M/s Ambica Alloys, Sirmour V. DCIT, Circle, Shimla

ITA 300/CHANDI/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3102 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 15-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Set aside
• Section: 143(1); 80IC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH .., !' '# $, % &' BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ITA NO.300/CHD/2019 ASSESSMENT YEAR : 2014-15 M/S AMBICA ALLOYS PLOT NO. 5, KALA AMB, PHASE II, INDUSTRIAL AREA, DISTT. SIRMOUR HIMACHAL PRADESH THE DCIT CIRCLE SHIMLA, HIMACHAL PRADESH PAN NO: AAJFA6144N APPELLANT RESPONDENT !' ASSESSEE BY : SHRI ATUL GOYAL, CA #!' REVENUE BY : SHRI CHANDRAJIT SINGH, CIT(DR) $ %! & DATE OF HEARING : 21/11/2019 '()*! & DATE OF PRONOUNCEMENT : 21/11/2019 &(/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESEE AND IS DIRECTED AGAIN ST THE ORDER DT. 19/02/2019 OF LD. CIT(A), SHIMLA. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT THE ORDER OF THE LD. ASSESSING OFFICER UPHE LD BY THE WORTHY CIT(A) IS BEING CHALLENGED ON THE GROUND OF IT BEING BAD IN LAW, AR BITRARY & HAVING BEEN PASSED IN HASTE WITHOUT CONSIDERING THE JUDICIAL PRONOUNCEMENTS REL IED UPON BY THE APPELLANT DURING THE COURSE OF THE APPELLANT PROCEEDINGS. 2. THAT THE WORTHY CIT(A) ERRED IN FACTS & IN LAW I N NOT CONSIDERING THE AY 2014-15 AS THIRD ASSESSMENT YEAR FOR CLAIMING DEDUCTION U/S 80IC OF THE INCOME TAX ACT, 1961 ON THE BASIS OF SUBSTANTIAL EXPANSION & THEREFORE THE SAID ORDER DESERVES TO BE SET ASIDE. 3. ANY OTHER GROUND OR GROUNDS AS MAY BE URGED AT T HE TIME OF HEARING. 3. FROM THE ABOVE GROUNDS IT WOULD BE CLEAR THAT THE ON LY ISSUE AGITATED BY THE ASSESSEE RELATES TO THE DENIAL OF DEDUCTION UNDER SECTI ON 80IC OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT), CLAIMED BY THE ASSESSEE ON THE BASIS OF SUBSTANTIAL EXPANSION. 2 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE F ILED RETURN OF INCOME ON 29/11/2014 DECLARING INCOME OF RS. 2,66,170/- AFTER C LAIMING THE DEDUCTION OF RS. 4,01,01,925/- UNDER SECTION 80IC OF THE ACT WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT, AT THE RETURNED INCOME, SUBSEQUENTLY THE CASE WA S SELECTED FOR SCRUTINY. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. OBSERVED THAT THE ASSESSEE STARTED ITS OPERATION ON 17/04/2008 AND CLAIM ED DEDUCTION UNDER SECTION 80IC OF THE ACT FROM THE A.Y. 2009-10 AND THE PRESENT YEAR WA S SIXTH YEAR IN WHICH THE ASSESSEE WAS CLAIMING THE DEDUCTION UNDER SECTION 80IC O F THE ACT. HE ALSO OBSERVED THAT THE ASSESSEE INFORMED THAT ITS UNIT HAD COMPLETED SUBSTANTIAL EXPANSION ON 15/03/2012 AND THE RELEVANT ASSESSMENT YEAR IS 2012-13 (1 ST YEAR). HOWEVER THE A.O. DID NOT ALLOW THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SE CTION 80IC OF THE ACT BY OBSERVING THAT THE ASSESSEE WAS ENTITLED FOR DEDUCTION UNDER SECTION 80IC FOR THE FIRST FIVE ASSESSMENT YEAR I.E. FROM 2009-10 TO 2013-14 AND THEREAFTER THE DEDUCTION WAS TO BE ALLOWED @ 25% FROM THE ASSESSMENT YEAR 2014-15 ONWA RDS. IN OTHER WORDS THE A.O. HAS NOT ALLOWED THE BENEFIT OF SUBSTANTIAL EXPANSION TO THE ASSESSEE. 6. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO UPHELD THE VIEW TAKEN BY THE A.O. 7. NOW THE ASSESSEE IS IN APPEAL. 8. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NOW THE ISSUE HAS BEEN SETTLED BY THE HON'BLE APEX COURT IN THE CASE OF PR. CIT, SHIMLA VS . M/S AARHAM SOFTRONICS IN CIVIL APPEAL NO(S). 1784 OF 2019 ORDER DT. 20/02/2019 WHE REIN IT HAS BEEN HELD THAT OBJECTIVES FOR WHICH SECTION 80IC WAS ENACTED AND IRRESI STIBLE CONCLUSION WOULD BE TO GRANT 100% DEDUCTION OF THE PROFITS AND GAINS EVEN FROM THE YEAR WHEN THERE IS SUBSTANTIAL EXPANSION IN THE EXISTING UNIT, AFTER ALL, THI S SUBSTANTIAL EXPANSION INVOLVES GREAT DEAL OF INVESTMENT WHICH HAS BEEN ATLEAST 50% IN THE PLANT AND MACHINERY OF THE BOOK VALUE THEREOF BEFORE TAKING DEPRECIATION IN ANY YEA R. 9. IN HIS RIVAL SUBMISSIONS THE LD. CIT DR STRONGLY SU PPORTED THE ORDERS OF THE AUTHORITIES BELOW. 3 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE IT IS NOTICED THAT THE ASSESSEE HAD CARRIED OUT ITS SUBSTANTIAL EXPANSION ON 15/03/2012 AND THIS FACT HAS ALSO BEEN ADMITTED BY THE A.O. , NOW THIS ISSUE HAS BEEN SETTLED BY THE HO N'BLE APEX COURT IN THE CASE OF PR. CIT VS. AARHAM SOFTRONICS (SUPRA) WHEREIN IT HAS BEE N HELD AS UNDER: OBJECTIVES FOR WHICH SECTION 80-IC WAS ENACTED, AN IRRESISTIBLE CONCLUSION WOULD BE TO GRANT 100% DEDUCTION OF THE PROFITS AND GAINS EVEN FROM THE YEAR WHEN THERE IS SUBSTANTIAL EXPANSION IN THE EXISTING UNIT. AFTER ALL, THIS SUB STANTIAL EXPANSION INVOLVES GREAT DEAL OF INVESTMENT WHICH HAS TO BE, AT LEAST 50% IN THE PLA NT AND MACHINERY, OF THE BOOK VALUE THEREOF BEFORE TAKING DEPRECIATION IN ANY YEAR. WITH AN EXPANSION OF SUCH A NATURE NOT ONLY THERE W OULD BE INCREASE IN PRODUCTION BUT GENERATION OF MORE EMPLOYMENT AS WELL, WHICH WOULD BENEFIT THE LOCAL POPULACE. IT IS FOR THIS REASON, CARRYING OUT SUBSTANTIAL EXPANSION BY ITSELF IS TREATED AS 'INITIAL ASSESSMENT YEAR'. IT WOULD MEAN THAT EVEN WHEN AN OLD UNIT COMPLETES SUBSTANTIAL EXPANSION, SUCH A UNIT ALSO BECOMES ENTITLED TO AVAIL THE BENEFIT OF SECTI ON 80-IC. IF THAT IS THE PURPOSE OF THE LEGISLATURE, WE SEE NO REASON AS TO WHY 100% DEDUCT ION OF THE PROFITS AND GAINS BE NOT ALLOWED TO EVEN THOSE UNITS WHO HAD AVAILED THIS DE DUCTION ON SETTING UP OF A NEW UNIT AND HAVE NOW INVESTED HUGE AMOUNT WITH SUBSTANTIAL EXPANSION OF THOSE UNITS. 11. WE THEREFORE BY KEEPING IN VIEW THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE AFORESAID REFERRED TO ORDER, SET ASIDE THE IMPUGNE D ORDER PASSED BY THE LD. CIT(A) AND DIRECT THE A.O. TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 21/11/2019) SD/- SD/- '# $ .., (SANJAY GARG ) ( N.K. SAI NI) % &'/ JUDICIAL MEMBER / VICE PRESIDENT AG DATE: 21/11/2019 (+! ,-.- 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