M/s Shree Dhanwantri Herbles, Baddi V. DCIT, Circle, Parwanoo

ITA 1169/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6567 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 24-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SIGH
• Assessee Lawyers: PUNEET GUPTA
• 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.1169/CHD/2017 (ASSESSMENT YEAR : 2013-14) M/S SHREE DHANWANTRI HERBLES, VS. THE D.C.I.T., VILL. KISHANPURA, P.O. GURUWALA, CIRCLE- PARWANOO. BADDI, DISTT.SOLAN, H.P. H.P. PAN: AAZFS3118E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PUNEET GUPTA, CA RESPONDENT BY : SHRI MANJIT SIGH, SR.DR DATE OF HEARING : 04.12.2017 DATE OF PRONOUNCEMENT : 14.12.2017 ORDER PER ANNAPURNA GUPTA, A.M.: 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 20.5.2017 RELATING TO ASSESSMENT YEAR 2013-14. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: 1. THE LD. CIT(A) IS WRONG IN DISALLOWING THE BENE FIT 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. 2. IN VIEW OF ABOVE & SUCH OTHER GROUNDS, WHICH MAY BE TAKEN AT THE TIME OF HEARING THE APPEAL MAY PLEASE BE ALLOWED & JUSTICE RENDERED. 3. THE ONLY ISSUE IN THE PRESENT APPEAL PERTAINS TO RESTRICTION OF DEDUCTION UNDER SECTION 80 IC TO 25% OF THE ELIGIBLE PROFITS AS AGAINST 100% CLAIMED BY THE ASS ESSEE ON THE BASIS OF SUBSTANTIAL EXPANSION UNDERTAKEN BY IT . THE 2 ASSESSING OFFICER RESTRICTED THE DEDUCTION TO 25% A ND THE CIT( APPEALS) UPHELD THE ORDER OF THE ASSESSING OFF ICER FOLLOWING THE DECISION OF THE CHANDIGARH BENCH OF T HE ITAT IN THE CASE OF HYCRON ELECTRONICS VS ITO (ITA. NO. 798/CHD/2012), WHEREIN IT WAS HELD THAT THE BENEFIT OF SUBSTANTIAL EXPANSION IS APPLICABLE TO UNITS WHICH WERE IN EXISTENCE AT THE TIME OF ANNOUNCEMENT OF THE SCHEME I.E. 7 TH JANUARY 2003, AND NOT TO NEW UNITS WHICH CAME INTO EXISTENCE THEREAFTER. SINCE THE ASSESSEE UNIT COMME NCED OPERATION/ACTIVITY ON 25.7.2005 I.E. AFTER THE ANNO UNCEMENT OF THE SCHEME, FOLLOWING THE PROPOSITION LAID DOWN IN HYCRON ELECTRONICS (SUPRA), THE DEDUCTION UNDER SEC TION 80 IC WAS RESTRICTED TO 25% OF THE ELIGIBLE PROFITS. 4. DURING THE COURSE OF HEARING BEFORE US, IT WAS B ROUGHT TO OUR NOTICE THAT IDENTICAL DISALLOWANCE MADE IN T HE PRECEDINGP YEAR IN THE CASE OF THE ASSESSEE WHICH H AD BEEN UPHELD BY THE I.T.A.T. FOLLOWING ITS DECISION IN TH E CASE 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 3 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. (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 7.1.20013 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)]. 5. LD.DR FAIRLY ADMITTED TO THE ABOVE FACTS. IN VIE W OF THE SAME, WE SEE NO REASON TO UPHOLD THE ORDER LD. CIT (APPEALS) AND THE SAME IS SET ASIDE AND THE AO IS D IRECTED TO GRANT THE ASSESSEE DEDUCTION OF HUNDRED PERCENT OF ITS 4 ELIGIBLE PROFITS, AS PER THE RULING OF THE JURISDI CTIONAL HIGH COURT IN THIS REGARD IN THE CASE OF STOVEKRAFT INDI A (SUPRA). 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE, THERE FORE, STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/12/2017. SD/- SD/- ( SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 14 TH DECEMBER, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH