M/s RR Lamps, Kirpalpur V. DCIT, Circle, Parwanoo

ITA 189/CHANDI/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8897 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 22-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Set aside
• Section: 10B; 80IC; 80IC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BEN CH B, CHANDIGARH .., ! '# #$ %, & '( BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, JM ITA NO.189/CHD/2019 ASSESSMENT YEAR : 2015-16 M/S RR LAMPS VILLAGE KIRPALPUR, PO NALAGARH, SOLAN HIMACHAL PRADESH THE DCIT CIRCLE, PARWANOO HIMACHAL PRADESH PAN NO: AAIFR7427E APPELLANT RESPONDENT !' ASSESSEE BY : SHRI. VINEET KRISHAN, ADVOCATE #!' REVENUE BY : SHRI. MANJIT SINGH, CIT DR $ %! & DATE OF HEARING : 08/07/2019 '()*! & DATE OF PRONOUNCEMENT : 08/07/2019 ')/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT. 26/12/2018 OF LD. CIT(A), SHIMLA, HIMACHAL PRADESH. 2. FOLLOWING GROUNDS HAS BEEN RAISED IN THIS APPEAL : 1. THAT THE ORDER PASSED UNDER SECTION 250(6) OF TH E INCOME TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), S HIMLA IN APPEAL NO. IT/176/17-18/SML DATED 26.12.2018 IS CONTRARY TO LA W AND FACTS OF THE CASE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN UPHOLDING THE ACTION OF THE ID. ASSESSING OFFICER WHO HAD RESTRICTED THE CL AIM OF DEDUCTION UNDER SECTION 80IC TO 25% OF THE PROFITS AND GAINS OF THE ELIGIBL E BUSINESS INSTEAD OF 100% OF SUCH PROFITS CLAIMED BY APPELLANT, WHICH LED TO ADDITION OF RS. 94,09,202/-. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN UPHOLDING THE STAND OF THE ID. ASSESSING OFFICER WHO HAD ERRED IN MISINTER PRETING THE PROVISIONS OF SECTION 80IC AND IN HOLDING THAT THE BENEFIT OF 100% DEDUCT ION UNDER SECTION 80IC OF THE ACT FOR FIRST FIVE YEARS IN CASE OF SUBSTANTIAL EXP ANSION IS AVAILABLE ONLY TO THE UNITS THAT EXISTED AND WHERE OPERATIONAL AS ON 07.01.2003 AND SUCH BENEFIT IS NOT AT ALL MEANT FOR THE UNITS THAT CAME INTO BEING ON OR AFTE R THE INTRODUCTION OF THE SCHEME OF SUCH DEDUCTION. 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD COMMISSIONER OF INCOME TAX (APPEALS) GRAVELY ERRED IN UPHOLDING THA T ONCE AN 'INITIAL ASSESSMENT YEAR' IS DETERMINED IN CASE OF AN UNDERTAKING CLAIM ING BENEFIT U/S 80IC OF THE ACT, IT CANNOT BE CHANGED EVEN IF SUCH UNDERTAKING COMPL ETES SUBSTANTIAL EXPANSION AND AGAIN QUALIFIES FOR DEDUCTION UNDER THE SAID S ECTION ON THE BASIS OF 'QUALIFYING EXPANSION', RATHER THAN BASED ON 'QUALIFYING COMMENCEMENT'. 2 5. THAT THE APPELLANT CRAVES TO ADD, AMEND OR ALTER ANY GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL, WITH TH E PERMISSION OF THE HON'BLE INCOME TAX APPELLATE TRIBUNAL. 3. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEA L RELATES TO THE DEDUCTION UNDER SECTION 80IC OF THE INCOME TAX ACT, 1961 (HER EINAFTER REFERRED TO AS ACT), DENIED BY THE A.O. EVEN WHEN THE ASSESSEE COMPLETED SUBSTANTIAL EXPANSION AND CLAIMED FOR DEDUCTION ON THE BASIS OF SUCH EXPA NSION. 4. FACTS OF THE CASE IN BRIEF FARE THAT THE ASSESSE E E-FILED ITS RETURN OF INCOME ON 21/09/2015 AT AN INCOME RS. 1,90,140/- AFTER CLA IMING DEDUCTION UNDER SECTION 80IC OF THE ACT, AMOUNTING TO RS. 1,28,49,7 23/- AND SHOWING THE BOOK PROFIT OF RS. 1,30,39,864/-. LATER ON THE CASE WAS SELECTED FOR SCRUTINY. THE A.O. OBSERVED THAT THE ASSESSEE STARTED ITS BUSINESS ACT IVITY / OPERATION ON 27/09/2006 AS SUCH THE INITIAL ASSESSMENT YEAR FOR CLAIM OF DE DUCTION UNDER SECTION 80IC OF THE ACT WAS ASSESSMENT YEAR 2007-08. HE FURTHER OBS ERVED THAT THE ASSESSEE HAD ALREADY CLAIMED DEDUCTION @ 100% OF ELIGIBLE PROFIT FOR THE FIVE YEARS PERIOD OF A.Y 2007-08 TO A.Y. 2011-12 AND AGAIN CLAIMED 100% DEDUCTION AGAINST THE ELIGIBLE PROFIT BY CLAIMING SUBSTANTIAL EXPANSION I N THE A.Y. 2015-16 WHICH WAS NINTH YEAR OF PRODUCTION FOR THE ASSESSEES FIRM. T HE A.O. HELD THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF TH E ACT ONLY @ 25% AS AGAINST THE CLAIM OF 100%. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO UPHELD THE VIEW TAKEN BY THE A.O. 6. NOW THE ASSESSEE IS IN APPEAL. 7. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVERED B Y THE DECISION OF THIS BENCH OF THE ITAT IN ASSESSEES OWN CASE FOR THE A.Y. 2014-1 5 IN ITA NO. 1389/CHD/2017 VIDE ORDER DT. 16/01/2018, COPY OF THE SAID ORDER W AS FURNISHED WHICH IS PLACED ON RECORD. 8. IN HIS RIVAL SUBMISSIONS THE LD. CIT DR ALTHOUG H SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW BUT COULD NOT CONTROVERT THE AFOR ESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED TH AT AN IDENTICAL ISSUE HAVING SIMILAR FACTS WAS A SUBJECT MATTER OF THE ASSESSEE S APPEAL IN THE PRECEDING A.Y. 2014-15 IN ITA NO. 1389/CHD/2017 WHEREIN VIDE ORDER DT. 16/01/2018 THIS ISSUE HAS 3 BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND THE RELE VANT FINDINGS HAD BEEN GIVEN IN PARA 3 TO 6 OF THE SAID ORDER WHICH READ A S UNDER: 3. DURING THE COURSE OF HEARING BEFORE US, IT WAS B ROUGHT TO OUR NOTICE THAT THE ISSUE INVOLVED IN THESE APPEALS HAS ALREADY BEEN AD JUDICATED BY THE HONBLE HIMACHAL PRADESH HIGH COURT VIDE THEIR ORDER DT. 28 NOVEMBER 2017 IN THE GROUP OF CASES WITH THE LEAD CASE TITLED AS M/S STOVEKRAF T INDIA VS. COMMISSIONER OF INCOME TAX, ITA NO.20 OF 2015, AND IT WAS POINTED O UT THAT THE HONBLE HIGH COURT HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, HO LDING THAT THERE IS NO BAR IN THE SAID SECTION DENYING THE BENEFIT OF HUNDRED PERCENT DEDUCTION TO NEW UNITS UNDERTAKING SUBSTANTIAL EXPANSION. OUR ATTENTION WA S DRAWN TO THE RELEVANT CONCLUSIONS OF THE HONBLE HIGH COURT IN THIS REGAR D 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 APP ELLATE 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 HA VE UNDERTAKEN SUBSTANTIAL EXPANSION BETWEEN 7.1.2003 UPTO 1.4.2012, SHOULD BE ENTITLED TO BENEFIT OF SECTION 80-IC OF THE ACT, FOR THE PERIOD 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 PERCENTA GE STIPULATED UNDER SECTION 80- IC. (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% FOR 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. HOWEVER, LD. DR FAIRLY ADMITTED THAT THE ISSUE I S SQUARELY COVERED BY THE ABOVE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT. IT WAS, HOWEVER, SUBMITTED THAT THE ISSUE BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AS TO WHETHER THE ASSESSEE HAS ACTUALLY CARRIED OUT THE S UBSTANTIAL EXPANSION TO BE 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 REV EALS 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 STOVEKRAFT 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 WITHIN THE DEFINITION OF THE SECTION, (B) THEIR ENTITLEMENT AND EXTENT OF DEDUCTION WOULD BE DEPENDENT UPON INTERPRETATION OF THE RELEVANT PROVISIONS. 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 IMPUGNED OR DERS OF THE CIT(A) ARE SET ASIDE AND THE AO IS DIRECTED TO GRANT TO THE ASSESS EES DEDUCTION AT THE RATE OF HUNDRED PERCENT OF ITS ELIGIBLE PROFITS, AS PER THE RULING OF THE JURISDICTIONAL HIGH COURT IN THIS REGARD IN THE CASE OF M/S STOVEKRAFT INDIA VS. COMMISSIONER OF INCOME TAX (SUPRA). SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER IN ASSESSEES OWN CASE, WE DIRECT THE A.O. TO ALLOW THE CLAIM OF THE ASSESSEE UNDER SECTION 80IC OF THE ACT , SINCE THERE WAS A SUBSTANTIAL EXPANSION A ND THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT FOR THE A.Y. 2015-16 ALSO. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ( ORDER PRONOUNCED IN THE OPEN COURT ON 08/07/2019 ) SD/- SD/- #$ % .., (SANJAY GARG ) ( N.K. SAI NI) & '(/ JUDICIAL MEMBER ! / VICE PRESIDENT AG DATE: 08/07/2019 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE (+ $ BY ORDER, ; # ASSISTANT REGISTRAR