Sh. Sanjay Bhasin, Baddi V. ACIT, Circle, Shimla

ITA 1555/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9909 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 10-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: D N VAIDYA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH SMC CHANDIGARH , ! BEFORE: SMT. DIVA SINGH, JM ./ ITA NO. 1555 TO 1558/CHD/2018 !' # $# / ASSESSMENT YEAR : 2012-13 TO 2015-16 SHRI SANJAY BHASIN, PROP. M/S PRAKASH INDUSTRIES, PRAKASH HITACH IND. PLOT-106, INDUSTRIAL AREA, BADDI. VS THE ACIT, CIRCLE, SHIMLA (HP). ./PAN NO: ABEPB7839D /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI D.N.VAIDYA / REVENUE BY : SHRI MANJIT SINGH, CIT-DR /DATE OF HEARING : 28.05.2019 !'#$%& /DATE OF PRONOUNCEMENT : 31.05.2019 %&/ ORDER BY THESE FOUR APPEALS FILED BY THE ASSESSEE, THE C ORRECTNESS OF THE CONSOLIDATED ORDER DATED 27.10.2018 OF CIT(A), SHIMLA PERTAINING TO 20 12-13, 2013-14, 2014-15 AND 2015-16 ASSESSMENT YEAR IS ASSAILED. IN ALL THESE APPEALS, THE ASSESSEE HAS RAISED AN IDENTICAL GROUND. IN VIEW THEREOF, THE PARTIES ADVANCED THEIR ARGUMENTS ADDRESSING THE FACTS AS AVAILABLE IN ITA 1555/CHD/2018 AS THE FACTS, CIRCUMSTANCES AND POSIT ION OF LAW ON THE IDENTICAL GROUND IN THE REMAINING APPEALS REMAINS THE SAME. 2. THE LD. AR RELYING ON THE DECISION OF APEX COURT IN PCIT SHIMLA VS M/S AARHAM SOFTRONICS & OTHERS IN CIVIL APPEAL NO. 1784 OF 201 9 DATED 20.02.2019 SUBMITTED THAT THE CLAIM OF THE ASSESSEE FOR THE FOUR YEARS U/S 80IC OF THE ACT DESERVES TO BE ALLOWED. INVITING ATTENTION TO THE ASSESSMENT ORDER PAGE 1 AND 2, IT WAS HIS SU BMISSION THAT THE ASSESSEE HAD CARRIED OUT SUBSTANTIAL EXPANSION IN 2011-12 ASSESSMENT YEAR A ND ACCORDINGLY ON THE SAID BASIS FOR THE MANUFACTURING ACTIVITY, THE ASSESSEE HAD CLAIMED DE DUCTION @ 100% OF ELIGIBLE PROFITS. THE AO REDUCED THE SAME RELYING UPON THE DECISION OF THE I TAT IN THE CASE OF HYCRON ELECTRONICS V ITO IN ITA 798/CHD/2012 DATED 27.05.2015. THE CIT(A ) CONFIRMED THE REDUCTION OF ASSESSEE'S CLAIM BY THE CONSOLIDATED ORDER RELYING UPON THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS ITA-1555 TO 1558/CHD/20178 A.Y. 2012-13 TO 2015-16 PAGE 2 OF 4 M/S CLASSIC BINDING INDUSTRIES & ORS. IN CIVIL APPE AL NO. 7208 AND OTHERS OF 2018 DATED 20.08.2018. THE LD. AR PLACING RELIANCE ON THE DEC ISION OF THE APEX COURT IN THE CASE OF M/S AARHAM SOFTRONICS & OTHERS (SUPRA) SUBMITTED TH AT THE CLAIM OF THE ASSESSEE WAS ALLOWABLE AS PER THE LATEST SETTLED LEGAL POSITION AS PREVALE NT NOW. 3. THE LD. CIT-DR MR. MANJIT SINGH CONSIDERING THE FACTS SUBMITTED THAT THE FACTUM OF SUBSTANTIAL EXPANSION IS NOT DISPUTED, HOWEVER THE CLAIM WAS REDUCED CONSIDERING THE POSITION AS AVAILABLE IN THE CASE OF CIT VS M/S CLASSIC BINDING INDUSTRIES & ORS (SUPRA). IT WAS AGREED THAT IN THE DECISION RENDERED IN THE CASE OF M/S AA RHAM SOFTRONICS & OTHERS (SUPRA), THE VIEW FAVOURING THE ASSESSEE HAS BEEN TAKEN. ACCORDINGLY , NO FURTHER ARGUMENT WAS ADVANCED. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT THE ASSESSEE IN THE YEAR UNDER CONSIDERATION C LAIMED SUBSTANTIAL EXPANSION HAVING BEEN CARRIED OUT IN 2011-12 ASSESSMENT YEAR. SINCE 80IC DEDUCTION @ 100% OF ELIGIBLE PROFITS FOR A PERIOD OF FIVE YEARS ALREADY STOOD ALLOWED TO THE A SSESSEE IN 2006-07 TO 2010-11 ASSESSMENT YEARS, THE AO AND THE CIT(A) CONSIDERING THAT IN TH E 2012-13 ASSESSMENT YEAR, IT IS SEVENTH YEAR OF DEDUCTION AND THE REMAINING YEARS BEING 8 TH 9 TH AND 10 TH YEARS, RELYING UPON THE DECISION OF THE ITAT IN THE CASE OF HYCRON ELECTRONICS V ITO AN D THE APEX COURT IN THE CASE OF CIT VS M/S CLASSIC BINDING INDUSTRIES & ORS (SUPRA) RESPEC TIVELY CONFIRMED THE VIEW TAKEN BY THE AO WHEREBY ELIGIBLE DEDUCTION U/S 80IC STOOD REDUCE D TO 25% AS AGAINST CLAIM OF 100%. IT IS SEEN THAT THE ISSUE OF INITIAL ASSESSMENT YEA R IN THE CONTEXT OF SUBSTANTIAL EXPANSION HAS BEEN EXAMINED IN DETAIL BY THE APEX COURT IN TH E AFORESAID DECISION NAMELY M/S AARHAM SOFTRONICS & OTHERS (SUPRA) WHEREIN THE VIEW TAKEN IN M/S CLASSIC BINDING WAS MODIFIED. IT IS A MATTER OF FACT THAT THE COURT IN VERY CATEGORIC TERMS ADDRESSED THE LEGAL POSITION IN THE FOLLOWING MANNER : 22. IT WOULD BE PERTINENT TO POINT OUT THAT IN PAR A 20 OF THE JUDGMENT IN CLASSIC BINDING INDUSTRIES, THIS COURT OBSERVED THAT IF DED UCTION @ 100% FOR THE ENTIRE PERIOD OF 10 YEARS, IT WOULD BE DOING VIOLENCE TO T HE LANGUAGE OF SUB-SECTION (6) OF SECTION 80-IC. HOWEVER, THIS OBSERVATION CAME WITH OUT NOTICING THE DEFINITION OF INITIAL ASSESSMENT YEAR CONTAINED IN THE SAME VER Y PROVISION. 23. HAVING EXAMINED THE MATTER IN THE AFORESAID PERSPECTIVE, JUDGMENT IN THE CASE OF MAHABIR INDUSTRIES V. PRINCIPAL COMMISSIONER OF INCOME TAX WOULD, IN FACT, HELP THE ASSESSEE. THE FINE DISTINCTION POINTED OUT IN C LASSIC BINDING INDUSTRIES ELOPES THEREBY. TO RECAPITULATE, IN MAHABIR INDUSTRIES, IT WAS HELD THAT IF AN ASSESSEE GET 100% 2 CIVIL APPEAL NOS. 4765-4766 OF 2018 DECIDED ON MA Y 18, 2018 24 EXEMPTION UNDER SECTION 80-IB OF THE ACT FOR FIVE YEARS AND T HEREAFTER CARRIES OUT THE SUBSTANTIAL EXPANSION BECAUSE OF WHICH SAID ASSESSEE BECOMES EN TITLED TO EXEMPTION UNDER THE NEW PROVISION I.E. SECTION 80-IC OF THE ACT, THE AS SESSEE WOULD BE ENTITLED TO ITA-1555 TO 1558/CHD/20178 A.Y. 2012-13 TO 2015-16 PAGE 3 OF 4 DEDUCTION @ 100% EVEN AFTER FIVE YEARS. THIS RULING WAS PREDICATED ON THE GROUND THAT THERE CAN BE TWO INITIAL ASSESSMENT YEARS, ONE FOR THE PURPOSE OF SECTION 80-IB AND OTHER FOR THE PURPOSES OF SECTION 80-IC OF THE ACT. ONCE WE FIND THAT THERE CAN BE TWO INITIAL ASSESSMENT YEARS, EVEN AS PER THE DEFIN ITION THEREOF IN SECTION 80-IC ITSELF, THE LEGAL POSITION COMES AT PAR WITH THE ONE WHICH WAS DISCUSSED IN MAHABIR INDUSTRIES. 24. THE AFORESAID DISCUSSION LEADS US TO THE FOL LOWING CONCLUSIONS: (A) JUDGMENT DATED 20TH AUGUST, 2018 IN CLASSIC BIN DING INDUSTRIES CASE OMITTED TO TAKE NOTE OF THE DEFINITION INITIAL ASSESSMENT YEA R CONTAINED IN SECTION 80-IC ITSELF AND INSTEAD BASED ITS CONCLUSION ON THE DEFINITION CONTAINED IN SECTION 80-IB, WHICH DOES NOT APPLY IN THESE CASES. THE DEFINITIONS OF INITIAL ASSESSMENT YEAR IN THE TWO SECTIONS, VIZ. SECTIONS 80-IB AND 80-IC ARE MATERIA LLY DIFFERENT. THE DEFINITION OF INITIAL ASSESSMENT YEAR UNDER SECTION 80-IC HAS M ADE ALL THE DIFFERENCE. THEREFORE, WE ARE OF THE OPINION THAT THE AFORESAID JUDGMENT D OES NOT LAY DOWN THE CORRECT LAW. (B) AN UNDERTAKING OR AN ENTERPRISE WHICH HAD SET U P A NEW UNIT BETWEEN 7TH JANUARY, 2003 AND 1ST APRIL, 2012 IN STATE OF HIMAC HAL 25 PRADESH OF THE NATURE MENTIONED IN CLAUSE (II) OF SUB-SECTION (2) OF SECT ION 80-IC, WOULD BE ENTITLED TO DEDUCTION AT THE RATE OF 100% OF THE PROFITS AND GA INS FOR FIVE ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR. FOR THE NEXT FIVE YEARS, THE ADMISSIBLE DEDUCTION WOULD BE 25% (OR 30% WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS. (C) HOWEVER, IN CASE SUBSTANTIAL EXPANSION IS CARRI ED OUT AS DEFINED IN CLAUSE (IX) OF SUB-SECTION (8) OF SECTION 80-IC BY SUCH AN UNDERTA KING OR ENTERPRISE, WITHIN THE AFORESAID PERIOD OF 10 YEARS, THE SAID PREVIOUS YEA R IN WHICH THE SUBSTANTIAL EXPANSION IS UNDERTAKEN WOULD BECOME INITIAL ASSES SMENT YEAR, AND FROM THAT ASSESSMENT YEAR THE ASSESSEE SHALL BEEN ENTITLED TO 100% DEDUCTIONS OF THE PROFITS AND GAINS. (D) SUCH DEDUCTION, HOWEVER, WOULD BE FOR A TOTAL P ERIOD OF 10 YEARS, AS PROVIDED IN SUB-SECTION (6). FOR EXAMPLE, IF THE EXPANSION IS C ARRIED OUT IMMEDIATELY, ON THE COMPLETION OF FIRST FIVE YEARS, THE ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION AGAIN FOR THE NEXT FIVE YEARS. ON THE OTHER HAND, I F SUBSTANTIAL EXPANSION IS UNDERTAKEN, SAY, IN 8TH YEAR BY AN ASSESSEE SUCH AN ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION FOR THE FIRST FIVE YEARS, DEDUCTION @ 25% OF THE PROFITS AND GAINS FOR THE NEXT TWO YEARS AND @ 100% AGAIN FROM 8TH YEAR A S THIS YEAR BECOMES INITIAL ASSESSMENT YEAR ONCE AGAIN. 26 HOWEVER, THIS 100% DEDUCTION WOULD BE FOR REMAINING THREE YEARS, I.E., 8TH, 9TH AND 10TH ASSE SSMENT YEARS. 25. IN VIEW OF THE AFORESAID, WE AFFIRM THE JUDGMEN T OF THE HIGH COURT ON THIS ISSUE AND DISMISS ALL THESE APPEALS OF THE REVENUE. LIKEWISE, APPEALS FILED BY THE ASSESSEES ARE HEREBY ALLOWED. (EMPHASIS SUPPLIED) 5. ACCORDINGLY, IN VIEW THEREOF, IT IS SEEN THAT TH E ISSUE IS NO LONGER RES-INTEGRA. CONSIDERING THE SUBMISSIONS OF THE PARTIES THAT ON FACTS, THERE IS NO DISPUTE, ACCORDINGLY, IN THE LIGHT OF THE LEGAL POSITION AS APPRECIATED BY THE A PEX COURT IN M/S AARHAM SOFTRONICS & OTHERS (SUPRA) THE AO IS DIRECTED TO GRANT NECESSARY RELIE F TO THE ASSESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY, THE APPEAL OF THE ASSESSEE, IN TERMS O F THE ABOVE, IS ALLOWED. ITA-1555 TO 1558/CHD/20178 A.Y. 2012-13 TO 2015-16 PAGE 4 OF 4 6. SINCE IN ALL REMAINING THREE ASSESSMENT YEARS FA CTS, CIRCUMSTANCES AND POSITION OF LAW REMAIN THE SAME, CONSIDERING THE IDENTICAL ARGUMENT S OF THE PARTIES, IDENTICAL DIRECTION IS GIVEN TO THE ASSESSING OFFICER IN 2013-14 AND 2015-16 ASS ESSMENT YEARS. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 7. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE A RE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2019. SD/- ( ) (DIVA SINGH) ! / JUDICIAL MEMBER ) ' '( )* +*% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. , / CIT 4. , ( )/ THE CIT(A) 5. *-. / , /& , 012.3 / DR, ITAT, CHANDIGARH 6. .2 4 / GUARD FILE '( / BY ORDER, 5 / ASSISTANT REGISTRAR