Sh. Rakesh Verma, Parwanoo V. DCIT, Parwanoo

ITA 1240/CHANDI/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8442 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 30-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1240 /CHD/2016 (ASSESSMENT YEAR : 2012-13) SH.RAKESH VERMA, VS. THE D.C.I.T., PLOT NO.41, SECTOR-5, CIRCLE PARWANOO, H.P. PARWANOO (H.P.). PAN: AADPV5591N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANOJ KUMAR RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 24.01.2017 DATE OF PRONOUNCEMENT : 28.02.2017 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 (AP PEALS) SHIMLA DATED 26.09.2016. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT (A) IS WRONG IN DISALLOWING THE BENEFIT OF SUBSTANTIAL EXPANSION U/S 80IC(2) IN CONFIRMING THE DEDUCTION U/S 80 IC ONLY TO THE EXTENT OF 25% AS AGAINST 100% BY HOLDING THAT BENEFIT OF SUBSTANTIAL EXPANSION IS ALLOWABLE ONLY TO THE UNDERTAKINGS WHICH WERE EXISTING AS ON 07.01.2003. 2 2. THE ONLY ISSUE IN THE PRESENT APPEAL RELATES TO RESTRICTION OF DEDUCTION CLAIMED UNDER SECTION 80IC BY THE ASSESSEE AT THE RATE OF HUNDRED PERCENT OF THE PROF ITS TO 25%. 3. BRIEF FACTS RELATING TO THE CASE ARE THAT THE ASSESSEE CONCERN STARTED ITS MANUFACTURING ACTIVITY/OPERATION ON 24.04.2004 AND INITIAL ASSESS MENT YEAR FOR CLAIM OF DEDUCTION U/S 80 IC OF THE ACT WA S A. Y. 200506. THE ASSESSEE HAD ALREADY CLAIMED DEDUCTIO N U/S 80IC TO THE EXTENT OF HUNDRED PERCENT OF THE EL IGIBLE PROFIT FOR 5 YEARS PERIOD STARTING FROM A.Y. 20052 006 TO A.Y. 200910. THE ASSESSING OFFICER NOTICED THAT T HE ASSESSEE FIRM HAD AGAIN CLAIMED HUNDRED PERCENT DEDUCTION OF ITS ELIGIBLE PROFITS IN THE RELEVANT A SSESSMENT YEAR 201213 WHICH WAS THE 8 TH YEAR OF PRODUCTION FOR THE FIRM, BY CLAIMING TO HAVE CARRIED OUT SUBSTANTIAL EXPANSION IN A.Y. 200910. THE ASSESSING OFFICER, F OR DETAILED REASONS MENTIONED IN THE ASSESSMENT ORDER, HELD THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80 IC ONLY AT THE RATE OF 25% AS AGAINST THE CLAIM OF HUNDRED PERCENT MADE BY THE ASSESSEE AND DISALLOWED THE EXCESS DEDU CTION CLAIMED AMOUNTING TO RS.63,83,435/-. 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT (APPEALS) WHO DISMISSED THE ASSESSEES APPEAL, RESTRICTING THE CLAIM OF DEDUCTION OF THE ASSESSEE U/S 80IC TO 25% OF THE ELIGIBLE PROFITS, RELYING UPON THE JU DGEMENT OF THE CHANDIGARH BENCH OF THE ITAT IN THE CASE OF M/S 3 HYCRON ELECTRONICS VS. ITO IN ITA NO. 798/CHD/2012 AND OTHER RELATED CASES. 5. AGGRIEVED BY THE SAME THE ASSESSEE HAS COME UP IN APPEAL BEFORE US. 6. DURING THE COURSE OF HEARING BEFORE US LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THE I SSUE WAS COVERED AGAINST IT BY THE DECISION OF THE ITAT CHANDIGARH BENCH IN THE CASE OF M/S HYCRON ELECTRON ICS LIMITED (SUPRA). 7. IN VIEW OF THE SAME WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LD. CIT (APPEALS). T HE LD CIT(A) HAS CORRECTLY APPLIED THE DECISION RENDERED BY THE ITAT, CHANDIGARH BENCH, IN THE CASE OF M/S HYCRON ELECTRONICS (SUPRA), WHEREIN IT HAS BEEN CATEGORICA LLY HELD THAT ELIGIBLE UNDERTAKINGS FOR THE PURPOSE OF DEDUC TION U/S 80IC, WHICH CAME INTO EXISTENCE AFTER THE SECTI ON WAS BROUGHT ON THE STATUTE BY THE FINANCE ACT, 2003, I .E. 01.4.2004, AND WHICH HAVE CLAIMED 100% DEDUCTION OF PROFITS FOR THE PERIOD OF FIVE YEARS FROM THE YEAR IN WHICH IT COMMENCED OPERATIONS ,SHALL NOT BE ENTITLED TO C LAIM DEDUCTION @ 100% OF THEIR PROFITS ON UNDERTAKING SUBSTANTIAL EXPANSION THEREAFTER. THE ITAT HAS CATEGORICALLY HELD THAT THERE CAN BE ONLY ONE INITI AL ASSESSMENT YEAR FOR THE PURPOSE OF CLAIMING DEDUCTI ON U/S 80IC. SINCE AS PER THE FACTS OF THE PRESENT CASE TH E ASSESSEE UNDERTAKING CAME INTO EXISTENCE AFTER 4 01.04.2004, I.E. ON 24.04.2004, AND UNDISPUTEDLY HA S CLAIMED DEDUCTION OF 100% OF ITS PROFITS FOR FIVE Y EARS TAKING A.Y. 2005-06 AS ITS INITIAL ASSESSMENT YEAR, APPLYING THE DECISION IN THE CASE OF M/S HYCRON ELECTRONICS (SUPRA), THE ASSESSEE IS NOT ENTITLED T O CLAIM DEDUCTION OF 100% OF ITS PROFITS IN THE IMPUGNED YE AR ON ACCOUNT OF HAVING UNDERTAKEN SUBSTANTIAL EXPANSION IN F.Y. 2009-10. WE THEREFORE UPHOLD THE ORDER OF THE LD.CIT(A) REJECTING THE ASSESSEES CLAIM FOR 100% DEDUCTION OF ITS PROFITS U/S 80IC AND RESTRICTING T HE SAME @ 25% OF THE ELIGIBLE PROFITS. 8. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSED. 9. IN EFFECT THE APPEAL OF THE ASSESSEE STANDS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (C.M. GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH FEBRUARY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH