M/s Captab Biotech, Solan V. DCIT, Parwanoo

ITA 16/CHANDI/2017

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8215 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 03-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 80IC; 80IC

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER & MRS. ANNAPURNA GUPTA, ASCCOUNTANT MEMBER ITA NO. 16/CHD/2017 ASSESSMENT YEAR: 2012-13 M/S CAPTAB BIOTECH, VS. THE DCIT, CIRCLE, BADDI, SOLAN PARWANOO. PAN NO. AAEFC8544M (APPELLANT) (RESPONDENT) APPELLANT BY : SH. AMITOZ SINGH RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 23.02.2017 DATE OF PRONOUNCEMENT : 30.03.2017 ORDER PER DIVA SINGH, JM BY THE PRESENT APPEAL THE ASSESSEE ASSETS THE CORR ECTNESS OF THE ORDER DATED 22.11.2016 OF CIT(A) SHIMA ON THE FOLLOWING G ROUNDS:- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER DATED 22.11.2016 PASSED BY THE LD. CIT (APPEA LS); SHIMLA U/S 250(6) OF THE INCOME TAX ACT, 1961 IS BAD IN LAW, I LLEGAL, WITHOUT JURISDICTION AND VOID. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT (APPEALS), SHIMLA HAS ERRED IN: I. AFFIRMING THE ORDER OF LD. DY. COMMISSIONER OF INCOME TAX, PARWANOO IN RESTRICTING THE CLAIM OF APPELLANT OF DEDUCTION U/S 80-IC OF THE INCOME TAX ACT, 1961 AT 25% INSTEAD OF 100% CLAIMED BY THE APPELLANT IN THE SIX TH YEAR OF OPERATION OF NEW INDUSTRIAL UNDERTAKING OF THE APPE LLANT WHEREIN SUBSTANTIAL EXPANSION WAS CARRIED OUT IN SU CH NEW INDUSTRIAL UNDERTAKING BY THE APPELLANT. II. MISINTERPRETING THE PROVISIONS OF SECTION 80-I C OF THE ACT WHICH PROVIDE FOR SUBSTANTIAL EXPANSION TO BE UNDER TAKEN DURING THE PERIOD BEGINNING ON 7 LH JANUARY, 2003 AND ENDING BEFORE 1 ST APRIL, 2012 AND ERRONEOUSLY UPHOLDING THAT THE BENEFIT OF 100% DEDUCTION U/S 80-IC OF THE ACT FOR FIRST FIVE YEARS IN CASE OF SUBSTANTIAL EXPANSION IS AVAILABLE ONLY TO THE UNITS THAT EXISTED AND WERE OPERATIONAL AS ON 0 7.01.2003 AND SUCH BENEFIT IS NOT AT ALL MEANT FOR THE UNITS THAT CAME INTO BEING ON OR AFTER THE INTRODUCTION OF THE SCHE ME OF SUCH DEDUCTION. 2 III. UPHOLDING THAT ONCE AN 'INITIAL ASSESSMENT YE AR' IS DETERMINED IN CASE OF AN UNDERTAKING CLAIMING BENEF IT U/S 80-IC OF THE ACT IT CANNOT BE CHANGED EVEN IF SUCH UNDERTAKING COMPLETES SUBSTANTIAL EXPANSION AND AGA IN QUALIFIES FOR DEDUCTION UNDER THE SAID SECTION ON T HE BASIS OF 'QUALIFYING EXPANSION'. IV. MAKING A NARROW INTERPRETATION OF THE PROVISIO NS OF SECTION 80-IC OF THE INCOME TAX ACT, 1961 WHICH WAS INTRODUCED AS A WELFARE LEGISLATION FOR PROVIDING S TIMULUS TO THE ECONOMY OF INDUSTRIALLY BACKWARD STATES SUCH AS HIMACHAL PRADESH. 2. THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF PHARMACEUTICAL DRUGS AND HAS TWO MANUFAC TURING UNITS AT 631/632, EPIP ROAD, JHARMAJRI, BADDI. AS PER INFOR MATION GIVEN IN FORM NO. 10CCB, THE ASSESSEE STARTED ITS BUSINESS ACTIVI TY OPERATION QUA UNIT I ON 11.5.2006 AND INITIAL ASSESSMENT YEAR FOR CLAIM OF DEDUCTION U/S 80IC OF THE ACT WAS ASSESSMENT YEAR 2007-08. THE ASSESSEE H AD ALREADY CLAIMED DEDUCTION U/S 80IC TO THE EXTENT OF THE 100% ELIGIB LE PROFIT FOR FIVE YEAR PERIOD FROM 2007-08 TO 2011-12 ASSESSMENT YEAR. TH E ASSESSING OFFICER NOTICED THAT THE ASSESSEE FIRM HAD AGAIN CLAIMED 10 0% DEDUCTION AGAINST ELIGIBLE PROFITS IN THE RELEVANT ASSESSMENT YEAR 20 12-13 WHICH IS THE SIXTH YEAR OF PRODUCTION FOR THE FIRM BY CLAIMING SUBSTAN TIAL EXPANSION IN FINANCIAL YEAR 2011-12. IN UNIT-II, ON 31.3.2010 T HE INITIAL ASST. YEAR FOR CLAIM OF DEDUCTION U/S 80-IC OF THE ACT WAS ASSESSM ENT YEAR 2010-11. ACCORDINGLY THE ASSESSING OFFICER REQUIRED, THE ASS ESSEE TO FURNISH REASONS AND JUSTIFICATION FOR THE SAID CLAIM OF 100% AS AGA INST ELIGIBLE NORMS OF 25%. IN THE ABSENCE OF ANY EXPLANATION THEREIN, AN D CONSIDERING THE FACTS THAT THE BENEFIT OF SUBSTANTIAL EXPANSION IS AVAILA BLE ONLY TO THE EXISTING UNIT I.E. THE UNITS THAT EXISTED AND WERE OPERATION AL ON 7.1.2003 IN ORDER TO MAKE THEM ELIGIBLE FOR 100% DEDUCTION U/S 80IC FOR FIVE YEARS AND WAS NOT MEANT FOR THE UNITS THAT CAME INTO BEING ON OR AFTE R INTRODUCTION OF THE SCHEME I.E. 7.1.2003. ACCORDINGLY, THE ASSESSEES C LAIM OF SUBSTANTIAL EXPANSION WAS DENIED AND DEDUCTION U/S 80-IC TO THE TUNE OF 25% OF ELIGIBLE PROFIT FROM 20.12.2013 ASSESSMENT YEAR ONW ARDS WAS ALLOWED. HOWEVER, FOR UNIT II, THE DEDUCTION U/S 80IC OF THE ACT @ 100% WAS ALLOWED AS IT WAS THE THIRD YEAR OF CLAIM OF DEDUCT ION U/S 80IC. 3. THE ASSESSEE CHALLENGED THE SAID ORDER BEFORE TH E CIT(A) UNSUCCESSFULLY. THE CIT(A) REJECTED THE CLAIM RELYI NG UPON THE ORDER OF 3 ITAT IN THE CASE OF M/S HYCRON ELECTRONICS VS ITO IN ITA NO. 798/CHD/2012 AND OTHER RELATED CASES. 4. BOTH THE LD. AR AND SENIOR DR WERE HEARD. THE LD . AR SUBMITTED THAT THE ASSESSEE IS CHALLENGING THE ISSUE BEFORE T HE HON'BLE HIGH COURT AND REITERATED ITS SUBMISSIONS MADE BEFORE THE TAX AUTHORITIES. THE LD. SR. DR STATED THAT IT IS A COVERED ISSUE IN FAVOUR OF T HE REVENUE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IN THE FACE OF AD MITTED FACTS AS SET OUT IN DETAIL HEREINABOVE THE ISSUE IS FULLY COVERED BY TH E AFORESAID ORDER OF THE ITAT. IN THE ABSENCE OF ANY CONTRARY DECISION, EITH ER ON FACT OR LAW RESPECTFULLY, FOLLOWING THE ORDER OF THE COORDINATE BENCH, THE APPEAL OF THE ASSESSEE IS DISMISSED. 6. THE SAID ORDER IS PRONOUNCED IN THE OPEN COURT A T THE TIME OF HEARING ITSELF. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.03.2017. SD/- SD/- (ANNAPURNA GUPTA) (DIVA SING H) ACCOUNTATN MEMBER JUDICIAL MEMBER RKK/RATI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR