M/s Sun Fly Appliances, Parwanoo V. CIT, Parwanoo

ITA 1260/CHANDI/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8443 (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: 01-12-2016
• 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.1260 /CHD/2016 (ASSESSMENT YEAR : 2012-13) M/S SUN FLY APPLIANCES, VS. THE D.C.I.T., VILL.NARYAL, SECTOR-4, CIRCLE PARWANOO, H.P. PARWANOO (H.P.). PAN: ABKPS9140C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANOJ KUMAR RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 25.01.2017 DATE OF PRONOUNCEMENT : 28.02.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA, DATED 30.09.2016. 2. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUND OF APPEAL: 1. THE LD. CIT (A) IS WRONG IN DISALLOWING THE BENEFIT OF SUBSTANTIAL EXPANSION U/S 80 IC (2) AND 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 2 UNDERTAKING WHICH WERE EXISTING AS ON 07. 01. 2003. 3. THE ONLY ISSUE IN THE PRESENT APPEAL PERTAINS T O RESTRICTION OF DEDUCTION, CLAIMED UNDER SECTION 80I C AT THE RATE OF 100% ON ACCOUNT OF SUBSTANTIAL EXPANSIO N UNDERTAKEN, TO 25% OF THE PROFITS. 4. BRIEF FACTS RELEVANT TO THE CASE ARE THAT THE ASSESSEE STARTED ITS MANUFACTURING ACTIVITY/OPERATI ON ON 14.09.2006 AND INITIAL ASSESSMENT YEAR FOR CLAIM OF DEDUCTION U/S 80IC OF THE ACT WAS A.Y. 200708. THE ASSESSEE CLAIMED DEDUCTION U/S 80 IC TO THE EXTENT OF 100% OF THE ELIGIBLE PROFITS FOR 5 YEARS PERIOD STA RTING FROM A.Y.200708 TO A.Y. 201112. DURING ASSESSMENT PROCEEDINGS FOR THE IMPUGNED YEAR THE AO NOTICED TH AT THE ASSESSEE FIRM HAD AGAIN CLAIMED HUNDRED PERCENT DEDUCTION OF ITS ELIGIBLE PROFITS ON ACCOUNT OF HA VING CARRIED OUT SUBSTANTIAL EXPANSION IN F.Y. 2011 12 . THE ASSESSING OFFICER, FOR DETAILED REASONS MENTIONED I N THE ASSESSMENT ORDER ,HELD THAT THE ASSESSEE WAS ELIGIB LE FOR DEDUCTION U/S 80IC ONLY AT THE RATE OF 25% AS AGAIN ST THE CLAIM OF 100% MADE BY THE ASSESSEE. 5. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(APPEAL) WHO DISMISSED THE ASSESSEES APPEAL AND RESTRICTED THE DEDUCTION CLAIMED TO 25% OF THE PROF ITS, RELYING UPON THE JUDGEMENT OF THE CHANDIGARH BENCH OF 3 THE ITAT IN THE CASE OF M/S HYCRON ELECTRONICS VS I TO IN ITA NO. 798/CHD/2012 AND OTHER RELATED CASES. 6. AGGRIEVED BY THE SAME THE ASSESSEE HAS NOW COME UP IN APPEAL BEFORE US. 7. DURING THE COURSE OF HEARING BEFORE US, IT WAS FAIRLY CONCEDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE WAS COVERED AGAINST IT BY THE DECISION OF THE CHANDIGARH BENCH OF THE ITAT, IN THE CASE OF M/S HY CRON ELECTRONICS VS ITO IN ITA NO. 798/CHD/2012 AND OTHE R RELATED CASES. 8. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW. FACTS EMERGIN G IN THE PRESENT CASE AND WHICH ARE RELEVANT FOR ADJUDICATIN G THE ISSUE AT HAND ARE THAT THE ASSESSEE CAME INTO EXIS TENCE AND COMMENCED ITS MANUFACTURING ACTIVITY/OPERATION ON 14.09.2006, WAS ELIGIBLE TO CLAIM DEDUCTION OF 100% OF ITS PROFITS U/S 80IC OF THE INCOME TAX ACT,1961, AND HA D CLAIMED THE SAME FOR FIVE YEARS FROM A.Y 2007-08 TO A.Y 2011-12. FURTHER IT IS NOT DISPUTED THAT THE ASSESS EE UNDERTOOK SUBSTANTIAL EXPANSION OF ITS UNDERTAKING IN F.Y. 2011-12 AND ON ACCOUNT OF THE SAME CLAIMED DEDUCTI ON AGAIN @ 100% OF ITS ELIGIBLE PROFITS WHICH HAS BEEN DENIED TO IT, RESTRICTING THE SAME TO 25% OF THE PROFITS , WHICH HAS BEEN CHALLENGED BEFORE US. 4 9. WE HAVE GONE THROUGH THE ORDER OF THE LD CIT(A) AND FIND NO INFIRMITY IN THE SAME. AS CONCEDED BY T HE LD COUNSEL FOR THE ASSESSEE, THE ISSUE OF QUANTUM OF DEDUCTION AVAILABLE TO NEW UNDERTAKINGS WHICH CAME INTO EXISTENCE AFTER 01.07.2003, AND WHICH HAVE ALREADY CLAIMED DEDUCTION OF 100% OF THEIR ELIGIBLE PROFITS FOR THE STATUTORILY SPECIFIED PERIOD OF FIVE YEARS, ON SUBS TANTIAL EXPANSION OF THE SAID UNDERTAKING, HAS BEEN DEALT W ITH BY THE ITAT CHANDIGARH BENCH IN THE CASE OF M/S HYCRON ELECTRONICS (SUPRA).THE HONBLE BENCH IN THE SAID O RDER, AFTER DEEPLY ANALYZING THE PROVISIONS OF SECTION 80 IC ,HAS CATEGORICALLY HELD THAT THE BENEFIT OF CLAIMING 10 0% DEDUCTION OF PROFITS ON UNDERTAKING SUBSTANTIAL EXP ANSION IS NOT AVAILABLE TO NEW UNDERTAKINGS SET UP AFTER 01.07.2003. IT HAS BEEN CATEGORICALLY HELD BY THE ITAT THAT THERE CAN BE ONLY ONE INITIAL ASSESSMENT YEAR FOR THE PURPOSE OF CLAIMING DEDUCTION @ 100% OF PROFITS U/S 80IC OF THE ACT. IT HAS ALSO BEEN HELD THAT AS PER SEC TION 80IC, ELIGIBLE UNDERTAKINGS SET UP IN SPECIFIED AR EAS OF THE STATE OF HIMACHAL PRADESH ARE NOT ENTITLED TO C LAIM DEDUCTION @ 100% OF THE PROFITS BEYOND A PERIOD OF FIVE YEARS. 10. THE LD CIT(A) ,WE FIND HAS CORRECTLY APPRECIAT ED THE FACTS OF THE PRESENT CASE AND APPLIED THE AFOR ESAID DECISION OF THE ITAT TO RESTRICT THE DEDUCTION CLAI MED BY THE ASSESSEE U/S 80IC @ 25% OF THE PROFITS, SINCE UNDISPUTEDLY THE ASSESSEE COMMENCED BUSINESS OPERAT IONS 5 AFTER 01.07.2003, I.E. ON 14.09.2006 AND HAD ALREAD Y CLAIMED DEDUCTION OF 100% OF ITS PROFITS FOR FIVE Y EARS FROM A.Y 2007-08 TO A.Y 2011-12. THE LD CIT(A) HAS CORRECTLY HELD THAT THE ASSESSEE WAS NOT ENTITLED T O CLAIM DEDUCTION @ 100% OF ITS PROFITS IN THE IMPUGNED YEA R ON ACCOUNT OF HAVING UNDERTAKEN SUBSTANTIAL EXPANSION IN F.Y 2011-12 IN VIEW OF THE DECISION OF THE ITAT IN THE CASE OF M/S HYCRON ELECTRONICS (SUPRA). 11. IN VIEW OF THE SAME WE FIND NO MERIT IN THE GROUND OF APPEAL RAISED BY THE ASSESSEE AND THE SAM E IS THEREFORE DISMISSED. 12. THE APPEAL OF THE ASSESSEE, THEREFORE, 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