Nirmal Singal, Chandigarh V. ACIT, C-2(1), Chandigarh

ITA 1245/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6563 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 18-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SIGH
• 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.1245/CHD/2017 (ASSESSMENT YEAR : 2013-14) NIRMAL SINGAL PROP M/S K.N. VS. THE A.C.I.T., PAPER & PACKAGES, PLOT NO.213, CIRCLE 2(1), INDUSTRIAL AREA, PHASE-1, CHANDIGARH. CHANDIGARH. PAN: ABZPS5610E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RACHIT GOYAL, CA RESPONDENT BY : SHRI MANJIT SIGH, SR.DR DATE OF HEARING : 12.12.2017 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 )-1, GURGAON [HEREINAFTER REFERRED TO AS CIT(APPEALS)] DATED 22.5.2017 RELATING TO ASSESSMENT YEAR 2013-14. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: 1. THE IMPUGNED ORDER IN THE CASE CITED AS SUBJECT IS A GAINST THE FACTS AND LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE CIT (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER OF ALLOWING DEDUCTION U/S 801C OF INCOME TAX ACT, 1961 @ 25% INSTEAD OF 100% AS CLAIMED BY THE ASSESSEE. 3. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN CONFIRM ING THE ACTION OF ASSESSING OFFICER OF ALLOWING DEDUCTION U/S 801C OF RS.7,67,906/- INSTEAD OF RS.30,71,626/- AS CLA IMED BY THE ASSESSEE. 4. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, T HE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 801C OF INCOM E 2 TAX ACT, 1961 @ 100% OF PROFIT DERIVED FROM THE INDUSTRIAL UNDERTAKING AND THE CIT(A) AND THE ASSESSING OFFICER HAS ERRED IN RESTRICTING THE DEDU CTION TO 25%. THE ALLEGED REASONS GIVING BY THE A.O. AND CIT(A) FOR RESTRICTING THE DEDUCTION TO 25% ARE ERRONEOUS. 5. THE CIT (APPEALS) HAS ERRED BY INITIATING THE PENALT Y U/S 271(L)(C) OF RS.4,77,940/- WITHOUT APPRECIATING T HE FACTS IN TRUE AND FAIR PERSPECTIVE AS APPLICABLE IN THIS CASE. 6. THE APPELLANT CRAVES LEAVE TO ADD ONE OR MORE GROUN D OF APPEAL OR TO ALTER / MODIFY THE EXISTING GROUND BEF ORE OR AT THE TIME OF HEARING OF APPEAL. 3. THE ONLY ISSUE IN THE PRESENT APPEAL PERTAINS TO RESTRICTION OF DEDUCTION UNDER SECTION 80 IC OF THE INCOME TAX ACT, 1961, TO 25% OF THE ELIGIBLE PROFITS AS AG AINST 100% CLAIMED BY THE ASSESSEE ON THE BASIS OF SUBSTA NTIAL EXPANSION UNDERTAKEN BY IT. THE AO RESTRICTED THE DEDUCTION TO 25% AND THE CIT( APPEALS) UPHELD THE O RDER OF THE AO FOLLOWING THE DECISION OF THE CHANDIGARH BEN CH OF THE 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 04.05.2007 I.E. AFTER THE ANNOUNCEMENT OF THE SCHEME, FOLLOWING THE PROPOSITI ON LAID DOWN IN HYCRON ELECTRONICS (SUPRA), THE DEDUCTION U NDER SECTION 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 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 3 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 SSESSES, 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. 4 (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 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 5