Raj Industries, Ludhiana V. DCIT, C-5, Ludhiana

ITA 1617/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7576 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 28-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDEEP GOEL
• Assessee Lawyers: S VASUDEVA
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, B CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 1617/CHD/2017 ASSESSMENT YEAR: 2014-15 RAJ INDUSTRIES VS. DCIT VILLAGE PAWA, G.T.ROAD, CIRCLE 5 (1) LUDHIANA LUDHIANA PAN NO. AAIFR5498R (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S. VASUDEVA & SH. KARANJOT SINGH RESPONDENT BY : SH. JAGDEEP GOEL, CIT DATE OF HEARING : 19.06.2018 DATE OF PRONOUNCEMENT : 02.07.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE CAPTIONED APPEAL HAS BEEN PREFERRED BY THE ASSE SSEE AGAINST THE ORDER DATED 24.10.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEAL)-2, LUDHIANA [HEREINAFTER REFERR ED TO AS CIT(A)]. THE ASSESSEE IN THIS APPEAL HAS TAKEN THE FOLLOWING GROUNDS:- 1) THAT THE ORDER DATED 24/10/2017 PASSED BY THE L D. COMMISSIONER OF INCOME TAX (APPEALS)-2 LUDHIANA IS BAD IN LAW BEING BASED ON INCORRECT APPRECIATION OF FACTS AND LAW. 2) THAT THE ORDER DATED 24/10/2017 PASSED BY THE LD . COMMISSIONER OF INCOME TAX (APPEALS)-2 LUDHIANA MER ELY ITA NO. 1617/CHD/2017- RAJ INDUSTRIES, LUDHIANA 2 BASED OF ORDER PASSED BY HIS PREDECESSOR FOR THE AS S. YEAR 2013-14, WITHOUT LOOKING INTO PROVISIONS OF SECTION 80IC. 3 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2 LUDH IANA ERRED ON FACTS AND IN LAW IN HOLDING THAT PROVISION S OF SECTION 80IC RECOGNIZED ONLY ONE INITIAL ASSESSMENT YEAR. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2 LUDH IANA HAS FAILED TO APPRECIATE THAT THERE ARE TWO LIMBS T O CLAIM DEDUCTION U/S 80IC (2) OF THE INCOME TAX, ACT 1961, AND THE APPELLANT UNIT HAVING SATISFIED THE SECOND LIMB , VIZ., WHICH MANUFACTURES AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE ELIGIBLE PERIOD, COULD NOT HA VE BEEN DENIED THE BENEFIT OF 100% DEDUCTION U/S 80IC 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER OR VARY ANY GROUND OF APPEAL BEFORE THE APPEAL IS H EARD AND FINALLY DISPOSED OFF. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE RAISED IN THIS APPEAL SQUA RELY COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S SECURITY PRODUCTS PVT. LTD. VS. DCIT, CIRCLE, PARWANOO (ITA NO. 1152/CHD/2017 DATED 19.12.2017) WHEREIN THE TRIBUNA L WHILE RELYING UPON THE DECISION OF THE HON'BLE HIMACHAL P RADESH HIGH COURT IN THE CASE OF M/S STOVEKRAFT INDIA VS. COMMISSIONER OF INCOME TAX, ITA NO. 20 OF 2015 HAS DECIDED, THE ISSUE IN FAVOUR OF THE ASSESSEE. RELEVANT PART OF THE ORDER ITA NO. 1617/CHD/2017- RAJ INDUSTRIES, LUDHIANA 3 OF THE TRIBUNAL IN CASE OF M/S SECURITY PRODUCTS PV T. LTD. VS. DCIT(SUPRA) IS REPRODUCED AS UNDER:- 3. DURING THE COURSE OF HEARING BEFORE US, IT WAS BROUGHT TO OUR NOTICE THAT THE ORDER OF THE ITAT IN THE CASE OF HYCRON ELECTRONICS (SUPRA) HAD BEEN DECIDED IN APPEAL BY THE HONBLE HIMACHAL PRADESH HIGH COURT V IDE THEIR ORDER DT. 28 NOVEMBER 2017 IN THE GROUP OF CASES WITH THE LEAD C ASE TITLED AS M/S STOVEKRAFT INDIA VS. COMMISSIONER OF INCOME TAX, ITA NO.20 OF 2015, AND IT WAS POINTED OUT THAT THE HONBLE HIGH COURT HAD DECIDED THE ISSUE I N FAVOUR OF THE ASSESSEE, HOLDING THAT THERE IS NO BAR IN THE SAID SECTION DE NYING THE BENEFIT OF HUNDRED PERCENT DEDUCTION TO NEW UNITS UNDERTAKING SUBSTANT IAL EXPANSION. OUR ATTENTION WAS DRAWN TO THE RELEVANT CONCLUSIONS OF THE HONBL E HIGH COURT IN THIS REGARD AT PARA 55 OF THE ORDER AS UNDER: 55.THUS, IN VIEW OF THE ABOVE DISCUSSION, THESE AP PEALS 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 ASSESSES, 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 1.4.201 2, SHOULD BE ENTITLED TO BENEFIT OF SECTION 80-IC OF THE ACT, FOR THE PER IOD FOR WHICH THEY WERE NOT ENTITLED TO THE BENEFIT OF DEDUCTION UNDER SECTION 80-IB. (B) SUCH OF THOSE UNITS WHICH HAVE COMMENCED PRODUC TION AFTER 7.1.2003 AND CARRIED OUT SUBSTANTIAL EXPANSION PRIOR TO 1.4. 2012, WOULD ALSO BE ENTITLED TO BENEFIT OF DEDUCTION AT DIFFERENT RATES OF PERCENTAGE STIPULATED UNDER SECTION 80-IC. 4 (C) SUBSTANTIAL EXPANSION CANNOT BE CONFINED TO ONE EXPANSION. AS LONG AS REQUIREMENT OF SECTION 80-IC(8)(IX) IS MET, THERE C AN BE NUMBER OF MULTIPLE SUBSTANTIAL EXPANSIONS. (D) CORRESPONDINGLY, THERE CAN BE MORE THAN ONE INI TIAL ASSESSMENT YEARS. (E) WITHIN THE WINDOW PERIOD OF 7.1.2013 UPTO 1.4.2 012, AN UNDERTAKING OR AN ENTERPRISE CAN BE ENTITLED TO DEDUCTION @ 100% F OR A PERIOD OF MORE THAN FIVE YEARS. (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 SH ALL NOT BE ENTITLED TO DEDUCTION UNDER ANY OTHER SECTION, CONTAINED IN CHA PTER VI-A OR SECTION 10A OR 10B OF THE ACT [SECTION 80- IB(5)]. 4. NO ONE APPEARED ON BEHALF OF THE ASSESSEE. HOWE VER, LD. DR FAIRLY ADMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE ABOVE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT. SHE, HOWEVER, HAS SUBMIT TED THAT THE ISSUE BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATI ON AS TO WHETHER THE ASSESSEE HAS ACTUALLY CARRIED OUT THE SUBSTANTIAL EXPANSION TO B E ENTITLED TO CLAIM DEDUCTION U/S 80IC OF THE ACT. 5. WE DO NOT AGREE TO THE ABOVE CONTENTION RAISED B Y THE REVENUE AT THIS STAGE. A PERUSAL OF THE ORDER OF THE ASSESSING OFFICER REVEA LS THAT THE ASSESSING OFFICER HAS NOT DISPUTED THAT THE ASSESSEE UNIT HAS CARRIED OUT SUBSTANTIAL EXPANSION AS PROVIDED UNDER CLAUSE (B) OF SUB SECTION (2) READ W ITH CLAUSE (IX) OF SUB SECTION (7) OF SECTION 80IC OF THE ACT. ALMOST SIMILAR VIEW HAS ALSO BEEN TAKEN BY THE HON'BLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF M/S 5 S TOVEKRAFT INDIA VS. COMMISSIONER OF INCOME TAX (SUPRA) IN THE FOLLOWIN G CONCLUDING PARA OF THE ORDER:- 58. ON FACTS, WE MAY CLARIFY THAT THE REVENUE HAS NOT DISPUTED, (A) THE UNITS HAVING CARRIED OUT SUBSTANTIAL EXPANSION WITH IN THE DEFINITION OF THE SECTION, (B) THEIR ENTITLEMENT AND EXTENT OF DEDUCT ION WOULD BE DEPENDENT UPON INTERPRETATION OF THE RELEVANT PROVISIONS. ITA NO. 1617/CHD/2017- RAJ INDUSTRIES, LUDHIANA 4 WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION AT THI S STAGE TO GIVE THE ASSESSING OFFICER A SECOND INNINGS TO RE-EXAMINE UNDISPUTED F ACTS. 6. IN VIEW OF THE ABOVE DISCUSSION, THE ORDER OF T HE CIT(A) IS SET ASIDE AND THE AO IS DIRECTED TO GRANT THE ASSESSEE DEDUCTION OF H UNDRED PERCENT OF ITS ELIGIBLE PROFITS, AS PER THE RULING OF THE JURISDICTIONAL HI GH COURT IN THIS REGARD IN THE CASE OF M/S STOVEKRAFT INDIA VS. COMMISSIONER OF INCOME TAX (SUPRA). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE, THER EFORE, STANDS ALLOWED. 3. SINCE THE ISSUE IS SQUARELY COVERED BY ABOVE DEC ISION OF THE TRIBUNAL AND LD. DR HAS NOT BROUGHT IN ANY DIS TINGUISHING CASE LAW OR FACT, HENCE, FOLLOWING THE DECISION OF THE TRIBUNAL(SUPRA), THE ISSUE RAISED IN THIS APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02.07.2018 GANESH KUMAR COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR