATED UNDER SECTION 80-IC. 4 (C) SUBSTANTIAL EXPANSION CANNOT BE CONFINED TO ONE EXPANSION. AS LONG AS REQUIREMENT OF SECTION 80-IC(8)(IX) IS MET, THERE CAN BE NUMBER OF MULTIPL E SUBSTANTIAL EXPANSIONS. (D) CORRESPONDINGLY, THERE CAN BE MORE THAN ONE INITIAL ASSESSMENT YEARS. (E) WITHIN THE WINDOW PERIOD OF 7.1.2013 UPTO 1.4.2012, 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 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 CHAPTER VI-A OR SECTION 10A OR 10B OF THE ACT [SECTION 80- IB(5)]. 4. NO ONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEV ER, LD. DR FAIRLY ADMITTED THAT THE ISSUE IS SQUARELY C OVERED BY THE ABOVE DECISION OF THE HON'BLE JURISDICTIONAL HI GH COURT. SHE, HOWEVER, HAS SUBMITTED THAT THE ISSUE BE RESTO RED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AS TO WHETHER THE ASSESSEE HAS ACTUALLY CARRIED OUT THE SUBSTANTIAL EXPANSION TO BE ENTITLED TO CLAIM DEDUC TION U/S 80IC OF THE ACT. 5. WE DO NOT AGREE TO THE ABOVE CONTENTION RAISED B Y THE REVENUE AT THIS STAGE. A PERUSAL OF THE ORDER OF TH E ASSESSING OFFICER REVEALS THAT THE ASSESSING OFFICE R HAS NOT DISPUTED THAT THE ASSESSEE UNIT HAS CARRIED OUT SUB STANTIAL EXPANSION AS PROVIDED UNDER CLAUSE (B) OF SUB SECTI ON (2) READ WITH CLAUSE (IX) OF SUB SECTION (7) OF SECTION 80IC OF THE ACT. ALMOST SIMILAR VIEW HAS ALSO BEEN TAKEN BY THE HON'BLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF M/S 5 STOVEKRAFT INDIA VS. COMMISSIONER OF INCOME TAX (S UPRA) IN THE FOLLOWING CONCLUDING PARA OF THE ORDER:- 58. ON FACTS, WE MAY CLARIFY THAT THE REVENUE HAS NOT DISPUTED, (A) THE UNITS HAVING CARRIED OUT SUBSTANTIAL EXPANSION WITHIN THE DEFINITION OF THE SECTION, (B) THEIR ENTITLEMENT AND EXTENT OF DEDUCTION WOULD BE DEPENDENT UPON INTERPRETATION OF THE RELEVANT PROVISIONS. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION AT THI S STAGE TO GIVE THE ASSESSING OFFICER A SECOND INNINGS TO RE-E XAMINE UNDISPUTED FACTS. 6. IN VIEW OF THE ABOVE DISCUSSION, THE ORDER OF TH E CIT(A) IS SET ASIDE AND THE AO IS DIRECTED TO GRANT THE AS SESSEE DEDUCTION OF HUNDRED PERCENT OF ITS ELIGIBLE PROFIT S, AS PER THE RULING OF THE JURISDICTIONAL HIGH COURT IN THIS REGARD IN THE CASE OF M/S STOVEKRAFT INDIA VS. COMMISSIONER OF INCOME TAX (SUPRA). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE, THERE FORE, STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT SD/- SD/- (ANAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 19 TH DECEMBER, 2017 *RKK* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 6