M/s C.R.G. Industries , Baddi V. ITO, W-1, Solan

ITA 27/CHANDI/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4999 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 08-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S KAHLON
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.27/CHD/2018 (ASSESSMENT YEAR : 2011-12) M/S CRG INDUSTRIES, VS. THE D.C.I.T., 75, HPSIDC INDL. AREA, CIRCLE PARWANOO. BADDI, DISTT. SOLAN (H.P.) PAN: AAEFC7147E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY JAIN, CA RESPONDENT BY : SHRI J.S.KAHLON, SR.DR DATE OF HEARING : 23.07.2018 DATE OF PRONOUNCEMENT : 01.08.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 3.10.2017 OF LD. COMMISSION ER OF INCOME TAX (APPEALS), FARIDABAD (HEREINAFTER REFERR ED TO AS LD.CIT (APPEALS)] 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT THE ID COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED BY NOT ALLOWING DEDUCTION @ 100% OF PROFIT DERIVED FROM MANUFACTURING ACTIVITIES OF UNIT DESPI TE OF FACT THAT THE ASSESSEE HAS UNDERTAKEN SUBSTANTIA L EXPANSION DURING THE FINANCIAL YEAR 2009-10. FURTHE R THE LD. ASSESSING OFFICER HAS WRONGLY DISALLOWED DEDUCTION AMOUNTING TO RS. 1745580/- U/S 80IC OF THE INCOME TAX ACT. 2. THAT THE ID COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED BY UPHOLDING THE ADDITION OF RS. 17758/- ON ACCOUNT OF INTEREST. 2 ITA NO.27/CHD/2018- M/S CRG INDUSTRIESM, BADDI 2. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE CLAIMED DEDUCTION U/S 80IC OF THE ACT @100% ON ACCO UNT OF SUBSTANTIAL EXPANSION OF THE UNIT. THE ASSESSING OF FICER, HOWEVER, DENIED THE CLAIM OBSERVING THAT ASSESSEE O NCE HAD AVAILED THE DEDUCTION U/S 80IC AT THE TIME OF ESTAB LISHMENT OF UNIT AND THUS WAS NOT ENTITLED TO 100% DEDUCTION SU BSEQUENTLY ON ACCOUNT OF SUBSTANTIAL EXPANSION. THE LD. CIT(A ), UPHELD THE ADDITION SO MADE BY THE ASSESSING OFFICER BY FO LLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S HYCRON ELECTRONICS V ITO IN ITA NO. 798/CHD/2012 AND OTHER RELATED CASES . 3. THE LD. AR HAS STATED THAT THE ISSUE RELATING TO SUBSTANTIAL EXPANSION RAISED IN THIS APPEAL IS NOW WELL SETTLED , WHICH HAS ALREADY BEEN ADJUDICATED BY THE HONBLE HIMACHAL PR ADESH HIGH COURT VIDE THEIR ORDER DT. 28 NOVEMBER 2017 IN THE GROUP OF CASES WITH THE LEAD CASE TITLED AS M/S STOVEKRAFT INDIA V S. COMMISSIONER OF INCOME TAX, ITA NO.20 OF 2015, AND IT HAS BEEN P OINTED OUT THAT THE HONBLE HIGH COURT HAS DECIDED THE ISSUE I N FAVOUR OF THE ASSESSEE, HOLDING THAT THERE IS NO BAR IN THE SAID SECTION DENYING THE BENEFIT OF HUNDRED PERCENT DEDUCTION TO NEW UNI TS UNDERTAKING SUBSTANTIAL EXPANSION. OUR ATTENTION HAS BEEN DRAWN TO THE RELEVANT CONCLUSIONS OF THE HONBLE HIGH COURT IN T HIS REGARD AT PARA 55 OF THE ORDER WHICH READ AS UNDER: 55.THUS, IN VIEW OF THE ABOVE DISCUSSION, THESE APPEALS ARE ALLOWED AND ORDERS PASSED BY THE ASSESSMENT OFFICER AS WELL AS THE APPELLATE AUTHORI TY AND THE TRIBUNAL, IN THE CASE OF EACH ONE OF THE ASSESSES, ARE QUASHED AND SET ASIDE, HOLDING AS UND ER: 3 ITA NO.27/CHD/2018- M/S CRG INDUSTRIESM, BADDI (A) SUCH OF THOSE UNDERTAKINGS OR ENTERPRISES WHIC H WERE ESTABLISHED, BECAME OPERATIONAL AND FUNCTIONAL PRIOR TO 7.1.2003 AND HAVE UNDERTAKEN SUBSTANTIAL EXPANSION BETWEEN 7.1.2003 UPTO 1.4.2012, SHOULD BE ENTITLED TO BENEFIT OF SECTION 80-IC OF THE ACT, FO R THE PERIOD FOR WHICH THEY WERE NOT ENTITLED TO THE BENE FIT OF DEDUCTION UNDER SECTION 80-IB. (B) SUCH OF THOSE UNITS WHICH HAVE COMMENCED PRODUCTION AFTER 7.1.2003 AND CARRIED OUT SUBSTANTI AL 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 CAN BE NUMBER OF MULTIPLE SUBSTANTIAL EXPANSIONS. (D) CORRESPONDINGLY, THERE CAN BE MORE THAN ONE INITIAL ASSESSMENT YEARS. (E) WITHIN THE WINDOW PERIOD OF 7.1.2013 UPTO 1.4.2012, 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 SECTIO N, CONTAINED IN CHAPTER VI-A OR SECTION 10A OR 10B OF THE ACT [SECTION 80- IB(5)]. 4. LD. DR HAS FAIRLY ADMITTED THAT THE ISSUE IS SQU ARELY COVERED BY THE ABOVE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT. HE, HOWEVER, HAS SUBMITTED THAT THE ISSUE BE RESTOR ED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AS TO WHE THER THE ASSESSEE HAS ACTUALLY CARRIED OUT THE SUBSTANTIAL 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 TH E ASSESSING OFFICER REVEALS THAT THE ASSESSING OFFICER HAS NOT DISPUTED THAT THE 4 ITA NO.27/CHD/2018- M/S CRG INDUSTRIESM, BADDI ASSESSEE UNIT HAS CARRIED OUT SUBSTANTIAL EXPANSION AS PROVIDED UNDER CLAUSE (B) OF SUB SECTION (2) READ WITH CLAUS E (IX) OF SUB SECTION (7) OF SECTION 80IC OF THE ACT. ALMOST SI MILAR VIEW HAS ALSO BEEN TAKEN BY THE HON'BLE HIMACHAL PRADESH HIG H COURT IN THE CASE OF M/S STOVEKRAFT INDIA VS. COMMISSIONER OF INCOME TAX (SUPRA) IN THE FOLLOWING CONCLUDING PARA OF TH E ORDER:- 58. ON FACTS, WE MAY CLARIFY THAT THE REVENUE HAS NOT DISPUTED, (A) THE UNITS HAVING CARRIED OUT SUBSTANT IAL EXPANSION WITHIN THE DEFINITION OF THE SECTION, (B) THEIR ENTITLEMENT AND EXTENT OF DEDUCTION WOULD BE DEPEND ENT UPON INTERPRETATION OF THE RELEVANT PROVISIONS. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION AT THI S STAGE TO GIVE THE ASSESSING OFFICER A SECOND INNINGS TO RE-EXAM INE UNDISPUTED FACTS. 6. IN VIEW OF THE ABOVE DISCUSSION, THE IMPUGNED OR DER OF THE CIT(A) RELATING TO GROUND NO.1 IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO GRANT TO THE ASSESSEE DEDUCT ION AT THE RATE OF HUNDRED PERCENT OF ITS ELIGIBLE PROFITS, AS PER TH E RULING OF THE JURISDICTIONAL HIGH COURT IN THIS REGARD IN THE CAS E OF M/S STOVEKRAFT INDIA VS. COMMISSIONER OF INCOME TAX (S UPRA). 7. SO FAR AS GROUND NO.2 IS CONCERNED, THE LD. COUN SEL FOR ASSESSEE FAIRLY ADMITTED THAT THE ASSESSEE IS N OT ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT IN RESPECT OF INT EREST INCOME, HOWEVER, HE HAS PLEADED THAT THE ASSESSEE M AY BE ALLOWED THE SET OFF OF THE INTEREST EXPENDITURE INC URRED FOR EARNING OF INTEREST INCOME. 5 ITA NO.27/CHD/2018- M/S CRG INDUSTRIESM, BADDI 8. HOWEVER, THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES HAVE SUBMITTED THAT THIS ISSUE HAS NOT BEEN ADJUDICATED UPON EITHER BY THE ASSESSING OFFICER OR BY THE LD. CIT (APPEALS). WE, THEREFORE, RESTORE THE ISSUE RELATING GROUND NO.2 TO THE LIMITED EXTENT THAT IF THE INTER EST EXPENDITURE INCURRED BY THE ASSESSEE HAS NEXUS WITH THE INTEREST INCOME EARNED BY THE ASSESSEE, THE ASSESSE E WILL BE ELIGIBLE FOR NETTING OFF/SETTING OFF OF THE SAME AG AINST THE INTEREST INCOME. THE MATTER IS, THEREFORE, RESTORED TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THIS ISSUE AFRESH ON THIS LIMITED POINT. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01.08.2018. SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 01.08.2018 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR