Umang Goenka, Kolkata V. ACIT, Circle-31, Kolkata, Kolkata

ITA 165/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0699 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 31-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAUL
• Assessee Lawyers: ARVIND AGARWAL
• Keywords: Depreciation
• Section: 143(3); 80IC; 80IC; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.165/KOL/2019 ( / ASSESSMENT YEAR: 2015-16) UMANG GOENKA 1, KAMAYANI, A.J.C. BOSE ROAD, KOLKATA-700020 VS. ACIT, CIRCLE-31, KOLKATA ./ ./PAN/GIR NO.: AGDPG 9805 G (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI ARVIND AGARWAL, ADVOCATE RESPONDENT BY : SHRI SUPRIYO PAUL, JCIT / DATE OF HEARING : 27/02/2020 /DATE OF PRONOUNCEMENT : 12/06/2020 / O R D E R PER DR. A.L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PER TAINING TO ASSESSMENT YEAR 2015-16, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-9, KOLKATA, IN APPEAL NO. 129/CIT(A)-9/CIR -31/2017-18/KOL, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY TH E ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DA TED 04/12/2017. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: UMANG GOENKA ITA NO. 165/KOL/2019 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 2 22 2 1. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE ACTION OF THE LD. CIT(A) IN UPHOLDING THE CLAIM OF DEDUCTI ON U/S. 80IC AT RS. 10172628/- ALLOWED BY ASSESSING OFFICER AS AGAINST CLAIM OF THE APPELLANT AT RS. 37118499/- IS ERRONEOUS AND BAD IN LAW. 2. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. ASST. COMMISSIONER OF INCOME TAX ON WRONG INTERPRET ATION OF SUBSTANTIAL EXPANSION AND INITIAL ASSESSMENT YEAR WRONGLY AND A RBITRARILY RESTRICTED THE CLAIM OF DEDUCTION U/S. 80IC AT RS. 10172628/- BEING 25% OF THE TOTAL CLAIM AS AGAINST ELIGIBLE CLAIM OF DEDUCTION OF 100 % OF THE TOTAL INCOME OF RS. 37118499/- AND THE LD. CIT(A) ERRED IN CONFIRMI NG THE ACTION OF THE ASSESSING OFFICER INSPITE OF THE FACT THAT SIMILAR CLAIM OF DEDUCTION @100% WAS ALLOWED IN EARLIER ASSESSMENT YEAR BY HONBLE I TAT KOLKATA BENCH IN ASSESSMENT YEAR 2013-2014 & 2014-2015. 3. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPELLANT HAD FULFILLED ALL THE CRITERIA FOR CLAIMI NG DEDUCTION U/S. 80IC OF THE IT ACT, 1961 @ 100% OF THE PROFIT ON MAKING SUB STANTIAL EXPANSION IN THE PLANT & MACHINERY AS PROVIDED IN SECTION 80IC(8 )(IX) OF THE IT ACT, 1961, THE LD. CIT(A) OUGHT TO HAVE DELETED THE ADDI TION IN FULL INSTEAD OF CONFIRMING THE ACTION OF THE ASSESSING OFFICER. 4. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. ASSESSING OFFICER FAILED TO COMPUTE BOOK PROFIT U/S . 115JC OF THE IT ACT, 1961 AND TAXED AND ALLOWED SET OFF OF TAX CREDIT U/ S. 115JD AND THE LD. CIT(A) FAILED TO PASS ANY ORDER ON THE ADDITIONAL G ROUNDS TAKEN BEFORE HIM. 5. FOR THAT THE ABOVE GROUNDS OF APPEAL SHALL BE ARGUE D IN DETAILS AT THE TIME OF HEARING AND THE APPELLANTS CRAVE LEAVE TO ADD TO ALTER AND OR TO AMEND THE AFORESAID GROUNDS AT OR BEFORE THE HEARIN G OF THE APPEAL. 4. GROUND NOS. 1 TO 3 RAISED BY THE ASSESSEE RELATE TO DEDUCTION U/S 80IC OF THE ACT. 5. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE, SRI UMANG GOENKA, IS THE PROPRIETOR OF M/S. ELECTRON AUTOMATS. THE POSTAL AD DRESS OF THE SAID FIRM IS HIG24C, SECTOR-I, DIST. SOLAN, PARWANOO - 173 220, HIMACHAL PRADESH. DURING THE RELEVANT FINANCIAL YEAR THE ASSESSEE WAS ENGAGE D IN THE BUSINESS OF DESIGNING AND DEVELOPING INNOVATIVE ELECTRICAL AND ELECTRONIC CONTROL GEAR AFTER STUDYING THE SHORT COMING OF THE EXISTING PRODUCTS AVAILABLE IN VARIOUS FIELDS. THESE PRODUCTS UMANG GOENKA ITA NO. 165/KOL/2019 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 3 33 3 ARE MICROPROCESSOR BASED AND ONCE THE DESIGNS ARE A PPRECIATED AND APPROVED BY THE CONSULTANTS THEY GO INTO COMMERCIAL MANUFACTURI NG OF THE END PRODUCTS LIKE AUTOMATIC CHANGE OVER SWITCHES, MOTOR STARTERS, CUR RENT LIMITERS, SAFETY POWER GUARD SOCKETS, ETC. AS PER INFORMATION GIVEN IN FOR M NO. 10CCB, THE ASSESSEE STARTED ITS BUSINESS ACTIVITY / OPERATION ON 26-05- 2007 AND INITIAL ASSESSMENT YEAR FOR CLAIM OF DEDUCTION U/S. 80-IC OF THE OF THE INC OME-TAX ACT, 1961 WAS ASSESSMENT YEAR 2008-2009. THE ASSESSEE HAD ALREADY CLAIMED DEDUCTION U/S. 80- IC TO THE EXTENT OF THE 100% ELIGIBLE PROFIT FOR FI VE YEARS PERIOD OF ASSESSMENT YEAR 2008-09 TO ASSESSMENT YEAR 2012-2013. HOWEVER, IT WAS NOTICED THAT THE ASSESSEE FIRM HAD AGAIN CLAIMED 100% DEDUCTION AGAI NST ELIGIBLE PROFITS IN THE RELEVANT ASSESSMENT YEAR 2015-2016 WHICH IS 8TH YEA R OF PRODUCTION FOR THE FIRM BY CLAIMING SUBSTANTIAL EXPANSION IN FINANCIAL YEAR 2011-2012. THE ASSESSEE MADE FOLLOWING SUBMISSION REGARDING THE SAME : IN THIS CONNECTION YOUR KIND ATTENTION IS DRAWN TO THE DETAILED ASSESSMENT ORDERS PASSED IN THE EARLIER YEARS WHICH ARE ALL SC RUTINY ASSESSMENTS. THERE IS NO CHANGE IN THE ACTIVITY CARRIED ON BY THE PROP RIETORSHIP CONCERN ELECTRON AUTOMATS & ASSESSMENT YEAR 15-16 IS THE 8T H YEAR OF CLAIM OF DEDUCTION U/S 80IC WHICH HAS BEEN CLAIMED @ 100% FO R WHICH DETAILED EXPLANATION AND SUBMISSION HAS BEEN FILED IN ASSESS MENT YEAR 13-14 & 14- 15 AS WELL. IN A. Y 13-14 THE DEDUCTION WAS ALLOWED @ 25% AS AGAINST CLAIM OF 100% ON SUBSTANTIAL EXPANSION AS PER THE P ROVISIONS OF SECTION 80 IC OF THE INCOME TAX ACT 1961, BUT ON APPEAL THE LE ARNED CTT(APPEAL) VIDE HIS ORDER DATED 31TH MAY 2016 IN APPEAL NO. 34 7/CIT APPEAL- 09/CIRCLE31/2015-16/KOLKATA WAS PLEASED TO ALLOW DE DUCTION @ 100% OF THE PROFIT. AUDIT REPORT IN FORM NO. 10CCB HAS ALRE ADY BEEN FURNISHED ON 30 TH AUGUST, 2016. IF ANY FURTHER DETAILS AND OR EXPLAN ATION IS REQUIRED IN THE MATTER THE SAME WILL BE FURNISHED ACCORDINGLY .. 6.THE DETAILS SUBMISSION AND EXPLANATION FILED IN A Y 2014-15 BY THE ASSESSEE BEFORE THE ASSESSING OFFICER IS REPRODUCED BELOW: 1. AS PER SUB-SECTION (2) OF SECTION 80IC DEDUCTION UNDER THIS SECTION IS AVAILABLE TO ANY UNDERTAKING OR ENTERPRISES IN T HE FOLLOWING TWO CATEGORIES: I) THE UNDERTAKING OR ENTERPRISES HAS BEGUN OR BEGI NS TO MANUFACTURE OR PRODUCE ANY ARTICLE OR THING DURING THE PERIOD 0 7.01.2003 TO 01.04.2012. UMANG GOENKA ITA NO. 165/KOL/2019 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 4 44 4 OR II) THE UNDERTAKING WHICH MANUFACTURE OR PRODUCE AN Y ARTICLE OR THING AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PER IOD 07.01.2003 TO 01.04.2012. 2. A BARE READING OF PROVISIONS OF SUB-SECTION (2) WOULD REVEAL THAT THE DEDUCTION UNDER THE AFORESAID TWO CATEGORIES IS IND EPENDENT. IN THE FIRST CATEGORY THE DEDUCTION IS BEING GIVEN TO THE UNDERT AKING WHICH HAS BEGUN OR BEGINS MANUFACTURING OR PRODUCTION OF ARTICLE AN D THING DURING THE SPECIFIED PERIOD 07.01.2003 TO 01.04.2012. THUS UND ER THE FIRST CATEGORY THE DEDUCTION IS AVAILABLE TO NEWLY SET-UP UNITS. 3. IN THE SECOND CATEGORY, THE DEDUCTION IS ALLOWED IN CASE OF EXPANSION BY THE EXISTING UNITS WHICH UNDERTAKE SUBSTANTIAL E XPANSION DURING THE SPECIFIED PERIOD OF 07.01.2003 TO 01.04.2012. 4. THERE IS NO DISPUTE ABOUT THE FACT THAT OUR MANU FACTURING UNITS WAS INCORPORATED ON 26.05.2007 AND EXEMPTION U/S. 80IC HAS BEEN ALLOWED @ 100% ON AND FROM ASSESSMENT YEAR 2008-2009 TO 2012- 2013 AS PER THE SCRUTINY ASSESSMENT ORDER PASSED U/S. 143(3) OF THE IT ACT, 1961. 5. THERE IS ALSO NO DISPUTE ABOUT THE FACT THAT OUR EXISTING MANUFACTURING UNIT COMPLETED SUBSTANTIAL EXPANSION OF PLANT & MACHINERY DURING THE PERIOD 01.04.2011 TO 31.03.2012 I.E. REL EVANT TO ASSESSMENT YEAR 2012-2013 AND ALL DOCUMENTARY EVIDENCES I.E. D ETAILS OF ADDITION TO PLANT & MACHINERY ALONG WITH BILLS AND VOUCHERS AND THE CERTIFICATE ISSUED BY THE DEPARTMENT OF INDUSTRIES, PARWANOO WERE FILE D DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS OF ASSESSMENT YEAR 2012-2013. 6. IN VIEW OF THE SUBSTANTIAL EXPANSION HAVING TAKE N PLACE DURING ASSESSMENT YEAR 2012-2013 I.E. BEFORE THE CUT OFF D T 01.04.2012 ASSESSMENT YEAR 2012-2013 BECOMES THE INITIAL ASSESSMENT YEAR FOR THE CLAIM OF DEDUCTION U/S. 80IC OF THE IT ACT, 1961 I.E. @ 100% FOR NEXT 5 YEARS COMMENCING FROM ASSESSMENT YEAR 2012-2013 WHICH INC IDENTALLY WAS THE 5TH YEAR OF THE COMMENCEMENT OF THE BUSINESS. 7. INITIAL ASSESSMENT YEAR HAS BEEN DEFINED U/ S. 8 0IC(8)(V) AS UNDER: INITIAL ASSESSMENT YEAR MEANS THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING OR THE ENTER PRISE BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMMEN CE OPERATION OR COMPLETES SUBSTANTIAL EXPANSION. 8. SINCE IN OUR CASE SUBSTANTIAL EXPANSION TOOK PLA CE DURING ASSESSMENT YEAR 2012-2013 OUR INITIAL ASSESSMENT YE AR WILL BE CONSIDERED UMANG GOENKA ITA NO. 165/KOL/2019 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 5 55 5 FROM ASSESSMENT YEAR 2012-2013 ITSELF AND 100% DEDU CTION WILL BE ALLOWED ACCORDINGLY SUBJECT TO A MAXIMUM OF 10 YEAR S FROM ASSESSMENT YEAR 2008-2009. 9. THE SUBSTANTIAL EXPANSION HAS BEEN DEFINED IN SE CTION 80IC(8)(IX) WHICH IS REPRODUCED AS UNDER: SUBSTANTIAL EXPANSION MEANS INCREASE IN THE INVEST MENT IN THE PLANT & MACHINERY BY AT LEAST 50% OF THE BOOK VALUE OF PLAN T & MACHINERY (BEFORE TAKING DEPRECIATION IN ANY YEAR) AS ON THE 1ST DAY OF THE PREVIOUS YEAR IN WHICH THE SUBSTANTIAL EXPANSION WAS UNDERTAKEN. 10. THE BOOK VALUE OF THE PLANT & MACHINERY BEFORE TAKING DEPRECIATION IN ANY YEAR AS ON THE 1ST DAY OF THE PREVIOUS YEAR IN WHICH SUBSTANTIAL EXPANSION TOOK PLACE WAS RS. 66110/ - AND VALUE OF THE INCREASED IN THE PLANT & MACHINERY IN THE YEAR OF SUBSTANTIAL EXPANS ION WAS RS. 440026/- WHICH IS MORE THAN 50% OF THE BOOK VALUE OF THE PLA NT & MACHINERY AS PROVIDED IN SECTION 80IC(8)(IX) OF THE INCOME TAX A CT, 1961. 11. THE TAX AUDIT REPORT IN FORM 10CCB WAS ALSO FUR NISHED IN AY 2012-2013 AND 100% CLAIM OF DEDUCTION U/S 80IC WAS ALLOWED WHICH WAS THE 5TH YEAR OF THE BUSINESS ON SUBSTANTIAL EXPANSI ON MADE AS PER THE PROVISION OF SECTION 80IC OF THE IT ACT, 1961 @100% . THUS, WE HAVE CORRECTLY CLAIMED DEDUCTION U/S. 80IC OF THE IT ACT, 1961 @ 100% OF THE PROFIT AS IN VIEW OF THE DEFINITION OF INITIAL ASSESSMENT YEAR AND SUBSTANTIAL EXPANSION WE ARE ENTITLED TO CLAIM 100% DEDUCTION AS PER THE PROVISION OF SECTION 80IC OF THE IT ACT, 1961 A S WE HAVE SATISFIED ALL THE CONDITION LAID DOWN IN THE ACT. I TRUST YOU WILL FIND THE SAME IN ORDER. IF ANY FUR THER OR OTHER EXPLANATIONS ARE REQUIRED, I AM READY AND WILLING TO COMPLY WITH THE SAME. 7. THE ASSESSING OFFICER HAVING GONE THROUGH THE AB OVE REPLY OF THE ASSESSEE HELD THAT THE ASSESSEES REPLY HAS BEEN CONSIDERED BUT NOT ACCEPTED. THE INTERPRETATION BEING ADOPTED BY THE ASSESSEE IS THA T AT THE TIME OF INITIAL SET UP OF THE NEW UNIT, AN ENTITY CAN CLAIM DEDUCTION FOR 100 % OF THEIR PROFITS FOR FIRST FIVE YEARS AND THEREAFTER WHENEVER IT CARRIES OUT THE SU BSTANTIAL EXPANSION OF THE SAME UNIT THEN IT CAN CLAIM 100% DEDUCTION FOR THE NEXT FIVE YEARS THEREBY GIVING A NEW DEFINITION TO THE TERM INITIAL ASSESSMENT YEAR AS G IVEN IN THE ACT. THEREFORE, ASSESSING OFFICER ALLOWED THE DEDUCTION U/S 80IC ON LY 25% OF RS. 4,06,90,511/- UMANG GOENKA ITA NO. 165/KOL/2019 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 6 66 6 I.E. RS. 1,01,72,627/- AND BALANCE AMOUNT OF RS. 3, 05,17,883/- WAS DISALLOWED BY THE ASSESSING OFFICER. 8. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED T HE ORDER OF THE ASSESSING OFFICER OBSERVING THE FOLLOWINGS: I HAVE GONE THROUGH THE ASSESSMENT ORDER, GROUNDS OF APPEAL AND THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT. THE ONLY ISSUE IN THE APPEAL RELATES TO CLAIM OF DE DUCTION U/S 80IC @ 100% INSTEAD OF 25% AS ALLOWED BY ASSESSING OFFICER. THE ASSESSEE RELIES ON THE JUDGEMENT OF HON'BLE ITAT IN ITS OWN CASE FOR A.Y. 2013-14 AND 2014-15. THE ISSUE INVOLVED IS WHETHER APPELLANT IS ENTITLED TO THE CLAIM OF DEDUCTION U/S 80IC OF THE IT ACT, 1961. ON SUBSTANTIAL EXPANSION @ 100% AS CLAIMED BY THE APPELLANT IN A.Y 2015-16 WHICH IS THE 8TH YEAR FROM THE INITIAL ASSESSMENT YEAR AS AGAINST 25% ALLOWED BY THE ASSESSING OFFICER. THE ISSUE IS SETTLED BY THE JUDGEMENT OF HON'BLE SU PREME COURT IN THE CASE OF CIT VS CLASSIC BINDING INDUSTRIES [2018] 96 TAXMANN.COM 405 (SC), WHEREIN IT HAS BEEN HELD THAT 'WHERE ASSESSEE HAD AVAILED DEDUCTIO N UNDER SECTION 80-IC FOR A PERIOD OF 5 YEARS AT RATE OF 100 PER CENT, HE WOULD BE ENTITLED TO DEDUCTION ON SUBSTANTIAL EXPANSION FOR REMAINING 5 ASSESSMENT YE ARS AT RATE OF 25 PER CENT (OR 30 PER CENT WHERE ASSESSEE IS A COMPANY), AS THE CA SE MAY BE, AND NOT AT RATE OF 100 PER CENT.' IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESSEE IS DISMISSED. 9. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 10. THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE AUTHORITIES BELOW AND ON THE OTHER HAND THE LD. DR HAS PRIMARILY REIT ERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OU R EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 11. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GO NE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCU MENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD. WE NOTE THAT THE APPELLANT IS THE UMANG GOENKA ITA NO. 165/KOL/2019 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 7 77 7 PROPRIETOR OF M/S. ELECTRON AUTOMATES WHO IS ENGAGE D IN THE BUSINESS OF DESIGNING AND DEVELOPING INNOVATIVE ELECTRICAL AND ELECTRONIC CONTROL GEAR AND THE FACTORY IS SITUATED IN HIMACHAL PRADESH. THE BUSINESS ACTIVITY IN THE PROPRIETORSHIP FIRM ELECTRON AUTOMATES COMMENCED OPERATION ON 26.05.200 7 AND AS PER THE PROVISION OF SECTION 80IC OF THE IT ACT, 1961 THE BUSINESS IN COME WAS ELIGIBLE FOR DEDUCTION U/S. 80IC OF THE IT ACT, 1961 COMMENCING FROM ASSES SMENT YEAR 2008-2009 FOR A TOTAL PERIOD OF 10 YEARS AND THE DEDUCTION U/S. 8 0IC IS BEING ALLOWED TO THE APPELLANT ON AND FROM AY 2008-2009 AS PER THE PROVI SION OF THE ACT..AS PER THE PROVISION OF SUB-SECTION (2) OF 80IC OF THE IT ACT, 1961 DEDUCTION UNDER THIS SECTION IS AVAILABLE TO ANY UNDERTAKING OR ENTERPRI SES IN TWO CATEGORIES I.E. (I) THE UNDERTAKING OR ENTERPRISES HAS BEGUN OR BEGINS TO M ANUFACTURE OR PRODUCE ANY ARTICLE OR THINGS DURING THE PERIOD 07.01.2003 TO 0 1.04.2012 OR (II) THE UNDERTAKING WHICH MANUFACTURE OR PRODUCE ANY ARTICLE OR THINGS AND UNDERTAKE SUBSTANTIAL EXPANSION DURING THE PERIOD 07.01.2003 TO 01.04.201 2 AND A BARE READING OF SUBSECTION (2) WOULD REVEAL THAT THE DEDUCTION UNDE R THE AFORESAID TWO CATEGORIES ARE INDEPENDENT TO EACH OTHER. IN THE 1ST CATEGORY THE DEDUCTION IS AVAILABLE TO NEWLY SETUP UNITS AND IN THE 2ND CATEGORY DEDUCTION IS AVAILABLE IN CASE OF EXPANSION BY THE EXISTING UNIT WHICH UNDERTAKES SUB STANTIAL EXPANSION DURING THE SPECIFIED PERIOD OF 07.01.2003 TO 01.04.2012. THERE IS NO DISPUTE ABOUT THE FACT THAT THE MANUFACTURING UNIT OF ELECTRON AUTOMATES W AS INCORPORATED ON 26.05.2007 AND EXEMPTION U/S. 80IC HAS BEEN ALLOWED @ 100% FROM ASSESSMENT YEAR 2008-2009 TO ASSESSMENT YEAR 2012-2013. THE AP PELLANT FIRM IN THEIR EXISTING MANUFACTURING UNIT OF ELECTRON AUTOMATES C OMPLETED SUBSTANTIAL EXPANSION OF PLANT & MACHINERY DURING THE PERIOD 01 .04.2011 TO 31.03.2012 AND WAS ELIGIBLE FOR CLAIM OF DEDUCTION U/S. 80IC @ 100 % FOR NEXT 5 YEARS COMMENCING FROM AY 2012-2013 WHICH BECOMES THE INI TIAL ASSESSMENT YEAR WHICH HAS BEEN DEFINED U/S. 80IC(V) WHICH READS AS UNDER: INITIAL ASSESSMENT YEAR MEANS THE ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISES BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMMENCE OPERATION OR COMPLET E SUBSTANTIAL EXPANSION UMANG GOENKA ITA NO. 165/KOL/2019 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 8 88 8 THE SUBSTANTIAL EXPANSION HAS FURTHER BEEN DEFINED IN SECTION 80IC(8)(IX) WHICH IS REPRODUCED AS UNDER: SUBSTANTIAL EXPANSION MEANS INCREASE IN THE INVEST MENT IN THE PLANT & MACHINERY BY AT LEAST 50% OF THE BOOK VALUE OF PLAN T & MACHINERY (BEFORE TAKING DEPRECIATION IN ANY YEAR) AS ON THE 1ST DAY OF THE PREVIOUS YEAR IN WHICH THE SUBSTANTIAL EXPANSION WAS UNDERTAKEN THUS, ON THE BASIS OF THE SUBSTANTIAL EXPANSION HAV ING BEEN MADE IN THE PLANT & MACHINERY WITHIN THE SPECIFIED PERIOD AS PROVIDED I N THE ACT AND HAVING FULFILLED ALL THE CONDITION FOR CLAIMING DEDUCTION @ 100% FOR FURTHER 5 YEARS THE APPELLANT HAD CLAIMED A SUM OF RS. 37118499/- AS DEDUCTION U/ S. 80IC OF THE IT ACT, 1961 FOR WHICH AUDIT REPORT IN FORM NO 10CCB WAS ALSO FU RNISHED. IN ASSESSMENT YEAR 2013-2014 WHICH WAS THE 6TH YEAR OF THE PRODUCTION THE APPELLANT HAD CLAIMED 100% DEDUCTION U/S. 80IC OF T HE IT ACT, 1961 BUT THE AO HAD ALLOWED 25% OF THE TOTAL CLAIM U/S. 80IC OF THE IT ACT, 1961. THE LD. CIT(A) VIDE ITS ORDER DT. 31.05.2016 IN APPEAL NO - 347/CI T(A)-9/CIR-31 /2015-16/KOL ALLOWED THE APPEAL AND DIRECTED TO ALLOW DEDUCTION U/S. 80IC @ 100% OF THE TOTAL CLAIM. THE LD. ASSESSING OFFICER FAILED TO FOLLOW T HE DIRECTION GIVEN IN ASSESSMENT YEAR 2013-2014 AND AGAIN ALLOWED CLAIMED U/S. 80IC @ 25% OF RS. 40690511/- I.E. RS. 10172628/-AS AGAINST THE CLAIM OF 100% OF THE PROFIT MADE BY THE INDUSTRIAL UNIT AMOUNTING TO RS. 37118499/- AND THE ADDITION MADE NEEDS TO BE DELETED IN FULL. THE LD. ASSESSING OFFICER HAS RELIED UPON CERTAIN I TAT DECISION WHILE MAKING ADDITION U/S. 80IC OF THE IT ACT, 1961 WHICH IS NOT APPLICABLE AND THE APPELLANT SUBMITS THAT THE SIMILAR ISSUE INVOLVED IN VARIOUS CASES WHICH HAVE BEEN DECIDED BY THE HONBLE HIMACHAL PRADESH HIGH COURT, SHIMLA IN IT APPEAL NO - 20/2015 VIDE ORDER DATED 28.11.2017 WE NOTE THAT THE ISSUE INVOLVED IS WHETHER THE ASSE SSEE IS ENTITLED TO CLAIM DEDUCTION U/S 80IC OF THE ACT ON SUBSTANTIAL EXPANS IONS @ 100% AS CLAIMED BY THE ASSESSEE IN A.Y. 2015-16 WHICH IS THE 8 TH YEAR FROM THE INITIAL ASSESSMENT YEAR AS AGAINST ALLOWED 25% OF THE ASSESSING OFFICE R. SINCE THE APPEAL OF THE ASSESSEE IS COVERED BY ITS OWN ORDER BY THE JUDGMEN T OF THE TRIBUNAL IN A.Y. 2013 14 AND THE LD . CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE OBSERVI NG THE FOLLOWINGS: SIMILAR ISSUE WAS INVOLVED IN AY 2013 EXEMPTION WAS DENIED BY THE ASSESSING OFFICER AND F INALLY THE HONBLE ITAT IN BOTH THE YEARS HAS ACCEPTED THE CLAIM OF THE APPELL ANT AND HAS ALLOWED DEDUCTION @ 100% U/S 80IC OF THE HONBLE ITAT IN ORDER DAED 21.03.2018 IN IT APP EAL NO. 1637/KOL/2016 RELATING TO AY 2013 DEDUCTION U/S 80IC @ 100% ON SUBSTANTIAL EXPANSION HELD AS UNDER: ITA NO ASSESSMENT YEAR: ASSESSEE IS COVERED BY ITS OWN ORDER BY THE JUDGMEN T OF THE TRIBUNAL IN A.Y. 2013 . CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE OBSERVI NG THE FOLLOWINGS: SIMILAR ISSUE WAS INVOLVED IN AY 2013 -14 AND 2014- 15 WHERE THE CLAIM OF 100% EXEMPTION WAS DENIED BY THE ASSESSING OFFICER AND F INALLY THE HONBLE ITAT IN BOTH THE YEARS HAS ACCEPTED THE CLAIM OF THE APPELL ANT AND HAS ALLOWED DEDUCTION @ 100% U/S 80IC OF THE I T ACT, 1961. THE HONBLE ITAT IN ORDER DAED 21.03.2018 IN IT APP EAL NO. 1637/KOL/2016 RELATING TO AY 2013 - 14 (DEPARTMENTAL APPEAL) WHILE ALLOWING THE CLAIM O F DEDUCTION U/S 80IC @ 100% ON SUBSTANTIAL EXPANSION HELD AS UNDER: UMANG GOENKA ITA NO . 165/KOL/2019 ASSESSMENT YEAR: 2015-16 P PP PA AA AG GG GE EE E | || | 9 99 9 ASSESSEE IS COVERED BY ITS OWN ORDER BY THE JUDGMEN T OF THE TRIBUNAL IN A.Y. 2013 - . CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE OBSERVI NG THE FOLLOWINGS: 15 WHERE THE CLAIM OF 100% EXEMPTION WAS DENIED BY THE ASSESSING OFFICER AND F INALLY THE HONBLE ITAT IN BOTH THE YEARS HAS ACCEPTED THE CLAIM OF THE APPELL ANT AND HAS ALLOWED DEDUCTION THE HONBLE ITAT IN ORDER DAED 21.03.2018 IN IT APP EAL NO. 1637/KOL/2016 14 (DEPARTMENTAL APPEAL) WHILE ALLOWING THE CLAIM O F DEDUCTION U/S 80IC @ 100% ON SUBSTANTIAL EXPANSION HELD AS UNDER: 12. SINCE THE I SSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND THIS IS A SUBSEQUENT YEAR OF DEDUCTION IN RESPECT OF SUBSTANTIAL EXPANSION ACT, THEREFORE THE GROUND NOS. 1 TO 3 ARE ALLOWED. 13. NOW WE SHALL TAKE GROUND NO. 4 PROFIT U/S 115JC AND ALLOW THE SET OFF OF TAX CREDI T U/S 115J YEAR ON BOOK PROFIT. 14. WE NOTE BEFORE THE LD. CIT(A) WHICH IS GIVEN BELOW: PROVISION OF SECTION 115JC REGARDING SPECIAL PROVI SION FOR PAYMENT OF TAX BY CERTAIN PERSON OTHER THAN A COMPANY WAS INTRODUCED BY FINANCE ACT 2012 W.E.F. 01.04.2013 RELEVANT TO A.Y. 2013 TAXES WERE PAID U/S 1 A.Y. 2013- 14 IS ENCLOSED. THE ASSESSING OFFICER HAS COMPUTED THE INCOME AS PER THE PROVISION OF THE I T ACT, 1961 AT RS. 3,02,98,9 70/ 9917852/- BUT HAS FAILED TO COM ALLOW CREDIT FOR TAXES PAID U/S 115JD FOR WHICH NEC ESSARY DIRECTION BE GIVEN AS PER LAW. ITA NO ASSESSMENT YEAR: SSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND THIS IS A OF DEDUCTION IN RESPECT OF SUBSTANTIAL EXPANSION THEREFORE THE GROUND NOS. 1 TO 3 ARE ALLOWED. GROUND NO. 4 RAISED BY THE ASSESSEE WHICH RELATES TO BOOK PROFIT U/S 115JC AND ALLOW THE SET OFF OF TAX CREDI T U/S 115J D FOR TAX PAID IN EARLIER THE LD. CIT(A) , THE ASSESSEE HAD RAISED ADDITIONAL GROUNDS PROVISION OF SECTION 115JC REGARDING SPECIAL PROVI SION FOR PAYMENT OF TAX BY CERTAIN PERSON OTHER THAN A COMPANY WAS INTRODUCED BY FINANCE ACT 2012 W.E.F. 01.04.2013 RELEVANT TO A.Y. 2013 - 14 AND IN COMPLIANCE TO THE SAID PROVISION TAXES WERE PAID U/S 1 15JC OF THE I T ACT, 1961 AND A STATEMENT OF TAXES PAID W.E..F 14 IS ENCLOSED. THE ASSESSING OFFICER HAS COMPUTED THE INCOME AS PER THE PROVISION OF THE I T ACT, 1961 AT RS. 3,02,98,9 70/ - AND HAS LEVIED TAX OF RS. BUT HAS FAILED TO COM PUTE BOOK PROFIT U/S 115JC OF THE IT ACT, 1961 AND ALLOW CREDIT FOR TAXES PAID U/S 115JD FOR WHICH NEC ESSARY DIRECTION BE GIVEN AS UMANG GOENKA ITA NO . 165/KOL/2019 ASSESSMENT YEAR: 2015-16 P PP PA AA AG GG GE EE E | || | 1 11 10 00 0 SSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND THIS IS A OF DEDUCTION IN RESPECT OF SUBSTANTIAL EXPANSION U/S 80IC OF THE RAISED BY THE ASSESSEE WHICH RELATES TO BOOK FOR TAX PAID IN EARLIER ADDITIONAL GROUNDS PROVISION OF SECTION 115JC REGARDING SPECIAL PROVI SION FOR PAYMENT OF TAX BY CERTAIN PERSON OTHER THAN A COMPANY WAS INTRODUCED BY FINANCE ACT 2012 W.E.F. 14 AND IN COMPLIANCE TO THE SAID PROVISION 15JC OF THE I T ACT, 1961 AND A STATEMENT OF TAXES PAID W.E..F 14 IS ENCLOSED. THE ASSESSING OFFICER HAS COMPUTED THE INCOME AS PER AND HAS LEVIED TAX OF RS. PUTE BOOK PROFIT U/S 115JC OF THE IT ACT, 1961 AND ALLOW CREDIT FOR TAXES PAID U/S 115JD FOR WHICH NEC ESSARY DIRECTION BE GIVEN AS UMANG GOENKA ITA NO. 165/KOL/2019 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 1 11 11 11 1 15. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY G ONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCU MENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD. WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE BOOK PROFIT U/S 115JC OF THE ACT AND AL LOW THE SET OFF OF TAX CREDIT U/S 115JD FOR TAXES PAID BY THE ASSESSEE IN EARLIER YEA RS ON BOOK PROFIT IN ACCORDANCE WITH LAW. STATISTICAL PURPOSES THE ADDITIONAL GROUN DS RAISED BY THE ASSESSEE IS ALLOWED. 16. BEFORE PARTING, IT IS NOTED THAT THE ORDER IS B EING PRONOUNCED AFTER 90 DAYS OF HEARING. HOWEVER, TAKING NOTE OF THE EXTRAORDINARY SITUATION IN THE LIGHT OF THE COVID-19 PANDEMIC AND LOCKDOWN, THE PERIOD OF LOCKD OWN DAYS NEED TO BE EXCLUDED. FOR COMING TO SUCH A CONCLUSION, WE RELY UPON THE DECISION OF THE CO- ORDINATE BENCH OF THE MUMBAI TRIBUNAL IN THE CASE O F DCIT VS. JCB LIMITED IN ITA NO. 6264/MUM/2018 AND ITA NO. 6103/MUM/2018 FOR A.Y. 2013-14 ORDER DATED 14.05.2020. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 12. 06.2020 SD/- ( S.S.GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 12/06/2020 ( SB, SR.PS ) UMANG GOENKA ITA NO. 165/KOL/2019 ASSESSMENT YEAR:2015-16 P PP PA AA AG GG GE EE E | || | 1 11 12 22 2 COPY OF THE ORDER FORWARDED TO: 1. UMANG GOENKA 2. ACIT, CIRCLE-31, KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES