Haripur Paper Company, Solan V. DCIT, Parwanoo

ITA 331/CHANDI/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1570 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 07-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Keywords: Revision of order; Depreciation; Advance ruling; Condonation of delay
• Section: 244A; 80IB; 263; 10

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 331/CHD/2015 ASSESSMENT YEAR: 2011-12 M/S HARIPUR PAPER COMPANY, VS. THE DCIT, CIRCLE, BAROTIWALA, DISTT. SOLAN, PARWANOO H.P. PAN NO. AADFH3413M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ATUL GOYAL RESPONDENT BY : DR. AMARVEER SINGH DATE OF HEARING : 22/07/2015 DATE OF PRONOUNCEMENT : 03/08/2015 ORDER PER T.R.SOOD, A.M. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28.1.2015 OF CIT(A), SHIMLA 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS:- 1. (I) THAT THE LD. ASSESSING OFFICER HAS ERRED BOTH IN LA W AND FACTS IN MAKING AN ADDITION OF RS. 94,21,209/- ON A CCOUNT OF DISALLOWANCE OF DEDUCTION UNDER SECTION 80IC ON THE GROUND THAT BENEFIT OF SUBSTANTIAL EXPANSION CAN ONLY BE U NDERTAKEN BY UNITS THAT WERE UNDERTAKING COMMERCIAL PRODUCTIO N 2 BEFORE 7 TH JANUARY 2003 AND SHALL NOT BE AVAILABLE FOR THE UNITS THAT CAME INTO EXISTENCE ON OR AFTER 07 TH JANUARY, 2003. (II) THAT LD. ASSESSING OFFICER HAS ERRED IN LAW AN D FACTS IN INITIATING PENALTY PROCEEDINGS UNDER THE PROVISION OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD CLAIMED DEDUCTION U/S 80IC @ 100% ON ELIGIBLE PROFITS. IT WAS FURTHER NOTICED THAT ASSES SEE HAS STARTED BUSINESS OPERATION FROM 2.4.2004 AND THE DEDUCTION WAS CLAIMED FOR THE FIRST TIME IN ASSESSMENT YEAR 2005-06. 100% DEDUCTION WAS CLAIMED FOR FIVE YEARS FROM ASSESSMENT YEARS 2005- 06 TO 2009-10. FURTHER, LATER ON ASSESSEE CARRIED ON SUBSTANTIAL EXPANSION AND AGAIN CLAIMED 100% DEDUCTION ON THE BASIS OF SUCH S UBSTANTIAL EXPANSION. THE PRESENT YEAR IS SEVENTH YEAR AND, THEREFORE, AFTER DETAILED DISCUSSION THE ASSESSING OFFICER ALLOWED DEDUCTION ONLY @ 25%. 4. ON APPEAL, THE ACTION OF THE ASSESSING OFFICER H AS BEEN CONFIRMED BY LD. CIT(A) AFTER ANALYZING THE PROVISION IN DETAIL IN H ER ORDER. 5. BEFORE US LD. COUNSEL FOR THE ASSESSEE FAIRLY CO NCEDED THAT THE PRESENT ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF HYCRON ELECTRONICS, SOLAN & OTHERS VS. ITO IN ITA NO. 798 /CHD/2012 & OTHERS. 6. ON THE OTHER HAND LD. DR SUPPORTED THE ORDER OF CIT(A). 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THIS ISSUE IS IDENTICAL TO THE ISSUE DECIDED IN GROUP OF CASES IN THE CASE OF HYRCRON ELECTRONICS, SOLAN VS. ITO & OTHERS (SUPRA). THE ISSUE WAS DECIDED VIDE P ARAS 22 TO 46 WHICH ARE AS UNDER:- 3 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS INCLU DING WRITTEN SUBMISSIONS IN THE LIGHT OF MATERIAL ON RECORD, AS WELL AS JUDGMENTS CITED BY THE PARTIES. BEFORE WE CONSIDER THE RELEVA NT PROVISIONS WHICH ARE REQUIRED TO BE INTERPRETED, IT WILL BE USEFUL T O DEAL WITH THE VARIOUS PRINCIPLES OF INTERPRETATION AS ENUNCIATED BY VARIOUS COURTS. 23. IT IS SETTLED THAT IF THE LANGUAGE OF A PARTICULAR STATUTE IS CLE AR THEN ONLY LITERAL MEANING HAS TO BE GIVEN TO SUCH L ANGUAGE AS LONG THE SAME DOES NOT RESULT IN ABSURDITY OR UNINTENDED CON SEQUENCES. THEREFORE, IF THE LANGUAGE OF A PARTICULAR STATUTE IS CLEAR THEN THE SAME CANNOT BE CHANGED BY APPLYING DIFFERENT PRINCIPLES OF INTERPRETATIONS. THIS IS CLEAR FROM THE OBSERVATIONS MADE BY HON'BL E APEX COURT IN THE CASE OF ORISSA STATE WAREHOUSING CORPORATION VS . CIT 237 ITR 607 WHEREIN IT HAS BEEN OBSERVED AT PAGE 604 & 605 OF THE REPORT AS UNDER:- LET US, HOWEVER, AT THIS JUNCTURE, CONSIDER SOME O F THE OFT CITED DECISIONS PERTAINING TO THE INTERPRETATION OF THE F ISCAL STATUTES BEING THE FOCAL POINT OF CONSIDERATION IN THESE APPEALS. LORD HALSBURY AS EARLY AS 1901, IN COOKE V. CHARLES A. VOGELER COMPANY [1901] AC 102 (HL) STATED THE LAW IN THE MANNER FOLLOWING: A COURT OF LAW, HAS NOTHING TO DO WITH THE REASON ABLENESS OR UNREASONABLENESS OF A PROVISION OF A STATUTE EXCEPT SO FAR AS IT MAY H OLD IT IN INTERPRETING WHAT THE LEGISLATURE HAS SAI D. IF THE LANGUAGE OF A STATUTE BE PLAIN, ADMITTING OF ONLY ONE MEANING, THE LEGISLATURE MUST BE TAKEN TO HAVE MEANT AND INTENDED WHAT IT HA S PLAINLY EXPRESSED, AND WHATEVER IT HAS IN CLEAR TERMS ENACT ED MUST BE ENFORCED THOUGH IT SHOULD NOT LEAD TO ABSURD OR MIS CHIEVOUS RESULTS. IF THE LANGUAGE OF THIS SUB-SECTION BE NOT CONTROLL ED BY SOME OF THE OTHER PROVISIONS OF THE STATUTE. IT MUST, SINCE, I TS LANGUAGE IS PLAIN AND UNAMBIGUOUS, BE ENFORCED AND YOUR LORDSHIPS HOUSE SITTING JUDICIALLY IS NOT CONCERNED WITH THE QUESTION WHETHER THE POLI CY IT EMBODIES IS WISE OR UNWISE, OR WHETHER IT LEADS TO CONSEQUENCES JUST OR UNJUST, BENEFICIAL OR MISCHIEVOUS. THE OFT-QUOTED OBSERVATIONS OF ROWLATTT J. IN THE C ASE OF CAPE BRANDY SYNDICATE V. IRC [1921] 1 KB 64 OUGHT ALSO T O BE NOTICED AT THIS JUNCTURE. THE LEARNED JUDGE OBSERVED (PAGE 71) : . . . IN A TAXING STATUTE ONE HAS TO LOOK MERELY A T WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. N OTHING IS TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED. THE OBSERVATIONS OF ROWLATT J. AS ABOVE STAND ACCEP TED AND APPROVED BY THE HOUSE OF LORDS IN A LATER DECISION, IN THE CASE OF CANADIAN EAGLE OIL ALSO IN A MANNER SIMILAR IN IRC V. ROS AND COULTER (BLADNOCH DISTILLERY CO. LTD. V. THE KING [1946] HO N'BLE APEX COURT 4 119; [1945] 2 ALL ER 499. LORD THANKERTON ALSO IN A MANNER SIMILAR IN IRC V. ROSS AND COULTER (BLADNOCH DISTILLERY CO. LT D. [1984] 1 ALL ER 616 AT PAGE 625 OBSERVE: IF THE MEANING OF THE PROVISION IS REASONABLY CLEA R, THE COURTS HAVE NO JURISDICTION TO MITIGATE SUCH HARSHNESS. THE DECISION OF THIS COURT IN KESHAVJI RAVJI AND C O. V. CIT[1990] 183 ITR 1 ALSO LENDS CONCURRENCE TO THE V IEWS EXPRESSED ABOVE. THIS COURT OBSERVED (PAGE 9): AS LONG AS THERE IS NO AMBIGUITY IN THE STATUTORY LANGUAGE, RESORT TO ANY INTERPRETATIVE PROCESS TO UNFOLD THE LEGISLATIVE INTENT BECOMES IMPERMISSIBLE. THE SUPPOSED INTENTIO N OF THE LEGISLATURE CANNOT THEN BE APPEALED TO TO WHITTLE D OWN THE STATUTORY LANGUAGE WHICH IS OTHERWISE UNAMBIGUOUS. IF THE INTENDMENT IS NOT IN THE WORDS USED. IT IS NOWHERE ELSE. THE NEED FOR INTERPRETATION ARISES WHEN THE WORDS USED IN THE STATUTE ARE, ON THEIR OWN TERMS, AMBIVALENT AND DO NOT MANI FEST THE INTENTION OF THE LEGISLATURE ARTIFICIAL AND UNDULY LATIDUDINARIAN RULES OF CONST RUCTION, WHICH WITH THEIR GENERAL TENDENCY TO GIVE THE TAXPAYER T HE BREAKS, ARE OUT OF PLACE WHERE THE LEGISLATION HAS A FISCAL MISSION. BE IT NOTED THAT INDIVIDUAL CASES OF HARDSHIP AND I NJUSTICE DO NOT AND CANNOT HAVE ANY BEARING FOR REJECTING THE N ATURAL CONSTRUCTION BY ATTRIBUTING NORMAL MEANING TO THE W ORDS USED SINCE HARD CASES DO NOT MAKE BAD LAWS. HOWEVER, IF SOME AMBIGUITY IS THERE IN THE LANGUAGE OF A PARTICULAR STATUTE BECAUSE OF VARIOUS REASONS, THE SAME IS REQ UIRED TO BE CONSTRUED SO AS TO FIND OUT THE REAL INTENTION OF T HE LEGISLATURE AND THEN EVERY POSSIBLE MATERIAL SHOULD BE CONSIDERED T O FIND OUT THE REAL INTENTION OF THE LEGISLATURE. IN THIS REGARD, THE O BSERVATION OF THE HON'BLE SUPREME COURT IN THE CELEBRATED JUDGEMENT OF K.P. VERGESE 131 ITR 598 (SUPRA) ARE RELEVANT. WE EXTRACT THE H EAD NOTE WHICH READS AS UNDER:- A STATUTORY PROVISION MUST BE SO CONSTRUED, IF POS SIBLE, THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED. WHERE T HE PLAIN LITERAL INTERPRETATION OF A STATUTORY PROVISION PRO DUCES A MANIFESTLY ABSURD AND UNJUST RESULT WHICH COULD NEV ER HAVE BEEN INTENDED BY THE LEGISLATURE, THE COURT MAY MOD IFY THE LANGUAGE USED BY THE LEGISLATURE OR EVEN DO SOME VI OLENCE TO IT, SO AS TO ACHIEVE THE OBVIOUS INTENTION OF THE LEGIS LATURE AND PRODUCE A RATIONAL CONSTRUCTION. L UKE V . IRC [1963] H ON ' BLE A PEX C OURT 557; [1964] 54 ITR 692 (HL) FOLLOWED. 5 SPEECHES MADE BY THE MEMBERS OF THE LEGISLATURE ON THE FLOOR OF THE HOUSE WHEN THE BILL IS BEING DEBATED A RE INADMISSIBLE FOR THE PURPOSE OF INTERPRETING THE ST ATUTORY PROVISION BUT THE SPEECH MADE BY THE MOVER OF THE B ILL EXPLAINING THE REASON FOR ITS INTRODUCTION CAN CERT AINLY BE REFERRED TO FOR THE PURPOSE OF ASCERTAINING THE MIS CHIEF SOUGHT TO BE REMEDIED BY THE LEGISLATION AND THE OBJECT AN D PURPOSE FOR WHICH THE LEGISLATION IS ENACTED. THIS IS AN ACCORD WITH THE RECENT TREND IN JURISTIC THOUGHT NOT ONLY IN WESTER N COUNTRIES BUT ALSO IN INDIA, THAT THE INTERPRETATION OF A STA TUTE BEING AN EXERCISE IN THE ASCERTAINMENT OF MEANING, EVERYTHIN G WHICH IS LOGICALLY RELEVANT SHOULD BE ADMISSIBLE. THE MARGINAL NOTE TO A SECTION CANNOT BE REFERRED TO FOR THE PURPOSE OF CONSTRUING THE SECTION BUT IT CAN CE RTAINLY BE RELIED UPON AS INDICATING THE DRIFT OF THE SECTION OR TO SHOW WHAT THE SECTION IS DEALING WITH. IT CANNOT CONTROL THE INTERPRETATION OF THE WORDS OF A SECTION, PARTICULARLY WHEN THE LA NGUAGE OF THE SECTION IS CLEAR AND UNAMBIGUOUS BUT, BEING PART OF THE STATUTE, IT PRIMA FACIE FURNISHES SOME CLUE AS TO THE MEANIN G AND PURPOSE OF THE SECTION. THE HIGHLIGHTED PORTION CLEARLY SHOWS THAT EVERY MA TERIAL WHICH IS LOGICALLY RELEVANT SHOULD BE TAKEN INTO ACCOUNT FOR ASCERTAINING THE TRUE MEANING OF A PARTICULAR PROVISION. THE SAME V IEW WAS TAKEN BY HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V N .K. VAIDYA 224 ITR 186 (SUPRA) AND OBSERVATIONS CONTAINED IN THE H EAD NOTE READS AS UNDER:- THE LEGISLATIVE HISTORY OF A FISCAL STATUTE COULD BE TRACED AND CONSIDERED TO UNDERSTAND ITS SCOPE. THE COURTS ARE PERMITTED TO TRAVEL BEYOND THE WORDS USED IN A STATUTE, TO FIND OUT THE PURPOSE FOR WHICH A PARTICULAR PROVISION IS ENACTED ; FOR THIS PURPOSE, EVEN THE SPEECH OF THE FINANCE MINISTER, W HILE INTRODUCING THE PARTICULAR FISCAL LEGISLATION COULD BE LOOKED INTO. THE CIRCULARS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES ARE NOT ONLY BINDING ON THE INCOME-TAX DEPARTMENT B UT ARE ALSO IN THE NATURE OF CONTEMPORANEA EXPOSITION FURNISHIN G LEGITIMATE AID IN THE CONSTRUCTION OF A PROVISION. 24. THE LD. COUNSEL OF THE ASSESSEE HAD REFERRED TO THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF DINAKAR ULLAL VS. CIT (SUPRA) AND DECISION OF HON'BLE SUPREME COURT IN THE CASE O F COMMISSIONER OF CENTRAL EXCISE VS. M/S RATTAN MELTI NG & WIRE (SUPRA) FOR THE PROPOSITION THAT SINCE CIRCULARS ARE NOT BI NDING ON THE COURTS, THEREFORE, THE SAME SHOULD NOT BE CONSIDERED FOR IN TERPRETATION OF A PARTICULAR PROVISION. AS FAR AS THE DECISION IN TH E CASE OF COMMISSIONER OF CENTRAL EXCISE VS. M/S RATTAN MELTI NG & WIRE (SUPRA) IS CONCERNED, THIS DOES NOT SUPPORT THE PROPOSITION MADE BY THE LD. COUNSEL FOR THE ASSESSEE. IN THAT CASE THE QUESTIO N WAS WHETHER A CIRCULAR ISSUED BY THE DEPARTMENT WHICH IS GENERALL Y BINDING ON THE 6 AUTHORITIES WOULD TAKE PRECEDENCE OVER THE INTERPRE TATION MADE BY THE SUPREME COURT OR HIGH COURT IN RESPECT OF PARTICULA R PROVISION. THE PARA 6 OF THIS JUDGMENT MAKE THIS POINT ABSOLUTELY CLEAR AND READS AS UNDER:- 6. CIRCULARS AND INSTRUCTIONS ISSUED BY THE BOARD ARE NO DOUBT BINDING IN LAW ON THE AUTHORITIES UNDE R THE RESPECTIVE STATUTES, BUT WHEN THE SUPREME COURT OR THE HIGH COURT DECLARES THE LAW ON THE QUESTION ARISING FOR CONSIDERATION, IT WOULD NOT BE APPROPRIATE FOR THE COURT TO DIRECT THAT THE CIRCUL AR SHOULD BE GIVEN EFFECT TO AND NOT THE VIEW EXPRESSE D IN A DECISION OF THIS COURT OR THE HIGH COURT. SO FAR AS THE CLARIFICATIONS/CIRCULARS ISSUED BY THE CENTR AL GOVERNMENT AND OF THE STATE GOVERNMENT ARE CONCERNED THEY REPRESENT MERELY THEIR UNDERSTANDING OF THE STATUTORY PROVISIONS. THEY ARE NOT BINDING UPON THE COURT. IT IS FOR THE COURT TO DECLARE WHAT THE PARTICULAR PROVISION OF STATUTE SAYS AND IT IS NOT FOR THE EXECUTIVE. LOOKED AT FORM ANOTHER ANGEL, A CIRCULAR WHICH IS CONTRARY TO THE STATUTORY PROVISI ONS HAS REALLY NO EXISTENCE IN LAW. THE ABOVE SHOWS THAT CIRCULARS ARE NOT BINDING ON T HE COURT BUT THE COURT HAS RIGHT TO LOOK AT THE CIRCULAR AND ULTIMAT ELY MEANING OF A PROVISION AS INTERPRETED BY THE COURT WOULD PREVAIL IN COMPARISON TO THE INTERPRETATION GIVEN IN THE CIRCULAR. THEREFO RE, IF CIRCULAR IS CONTRARY TO A PROVISION AS INTERPRETED BY THE COURT THEN THE OPINION OF THE COURT WOULD PREVAIL. THIS DECISION NOWHERE LAY S DOWN THAT CIRCULARS CANNOT BE CONSIDERED FOR INTERPRETATION O F A PARTICULAR PROVISION. 25. IN THE CASE OF DINAKAR ULLAL VS CIT 323 ITR 45 2(KARNATAKA), THE ASSESSEE WAS A CIVIL CONTRACTOR AND HAD FILED BELAT ED RETURN DECLARING INCOME OF RS. 50,240/- AND WAS CLAIMING REFUND OF R S. 2,14,505/- ON ACCOUNT OF TAX DEDUCTED AT SOURCE. THE LAST DATE OF FILING THE RETURN WAS 31.3.1997 BUT THE RETURN WAS FILED LATE ON 8 TH SEPTEMBER 1997. THE ASSESSEE SOUGHT CONDONATION OF DELAY BY AN APPLICAT ION FILED ON 21 ST SEPT, 1998 BY INVOKING SECTION 119(2)(B) OF THE ACT WHICH WAS INITIALLY REJECTED. HOWEVER, ON A WRIT PETITION THE ORDER F OR REJECTION WAS QUASHED BY A SINGLE JUDGE AND REMITTED THE MATTER B ACK FOR FRESH CONSIDERATION. ON REMAND, THE COMMISSIONER WHO WAS VESTED WITH THE JURISDICTION UNDER INSTRUCTION NO.13 OF 2006 IN RES PECT OF CLAIM UPTO RS. 10 LAKHS ACCEPTED THE CAUSE SHOWN FOR DELAY IN FILING THE RETURN BUT DENIED INTEREST ON REFUND AMOUNT IN VIEW OF THE CON DITION SET OUT IN CIRCULAR NO. 670 DATED 26 TH OCT 1993. THEREFORE, QUESTION BEFORE THE COURT WAS WHETHER THESE INSTRUCTIONS WERE CONTRARY TO THE PROVISION OF SECTION 244A OF THE ACT WHICH PROVIDED FOR PAYME NT OF INTEREST ON REFUNDS. THIS BECOMES ABSOLUTELY CLEAR FROM THE QU ESTION FRAMED BY HON'BLE COURT WHICH IS CONTAINED AT PLACITUM 6 AND READS AS UNDER:- 7 (I) WHETHER THE CONDITION TO DENY INTEREST ON REFU ND AMOUNT DUE TO AN ASSESSEE UNDER THE ACT, WHILE ADMITTING AN APPLICATION TO CONDONE THE DELAY IN MA KING A CLAIM FOR BELATED REFUND UNDER SECTION 237 OF THE ACT, AS CONTAINED IN INSTRUCTION NO. 12 OF 2003 DATED OCTOBER 30,2003 AND 13 OF 2006 DATED JANUARY 22,2006, OF THE BOARD, IS INCONSISTENT WITH SUB-SEC TION (2) OF SECTION 244A OF THE ACT? (II) WHETHER IN THE FACTS AND CIRCUMSTANCES, THE RESPONDENT WAS JUSTIFIED IN DENYING INTEREST ON BEL ATED REFUND CLAIMED FOR THE ASSESSMENT YEAR 1995-96, BY THE ORDER IMPUGNED. 26. THE HON'BLE COURT DISCUSSED THE MATTER AND ULTI MATELY HELD THAT ASSESSEE WAS ENTITLED TO INTEREST U/S 244A AND CIRC ULAR NO. 670 WAS CONTRARY TO THE PROVISIONS OF SECTION 244A. THE COU RT ALSO OBSERVED THAT CIRCULAR COULD BE ISSUED TO CLARIFY THE PROVISIONS FOR REMOVING THE DIFFICULTIES. THEREFORE, IT IS CLEAR THAT QUESTION WHETHER A CIRCULAR CAN BE CONSIDERED IN INTERPRETATION OF A PARTICULAR PRO VISION WAS NEVER BEFORE THE COURT AND THEREFORE, IN OUR OPINION, THI S JUDGEMENT DOES NOT SUPPORT THE PROPOSITION THAT CIRCULAR CANNOT BE CON SIDERED FOR THE PURPOSE OF INTERPRETING THE PARTICULAR PROVISION. 27. IT WILL BE USEFUL TO STATE ANOTHER VERY WELL S ETTLED PRINCIPLE OF INTERPRETATION I.E. WHENEVER THE PARTICULAR PROVISI ON IS REQUIRED TO BE INTERPRETED, IT SHOULD BE INTERPRETED AFTER READING THE WHOLE PROVISION AND NOT THE PARTS OF A PARTICULAR SECTION. HOWEVER, A PROVISION HAS TO BE READ IN CONTEXT OF THE OVERALL SCHEME OF THE ACT . IT IS ALSO WELL SETTLED THAT NO PROVISION CAN BE INTERPRETED IN SUC H A WAY WHICH WOULD RENDER PARTS OF THE SECTION OTIOSE OR MEANINGLESS. 28. HAVING CONSIDERED THE PRINCIPLES OF INTERPRETAT ION ABOVE, LET US CONSIDER THE PROVISION OF SECTION 80IC IN THE LIGHT OF THE ABOVE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT. SECTION 80IC READS AS UNDER:- SECTION 80IC 80-IC (1) WHERE THE GROSS TOTAL INCOME OF AN ASSES SEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (2), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUC TION FROM SUCH PROFITS AND GAINS, AS SPECIFIED IN SUB-SECTION(3). (2) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENT ERPRISE,- (A) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRO DUCE ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDULE, OR WHICH MANUFACTURES OR PRODUCES ANY ART ICLE OR THING, NOT 8 BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEE NTH SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING. (I) ON THE 23 RD DAY OF DECEMBER, 2002 AND ENDING BEFORE THE 1 ST DAY OF APRIL, [2007], IN ANY EXPORT PROCESSING ZONE OR INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR IND USTRIAL GROWTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PA RK OR SOFTWARE TECHNOLOGY PARK OR INDUSTRIAL AREA OR THEM E PARK, AS NOTIFIED BY THE BOARD IN ACCORDANCE WITH THE SCH EME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMENT IN THIS REGA RD, IN THE STATE OF SIKKIM; OR (II) ON THE 7 TH DAY OF JANUARY, 2003 AND ENDING BEFORE THE 1 ST DAY OF APRIL, 2012, IN ANY EXPORT PROCESSING ZONE O R INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TECHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY THE BOARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTI FIED BY THE CENTRAL GOVERNMENT IN THIS REGARD, IN THE STATE OF HIMACHAL PRADESH OR THE STATE OF UTTARANCHAL; OR (III) ON THE 24 TH DAY OF DECEMBER, 1997 AND ENDING BEFORE THE 1 ST DAY OF APRIL, 2007, IN ANY EXPORT PROCESSING ZONE O R INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TECHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY THE BOARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTI FIED BY THE CENTRAL GOVERNMENT IN THIS REGARD, IN ANY OF TH E NORTH- EASTERN STATES; (B) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRO DUCE ANY ARTICLE OR THING, SPECIFIED IN THE FOURTEENTH SCHEDULE OR C OMMENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE, OR WHICH MANU FACTURES OR PRODUCES ANY ARTICLE OR THING, SPECIFIED IN THE FOU RTEENTH SCHEDULE OR COMMENCES ANY OPERATIONS SPECIFIED IN THAT SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING- (I) ON THE 23 RD DAY OF DECEMBER, 2002 AND ENDING BEFORE THE 1 ST DAY OF APRIL, [2007], IN THE STATE OF SIKKIM; OR (II) ON THE 7 TH DAY OF JANUARY, 2003 AND ENDING BEFORE THE 1 ST DAY OF APRIL 2012, IN THE STATE OF HIMACHAL PRADESH OR THE STATE OF UTTARANCHAL; OR (III) ON THE 24 TH DAY OF DECEMBER, 1997 AND ENDING BEFORE THE 1 ST DAY OF APRIL, 2007, IN ANY OF THE NORTH-EASTERN STATES. (3) THE DEDUCTION REFERRED TO IN SUB-SECTION (1) SH ALL BE 9 (I) IN THE CASE OF ANY UNDERTAKING OR ENTERPRISE REFERR ED TO IN SUB-CLAUSES (I) AND (III) OF CLAUSE (A) OR SUB-C LAUSES (I) AND (III) OF CLAUSE (B), OF SUB-SECTION (2), ON E HUNDRED PER CENT OF SUCH PROFITS AND GAINS FOR TEN ASSESSME NT YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR; (II) IN THE CASE OF ANY UNDERTAKING OR ENTERPRISE REFERR ED TO IN SUB-CLAUSE (II) OF CLAUSE (A) OR SUB-CLAUSE (II) OF CLAUSE (B), OF SUB-SECTION (2),ONE HUNDRED PER CENT OF SUCH PROFIT AND GAINS FOR FIVE ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR AND THEREAFTER TWENTY-FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS . (4) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTE RPRISE WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY:- (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECONSTRUC TION, OF A BUSINESS ALREADY IN EXISTENCE: PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RES PECT OF AN UNDERTAKING WHICH IS FORMED AS A RESULT OF THERE - ESTABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASS ESSEE OF THE BUSINESS OF ANY SUCH UNDERTAKING AS IS REFER RED TO IN SECTION 33B, IN THE CIRCUMSTANCES AND WITHIN THE PERIOD SPECIFIED IN THAT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSI NESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. EXPLANATION.- THE PROVISIONS OF EXPLANATIONS 1 AND 2 TO SUB-SECTION (3) OF SECTION 80-IA SHALL APPLY FOR THE PURPOSES OF CL AUSE (II) OF THIS SUB- SECTION AS THEY APPLY FOR THE PURPOSES OF CLAUSE (I I) OF THAT SUB-SECTION. (5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, NO DEDUCTION SHALL BE ALLOWED UNDER ANY OTHER SECTION CONTAINED IN CHA PTER VIA OR IN SECTION 10A OR SECTION 10B, IN RELATION TO THE PROF ITS AND GAINS OF THE UNDERTAKING OR ENTERPRISE. (6) NOTWITHSTANDING ANYTHING CONTAINED IN THIS ACT, NO DEDUCTION SHALL BE ALLOWED TO ANY UNDERTAKING OR ENTERPRISE UNDER T HIS SECTION, WHERE THE TOTAL PERIOD OF DEDUCTION INCLUSIVE OF THE PERI OD OF DEDUCTION UNDER THIS SECTION, OR UNDER THE SECOND PROVISO TO SUB-SE CTION (4) OF SECTION 80-IB OR UNDER SECTION 10C, AS THE CASE MAY BE, EXC EEDS THE ASSESSMENT YEARS. (7) THE PROVISIONS CONTAINED IN SUB-SECTION (5) AND SUB-SECTIONS(7) TO (12) OF SECTION 80-IA SHALL, SO FAR AS MAY BE, APPL Y TO THE ELIGIBLE UNDERTAKING OR ENTERPRISE UNDER THIS SECTION. (8) FOR THE PURPOSES OF THIS SECTION,- 10 (I) INDUSTRIAL AREA MEANS SUCH AREAS, WHICH THE BOARD , MAY, BE NOTIFICATION IN THE OFFICIAL GAZETTE, SPECI FY IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT; (II) INDUSTRIAL ESTATE MEANS SUCH ESTATES, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE , SPECIFY IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMENT. (III) INDUSTRIAL GROWTH CENTRE MEANS SUCH CENTRES, WHIC H THE BOARD, MAY, BY NOTIFICATION IN THE OFFICIAL GAZ ETTE, SPECIFY IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMENT; (IV) INDUSTRIAL PARK MEANS SUCH PARKS, WHICH THE BOARD , MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECI FY IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT; (V) INITIAL ASSESSMENT YEAR MEANS THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAK ING OR THE ENTERPRISE BEGINS TO MANUFACTURES OR PRODUCE ARTICLES OR THINGS, OR COMMENCES OPERATION OR COMPL ETES SUBSTANTIAL EXPANSION; (VI) INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE MEAN S SUCH CENTRES, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY IN ACCORDANCE WITH TH E SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMEN T (VII) NORTH-EASTERN STATES MEANS THE STATES OF ARUNACH AL PRADESH, ASSAM, MANIPUR, MEGHALAYA, MIZORAM, NAGALAND AND TRIPURA; (VIII) SOFTWARE TECHNOLOGY PARK MEANS ANY PARK SET UP I N ACCORDANCE WITH THE SOFTWARE TECHNOLOGY PARK SCHEME NOTIFIED BY THE GOVERNMENT OF INDIA IN THE MINISTRY OF COMMERCE AND INDUSTRY; (IX) SUBSTANTIAL EXPANSION MEANS INCREASE IN THE INVESTMENT IN THE PLANT AND MACHINERY BY AT LEAST F IFTY PER CENT OF THE BOOK VALUE OF PLANT AND MACHINERY (BEFORE TAKING DEPRECIATION IN ANY YEAR), AS ON THE FIRST DAY OF THE PREVIOUS YEAR IN WHICH THE SUBSTANTIAL EXPANSION IS UNDERTAKEN; 11 (X) THEME PARK MEANS SUCH PARKS, WHICH THE BOARD , MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECI FY IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT. 29. SUB SECTION (1) OF THE ABOVE PROVISION IS A GEN ERAL PROVISION AND DOES NOT REQUIRE ANY INTERPRETATION. SUB SECTION [2 ] IS THE ENABLING PROVISION WHICH PROVIDES FOR THE TYPES OF UNDERTAKI NGS AND CIRCUMSTANCES WHERE DEDUCTION UNDER SECTION 80IC WO ULD BE ALLOWED. IT ALLOWS DEDUCTION TO VARIOUS UNDERTAKINGS WHICH HAVE EITHER BEGUN OR BEGINS MANUFACTURING OF ANY ARTICLE OR THINGS NOT B EING ANY ARTICLE OR THING SPECIFIED IN SCHEDULE XIII AND ALSO UNDERTAKE S SUBSTANTIAL EXPANSION. THESE DEDUCTIONS WERE AVAILABLE IN DIFFE RENT STATES DURING DIFFERENT WINDOW PERIODS WHICH HAVE BEEN REFERRED T O IN CLAUSE (I), (II) & (III) OF THIS SUB SECTION. THE CONTENTION ON BEHA LF OF THE ASSESSEE IS THAT SINCE DEDUCTION IS AVAILABLE TO THE UNDERTAKIN G WHICH UNDERTAKES SUBSTANTIAL EXPANSION AND SINCE THERE IS NO RESTRIC TION IN THIS SUB SECTION ITSELF, THEREFORE, THE DEDUCTION WAS AVAILA BLE ON SUBSTANTIAL EXPANSION BY OLD UNDERTAKINGS AS WELL AS NEW UNDERT AKINGS DURING THE WINDOW PERIOD. HOWEVER, THERE IS NO FORCE IN THIS I NTERPRETATION. SUB SECTION (2) BEGINS WITH THE EXPRESSION THIS SECTI ON APPLIES TO ANY UNDERTAKING OR ENTERPRISE WHICH HAS BEGUN OR BEGINS THIS ITSELF SHOWS THAT PROVISION MADE EVEN THE EXISTING UNDERTAKINGS ENTITLED FOR THE DEDUCTION BECAUSE THE EXPRESSION BEGUN WOULD REFE R TO THE UNDERTAKING WHICH WERE ALREADY EXISTING AND BEGAN T HE MANUFACTURE BEFORE THE WINDOW PERIOD MENTIONED IN THE SUB SECTI ON. THE LAST LINE OF THE SUB SECTION READS AND UNDERTAKES SUBSTANTIAL E XPANSION DURING THE PERIOD BEGINNING... THIS WOULD NATURALLY REFER TO THE UNDERTAKING WHICH WERE ALREADY EXISTING. IF IT IS READ THE WAY THE LD. COUNSEL OF THE ASSESSEE WOULD LIKE US TO READ THEN THE PROVISION W OULD BECOME UNWORKABLE BECAUSE IF THERE IS AN UNDERTAKING WHICH IS ESTABLISHED DURING THE WINDOW PERIOD THEN THE SAME CANNOT POSSI BLY UNDERTAKES SUBSTANTIAL EXPANSION ALSO SIMULTANEOUSLY. THE EXP RESSION AND WOULD REFER TO THE CUMULATIVE CONDITION THAT IS BOT H PARTS OF THE CONDITIONS NEED TO BE COMPLIED. THE EXPRESSION AND CAN BE JOINED ONLY WITH THE EXPRESSION BEGUN. THIS IS BECAUSE BEGUN REFERS TO SOMETHING WHICH HAS ALREADY STARTED IN THE PAST WHE REAS BEGINS CONNOTES SOMETHING WHICH WOULD COMMENCE IN THE PRES ENT. THEREFORE, THE EXPRESSION AND CAN BE CORRELATED ONLY WITH EX ISTING UNIT BECAUSE AS WE HAVE ALREADY SEEN A NEW UNIT WHICH HAS BEEN S ET UP AND BEGINS PRODUCTION CANNOT SIMULTANEOUSLY UNDERGO SUBSTANTIA L EXPANSION ALSO SO AS TO BECOME ELIGIBLE FOR DEDUCTION UNDER THIS S ECTION. 30. AT THIS STAGE, IT CAN BE SAID THAT SECTION HAS SOME CONFUSION AND SOME EFFORT IS REQUIRED TO UNDERSTAND THE CORRECT I NTENTION OF THE LEGISLATURE BY KEEPING VARIOUS PRINCIPLES OF INTERP RETATION. THEREFORE, VARIOUS PRINCIPLES OF INTERPRETATION NEEDS TO BE LO OKED INTO. THIS PROVISION WAS BROUGHT INTO THE STATUTE INDISPUTABLY IN THE LIGHT OF THE INCENTIVE PACKAGE ANNOUNCED BY THE UNION CABINET. THROUGH THIS INCENTIVE PACKAGE NOT ONLY INCOME TAX CONCESSION BU T EXCISE 12 CONCESSIONS AND SOME SUBSIDIES LIKE TRANSPORT SUBSI DY AND CAPITAL SUBSIDY WERE ALSO PROVIDED TO VARIOUS INDUSTRIES IN THE HILLY STATED COMPRISING STATES OF HIMACHAL PRADESH, UTTARANCHAL, SIKKIM AND NORTH-EASTERN STATES TO BOOST THE ECONOMIES OF THES E HILLY STATES. CIRCULAR NO.7 WAS ISSUED BY THE CBDT ON 5.9.2003 IN THIS RESPECT AND THE CIRCULAR READS AS UNDER:- CIRCULAR NO. 7/2003 DATED 05.09.2003 49. NEW PROVISIONS ALLOWING A TEN YEARS TAX HOLIDAY IN RESPECT OF CERTAIN UNDERTAKINGS IN THE STATES OF HIMACHAL P RADESH, SIKKIM, UTTARANCHAL AND NORTH-EASTERN STATES. 49.1 THE UNION CABINET HAS ANNOUNCED A PACKAGE OF F ISCAL AND NON-FISCAL CONCESSIONS FOR THE SPECIAL CATEGORY STATES OF HIMACHAL PRADESH, UTTARANCHAL, SIKKIM AND NORTH-EAS TERN STATES, IN ORDER TO GIVE BOOST TO THE ECONOMY IN TH ESE STATES. WITH A VIEW TO GIVE EFFECT TO THESE NEW PACKAGES A NEW SECTION 80-IC HAS BEEN INSERTED TO ALLOW A DEDUCTIO N FOR TEN YEARS FROM THE PROFITS OF NEW UNDERTAKING OR ENTERP RISE OR EXISTING UNDERTAKINGS OR ENTERPRISES ON THEIR SUBST ANTIAL EXPANSION, IN THE STATES OF HIMACHAL PRADESH, UTTAR ANCHAL, SIKKIM AND NORTH-EASTERN STATES . FOR THIS PURPOSE, SUBSTANTIAL EXPANSION IS DEFINED AS INCREASE IN THE INVESTMENT IN THE PLANT AND MACHINERY BY AT LEAST 50% OF THE B OOK VALUE OF THE PLANT AND MACHINERY (BEFORE TAKING DEPRECIAT ION IN ANY YEAR), AS ON THE FIRST DAY OF THE PREVIOUS YEAR IN WHICH THE SUBSTANTIAL EXPANSION IS UNDERTAKEN. 49.2 THE SECTION PROVIDES THAT THE DEDUCTION SHALL BE AVAILABLE TO SUCH UNDERTAKINGS OR ENTERPRISES WHICH MANUFACTU RE OR PRODUCE ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDULE AND WHICH COMM ENCE OPERATION IN ANY EXPORT PROCESSING ZONE, OR INTEGRA TED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE, OR INDUSTRIAL PARK, OR SOFTWARE TECHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, A S NOTIFIED BY THE BOARD IN ACCORDANCE WITH RULES PRES CRIBED IN THIS REGARD. SIMILAR DEDUCTION SHALL BE AVAILABLE T O THRUST SECTOR INDUSTRIES, AS SPECIFIED IN THE FOURTEENTH S CHEDULE. 49.3 THE AMOUNT OF DEDUCTION IN CASE OF UNDERTAKING S OR ENTERPRISES IN THE STATES OF SIKKIM, AND THE NORTH- EASTERN STATES SHALL BE ONE HUNDRED PER CENT OF THE PROFITS OF THE UNDERTAKING FOR TEN ASSESSMENT YEARS. THE AMOUNT OF DEDUCTION IN CASE OF UNDERTAKINGS OR ENTERPRISES IN THE STATES OF UTTARANCHAL, HIMACHAL PRADESH SHALL BE ONE HUNDR ED PER CENT OF THE PROFITS OF THE UNDERTAKING FOR FIVE ASS ESSMENT YEARS, AND THEREAFTER TWENTY-FIVE PER CENT (THIRTY PER CEN T FOR COMPANIES ) FOR THE NEXT FIVE ASSESSMENT YEARS. 13 49.4 THE SECTION ALSO PROVIDES THAT NO DEDUCTION SH ALL BE ALLOWED TO ANY UNDERTAKING OR ENTERPRISE UNDER THIS SECTION, WHERE THE TOTAL PERIOD OF DEDUCTION INCLUSIVE OF TH E PERIOD OF DEDUCTION UNDER THIS SECTION OR UNDER SECTION 80-IB OR UNDER SECTION 10C, AS THE CASE MAY BE, EXCEEDS TEN ASSESS MENT YEARS. FURTHER, IN COMPUTING THE TOTAL INCOME OF THE ASSES SEE, NO DEDUCTION SHALL BE ALLOWED UNDER ANY OTHER SECTION CONTAINED IN CHAPTER VIA OR IN SECTION 10A OR 10B, IN RELATIO N TO THE PROFITS AND GAINS OF THE UNDERTAKING OR ENTERPRISE. 49.5 A NEW THIRTEENTH SCHEDULE HAS BEEN INSERTED IN THE INCOME-TAX ACT TO SPECIFY THE LIST OF ARTICLES AND THINGS, WHICH ARE INELIGIBLE FOR THE PURPOSE OF DEDUCTION UNDER S ECTION 80- IC. FURTHER, A NEW FOURTEENTH SCHEDULE HAS ALSO BEE N INSERTED, WHICH SPECIFIES THE LIST OF ARTICLES AND THINGS, BEING THRUST SECTOR INDUSTRIES, WHICH ARE ELIGIBLE FOR TH E PURPOSES OF AVAILING DEDUCTION UNDER THIS SECTION. CONSEQUENT T O THESES AMENDMENTS, THE PROVISIONS OF SECTION 10C AND SUB-S ECTION(4) OF SECTION 80-IB HAVE BEEN MADE INOPERATIVE IN RESP ECT OF THE UNDERTAKINGS OR ENTERPRISES IN THE STATE OF HIMACHA L PRADESH OR IN NORTH-EASTERN REGION INCLUDING SIKKIM, WITH E FFECT FROM THE 1 ST DAY OF APRIL, 2004. 49.6 THESE AMENDMENTS WILL TAKE EFFECT FROM 1 ST APRIL, 2004 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASS ESSMENT YEAR 2004-05 AND SUBSEQUENT YEARS. 31. THE CIRCULAR MAKES IT CLEAR THAT SECTION 80IC W AS INSERTED TO GIVE EFFECT TO THE NEW PACKAGE ANNOUNCED BY THE UNION CA BINET. THE CIRCULAR FURTHER CLARIFIES THAT THIS SECTION PROVID ES FOR DEDUCTION FOR A PERIOD OF 10 YEARS FROM THE PROFITS OF NEW UNDERTAK ING OR ENTERPRISE OR EXISTING UNDERTAKING OR ENTERPRISE ON THEIR SUBSTAN TIAL EXPANSION (SEE HIGHLIGHTED PORTION OF THE CIRCULAR). THE CONTENTIO N OF THE LD. COUNSEL OF THE ASSESSEE WAS THAT WORD EXISTING QUALIFIES ONLY THE UNDERTAKING OR ENTERPRISES AND DOES NOT MENTION ANY PARTICULAR DATE FOR CARRYING OUT SUBSTANTIAL EXPANSION. WE FIND NO MERIT IN THIS CONTENTION. THE WORD EXISTING IS DEFINED IN THE DICTIONARIES ARE A S UNDER:- 32. BLACK LAW DICTIONARY 6 TH EDITION:- EXIST : TO LIVE, TO HAVE LIFE OR ANIMATION TO BE IN PRESENT FORCE , ACTIVITY, OR EFFECT AT A GIVEN TIME, AS IN SPEAKING OF EXISTING CONTRACTS, CREDITORS DEBTS, LAWS, RIGHTS OR LIENS. FOR US RELEVANT MEANING WOULD BE TO BE IN PRESENT FORCE AS PER OXFORD DICTIONARY EXIST IS DEFINED AS UNDER 14 EXIST : 1 (NOT USED IN THE PROGRESSIVE TENSES) TO BE REAL; TO BE PRESENT IN A PLACE OR SITUATION : DOES LIFE EXIST ON OTHER PLANETS? THE PROBLEM ONLY EXISTS IN YOUR HEAD, JANE. FEW OF THES E MONKEYS STILL EXIST IN THE WILD. ON HIS RETIREMENT THE POST WILL CEASE TO EXIST. THE CHARITY EXISTS TO SUPPORT VICTIMS OF CRI ME. 2- (ON STH) TO LIVE, ESPECIALLY IN A DIFFICULT SITUATION OR WITH V ERY LITTLE MONEY: WE EXISTED ON A DIET OF RICE. THEY CANT EXIST ON T HE MONEY HES EARNING THE ABOVE DEFINITION CLEARLY SHOWS THAT EXIST WOU LD REFER TO SOMETHING WHICH IS IN FORCE PRESENTLY. EXIST WOULD GENERALL Y AND IN COMMON SENSE REFERS TO SOMETHING WHICH IS ALREADY THERE. W ITH REFERENCE TO THIS PROVISION, THIS WOULD REFER TO AN UNDERTAKING WHICH WAS ALREADY PRESENT ON THE DATE WHEN THIS PROVISION WAS INTRODU CED. IN ANY CASE THE NOTIFICATION ISSUED BY THE GOVT. OF INDIA, MINISTRY OF COMMERCE AND INDUSTRY, DEPARTMENT OF INDUSTRIAL POLICY AND PROMO TION WHICH IS PUBLISHED IN THE GAZETTE OF INDIA REMOVED ALL THE D OUBTS. THIS NOTIFICATION IS RELEVANT BECAUSE THIS WAS ISSUED WI TH REFERENCE TO SAME PACKAGE ANNOUNCED BY THE UNION CABINET OF INDIA FOR THE DEVELOPMENT OF THE HILLY STATES. SECTION 5, READS AS UNDER;- DEFINITIONS: (A) .. (B) .. (C) EXISTING INDUSTRIAL UNIT MEANS AN INDUSTRIAL UNIT EXISTING AS ON 7 TH JANUARY 2003. (D) . (E) . (F) THUS THE DEFINITION GIVEN ABOVE MAKES IT CLEAR THAT EXISTING INDUSTRIAL UNIT WOULD MEAN AN UNIT WHICH EXISTED ON 7.1.2003. 33. EVEN IF THE ABOVE CONTROVERSY IS IGNORED REGARD ING EXISTING UNIT, THE INTENTION OF THE LEGISLATURE BECOME ABSOLUTELY CLEAR WHEN SUB SECTION (2) IS READ ALONGWITH SUB-SECTION (3) OF SE CTION 80IC. AS NOTED EARLIER, SUB SECTION (2) IS ENABLING PROVISION WHIC H PROVIDES FOR DEDUCTION IN CERTAIN KIND OF UNDERTAKINGS, I.E. NEW UNIT SET UP OR THE EXISTING UNITS WHICH CARRIES OUT SUBSTANTIAL EXPANS ION DURING THE PARTICULAR WINDOW PERIOD WHICH ARE GIVEN IN CLAUSES (I), (II) & (III) OF SUB SECTION (2). THE SUB SECTION (3) PROVIDES FOR R ATES OF DEDUCTION. IT IS USEFUL TO NOTE THAT CLAUSE (I) OF SUB SECTION (3 ) PROVIDES FOR 100% DEDUCTION FOR A PERIOD OF 10 ASSESSMENT YEARS IN CA SES COVERED BY SUB CLAUSE (I) & (III) OF CLAUSE (A) AND SUB CLAUSE (I) & (III) OF CLAUSE (B). NOW SUB CLAUSE (I ) AND (III) OF CLAUSE (A) OF SUB SECTION (2) REFERS TO THE WINDOW PERIOD IN CASE OF STATE OF SIKKIM, NORTH -EASTERN STATES WHEREAS SUB CLAUSE (II) REFERS TO THE WINDOW PERIOD IN CASE OF STATE OF HIMACHAL PRADESH AND STATE OF UTTARANCHAL. SIMILAR LY, SUB CLAUSE (I) & (III) OF CLAUSE (B) REFERS TO WINDOW PERIOD IN CA SE OF STATE OF SIKKIM 15 AND NORTH-EASTER STATES WHEREAS SUB CLAUSE (II) REF ERS TO THE WINDOW PERIOD IN CASE OF STATE OF HIMACHAL PRADESH AND UTT ARANCHAL. NOW CLAUSE (II) OF SUB SECTION (3) PROVIDES FOR 100% DE DUCTION ON SUCH PROFITS FOR FIVE ASSESSMENT YEARS COMMENCING WITH I NITIAL ASSESSMENT YEAR AND THEREAFTER 25% (OR 30% WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS. THEREFORE, IT IS ABSOLUTELY CLEAR THAT IN CASE OF STATE OF SIKKIM AND NORTH-EASTERN STATES, LEGISLATU RE WAS VERY CLEAR THAT IN CASE OF NEW UNDERTAKING OR IN CASE OF SUBST ANTIAL EXPANDED UNDERTAKING DEDUCTION IS TO BE ALLOWED @ 100% FOR W HOLE OF THE TEN YEARS WHEREAS IN CASE OF STATE OF HIMACHAL PRADESH AND UTTARANCHAL THE DEDUCTION WAS TO BE ALLOWED @ 100% ONLY FOR FIR ST FIVE YEARS AND THEREAFTER IT WAS ONLY 25%. IF THE LEGISLATURE WAN TED TO EXTEND THE BENEFIT IN THE CASE OF SUBSTANTIAL EXPANSION SEPARA TELY THEN THE RATE OF DEDUCTION IN THE CLAUSE (I) & (II) OF SUB SECTION ( 3) WOULD NOT HAVE BEEN DIFFERENT I.E. 100% FOR WHOLE OF THE 10 YEARS IN CA SE OF STATE OF SIKKIM & NORTH-EASTERN STATES UNDER SUB CLAUSE (I) AND FOR THE STATE OF HIMACHAL PRADESH & UTTARANCHAL UNDER SUB CLAUSE (II ) 100% FOR FIRST FIVE YEARS AND THEREAFTER 25% FOR NEXT FIVE YEARS. THE CONCEPT OF SUBSTANTIAL EXPANSION REMAINS SAME UNDER SUB SECTIO N (2) FOR BOTH TYPES OF STATES I.E STATE OF SIKKIM AND NORTH-EASTE RN STATES AND STATE OF HIMACHAL PRADESH AND UTTRANCHAL. IF THE EXTENDED B ENEFIT OF SUBSTANTIAL EXPANSION WAS TO BE SEPARATELY ALLOWED IN CASE OF STATE OF HIMACHAL PRADESH AND STATE OF UTTARANCHAL, THEN MEA NING OF SUBSTANTIAL EXPANSION AS GIVEN UNDER SUB SECTION (2 ) WHICH IS SAME FOR THE STATE OF SIKKIM AND NORTH-EASTERN STATES BECOME REDUNDANT. AS NOTED EARLIER, THE PROVISION CANNOT BE INTERPRETED IN SUCH A WAY THAT PART OF THE SECTION BECOMES REDUNDANT OR OTIOSE. T HEREFORE, WHATEVER DOUBTS MAY BE THERE IN SUB SECTION (2) WHEN IT IS R EAD WITH SUB SECTION (3), THOSE DOUBTS ARE TOTALLY REMOVED AND IT BECOME ABSOLUTELY CLEAR THAT RATE OF DEDUCTION HAS TO BE 100% FOR FIRST 5 YEARS AND 25% THEREAFTER. 34. THERE IS A FORCE IN THE CONTENTION OF LD. CIT/D R THAT IF THE INTERPRETATION CONTENDED ON BEHALF OF THE ASSESSEE WAS TO BE ADOPTED THEN SUB SECTION (4) OF SECTION 80IC WOULD ALSO BEC OME REDUNDANT. SUB SECTION (4) CLEARLY PROVIDES THAT THE DEDUCTION IS AVAILABLE TO ANY UNDERTAKING OR ENTERPRISE WHICH IS NOT FORMED BY SP LITTING OR RECONSTRUCTION OF THE BUSINESS ALREADY IN EXISTENCE OR IT IS NOT FORMED BY TRANSFER TO NEW BUSINESS OF MACHINERY OR PLANT P REVIOUSLY USED FOR ANY PURPOSE. FURTHER THE EXPLANATION TO THIS SUB SE CTION MAKES IT CLEAR THAT EXPLANATION 1 & 2 OF SUB SECTION (3) OF SECTIO N 80IA ARE APPLICABLE IN THIS RESPECT. EXPLANATION 2 OF SUB SE CTION (3) OF SECTION 80 IA READS AS UNDER: EXPLANATION 2- WHERE IN THE CASE OF AN [UNDERTAKING], ANY MACHINERY OR PLANT OR ANY PART THEREOF PREVIOUSLY USED FOR ANY PURPOSE IS TRANSFERRED TO A NEW BUSINESS AND THE TOTAL VALUE O F THE MACHINERY OR PLANT OR PART SO TRANSFERRED DOES NOT EXCEED TWENTY PER CENT OF THE TOTAL VALUE OF TH E 16 MACHINERY OR PLANT USED IN THE BUSINESS, THEN, FOR THE PURPOSES OF CLAUSE (II) OF THIS SUB-SECTION, TH E CONDITION SPECIFIED THEREIN SHALL BE DEEMED TO HAVE BEEN COMPLIED WITH. FROM THE ABOVE IT BECOMES CLEAR THAT IF 20% OF THE MACHINERY FROM THE OLD UNIT WAS USED IN THE NEW UNIT THEN SUCH UNIT WO ULD NOT BE ELIGIBLE FOR DEDUCTION UNDER THIS SECTION THAT IS SECTION 80 IC. NOW FOR CARRYING OUT SUBSTANTIAL EXPANSION THE INVESTMENT IN PLANT & MACHINERY IS REQUIRED TO BE MADE BY ATLEAST 50%. SO IF 50% FRES H MACHINERY IS ADDED TO THE NEW UNIT THEN IT WILL VIOLATE SUB SECT ION (4) OF SECTION 80IC, THEREFORE, INTERPRETATION CANVASSED ON BEHALF OF THE ASSESSEE IS NOT POSSIBLE BECAUSE SECTION 80IC(4) WOULD BECOME R EDUNDANT AND SUCH AN INTERPRETATION IS NOT POSSIBLE. 35. FURTHER, SUB SECTION (6) PROVIDES THAT IN NO CA SE THE TOTAL PERIOD OF DEDUCTION COULD EXCEED THE PERIOD OF 10 YEARS IN CLUDING DEDUCTION AVAILED UNDER SUB SECTION (4) OF SECTION 80IB AND S ECTION 10A AND 10B. IT WAS CONTENDED BEFORE US THAT SINCE THERE IS NO RESTRICTION IN CARRYING OUT OF SUBSTANTIAL EXPANSION IN THE NEW UN ITS AND AS SUCH SUBSTANTIAL EXPANSION CAN BE CARRIED OUT ANY NUMBER OF TIMES. IF THIS INTERPRETATION IS ACCEPTED THEN SUB SECTION (6) WOU LD BE RENDERED OTIOSE OR MEANINGLESS BECAUSE IF A UNIT WAS SET UP ON THE COMMENCEMENT OF THIS SECTION AND THE SAME CLAIMS DEDUCTION @ 100% AND LATER ON EVERY FIVE YEARS A SUBSTANTIAL EXPANSION IS CARRIED OUT T HEN ACCORDING TO THE INTERPRETATION CANVASSED ON BEHALF OF THE ASSESSEE, SUCH UNIT WOULD AGAIN BECOME ENTITLED TO 100% DEDUCTION FOR ANOTHER FIVE YEARS AND FURTHER BLOCK OF FIVE YEARS EVERY TIME SUBSTANTIAL EXPANSION IS CARRIED OUT. IF THIS INTERPRETATION IS ADOPTED THEN DEDUCT ION WOULD BECOME ALMOST PERCEPTUAL AS LONG AS THE ASSESSEE HAS CARRI ED OUT SUBSTANTIAL EXPANSION BUT IN THAT CASE SUB SECTION (6) WOULD LO OSE ITS MEANING. SUCH AN UNLIMITED PERIOD OF DEDUCTION WOULD NOT BE IN CONSONANCE OF LAW. AT THE COST OF REPETITION, WE WOULD LIKE TO E MPHASIZE THAT NO PRINCIPLE OF INTERPRETATION CAN BE ADOPTED WHICH LE ADS TO A SITUATION WHERE A PARTICULAR PART OF THE SECTION BECOMES TOTA LLY REDUNDANT. IN FACT THOUGH IT WAS CONTENDED THAT IN THE PRESENT CA SE (I.E. IN CASE OF HYCRON ELECTRONICS) DEDUCTION HAS BEEN CLAIMED ONLY OF 10 YEARS BUT ON THE DATE OF HEARING SOME OTHER APPEALS WERE ALSO LI STED WHEREIN THE DEDUCTION WAS CLAIMED FOR MORE THAN 10 YEARS ADOPTI NG THE SAME CONTENTION WHICH HAS BEEN MADE BEFORE US. IN CASE O F M/S MAHAVIR INDUSTRIES (ITA NO. 127/CHD/2011 AND ITA NO. 791/CH D/2012) THOUGH THOSE CASES WERE ADJOURNED BECAUSE SOME OTHER ISSUE S WERE ALSO THERE BUT IN THOSE TWO CASES ASSESSEE HAD COMMENCED THE O PERATION ON 8.5.1997 AND CLAIMED DEDUCTION U/S 80IB FROM ASSES SMENT YEARS 1998- 99 TO 2005-06. LATER ON, SUBSTANTIAL EXPANSION WAS CARRIED OUT IN ASSESSMENT YEAR 2005-06 AND ON THE BASIS OF THE CON TENTION THAT ASSESSEE IS ALLOWED TO CARRY OUT ANY NUMBER OF EXP ANSIONS, DEDUCTION WAS CLAIMED FOR THE 12 TH YEAR FOR ASSESSMENT YEAR 2009-10 (WE MAY CLARIFY THAT REFERENCE TO THESE CASES IS MADE BECAU SE OF PARTICULAR CONTENTION AND WE ARE NOT EXPRESSING ANY OPINION ON THE MERITS OF THESE 17 APPEALS HERE). THEREFORE, THE CONTENTION OF THE AS SESSEE THAT ANY NUMBER OF EXPANSIONS ARE ALLOWED IS NOT POSSIBLE IN VIEW OF THE RESTRICTION GIVEN IN SECTION 80IC(6). 36. THE ABOVE SITUATION AS POINTED BY THE REVENUE A LSO BECOMES CLEAR IF THE PROVISION OF SECTION 80IC IS COMPARED TO THE PROVISION OF SECTION 80IB(4). RELEVANT PROVISION OF SECTION 80IB (4) READS AS UNDER:- (4) THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDU STRIAL UNDERTAKING IN AN INDUSTRIALLY BACKWARD STATE SPECIFIED IN THE EIG HTH SCHEDULE SHALL BE HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED F ROM SUCH INDUSTRIAL UNDERTAKING FOR FIVE ASSESSMENT YEARS BEGINNING WIT H THE INITIAL ASSESSMENT YEAR AND THEREAFTER TWENTY-FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING: PROVIDED THAT THE TOTAL PERIOD OF DEDUCTION DOES NO T EXCEED TEN CONSECUTIVE ASSESSMENT YEARS (OR TWELVE CONSECUTIVE ASSESSMENT YEARS WHERE THE ASSESEE IS A COMPANY-OPERATIVE SOCIETY) S UBJECT TO FULFILLMENT OF THE CONDITION THAT IT BEGINS TO MANUFACTURE OR P RODUCE ARTICLES OR THINGS OR TO OPERATE ITS COLD STORAGE PLANT OR PLAN TS DURING THE PERIOD BEGINNING ON THE IST DAY OF APRIL, 1993 AND ENDING ON THE 31 ST DAY OF MARCH, [2004]: PROVIDED FURTHER THAT IN THE CASE OF SUCH INDUSTRIE S IN THE NORTH-EASTERN REGION, AS MAY BE NOTIFIED BY THE CENTRAL GOVERNMEN T, THE AMOUNT OF DEDUCTION SHALL BE HUNDRED PER CENT OF PROFITS AND GAINS FOR A PERIOD OF TEN ASSESSMENT YEARS, AND THE TOTAL PERIOD OF DEDUC TION SHALL IN SUCH A CASE NOT EXCEED TEN ASSESSMENT YEARS: PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SUB-SECT ION SHALL BE ALLOWED FOR THE ASSESSMENT YEAR BEGINNING ON THE 1 ST DAY OF APRIL, 2004 OR ANY SUBSEQUENT YEAR TO ANY UNDERTAKING OR ENTERPRISE RE FERRED TO IN SUB- SECTION (2) OF SECTION 80-IC. 37. THE CAREFUL PERUSAL OF THE ABOVE PROVISION WOUL D SHOW THAT BEFORE THE INTRODUCTION OF SECTION 80IC WHICH IS BE FORE US FOR CONSIDERATION, THE DEDUCTION TO THE BACKWARD STATES WAS AVAILABLE IN TERMS OF SECTION 80IB(4). THE THIRD PROVISO MAKES IT CLEAR THAT AFTER 31.3.2004, THIS DEDUCTION WILL BE AVAILABLE ONLY U/ S 80IC. THE SUB SECTION FURTHER MAKES IT CLEAR THAT DEDUCTION WOULD BE @ 100% FOR THE FIRST FIVE YEARS AND THEREAFTER @ 25%. FURTHER, TH E FIRST PROVISO MAKES IT CLEAR THAT DEDUCTION WILL NOT EXCEED 10 CONSECUT IVE ASSESSMENT YEARS. THE SECOND PROVISO FURTHER MAKES IT CLEAR THAT IN T HE CASE OF STATES OF NORTH-EASTERN REGIONS, THE DEDUCTION WOULD BE @ 100 % FOR ALL THE 10 YEARS. THUS, EVEN IN THE EARLIER PROVISION ONLY IN CASE OF NORTH-EASTER STATES, THE DEDUCTION OF 100% WAS ALLOWABLE FOR 10 YEARS WHEREAS IN THE CASE OF STATES OF HIMACHAL PRADESH, THE DEDUCTI ON WAS ALLOWABLE @ 100% FOR FIRST FIVE YEARS AND 25% FOR NEXT FIVE YEA RS. 18 38. FURTHER, IT SHOULD BE NOTED THAT SUB SECTION (6 ) STARTS WITH NON OBSTANTE CLAUSE AND THEREFORE, IN NO CASE THE DEDUC TION COULD BE FOR PERIOD EXCEEDING 10 YEARS AND IN THIS REGARD WE MAY NOTE THAT EVEN THE LD. AUTHORS IN THEIR COMMENTARY OF INCOME TAX LAWS BY CHATURVEDI & PITHISARIAS - SIXTH EDITION HAS EXPRESSED THE SA ME OPINION. THE RELEVANT EXTRACT AT PAGES 6351 OF THE COMMENTARY RE ADS AS UNDER;- NO DEDUCTION POSSIBLE FOR MORE THAN 10 ASSESSMENT YEARS.- SECTION 80-IC(6) ALSO OPENS WITH A NON OBSTANTE CLA USE NOTWITHSTANDING ANYTHING CONTAINED IN,AND PROVIDES THAT NO DEDUCTION SHALL BE ALLOWED TO ANY UNDERTAKING OR EN TERPRISE UNDER SECTION 80-IC, - WHERE THE TOTAL PERIOD OF DE DUCTION INCLUSIVE OF THE PERIOD OF DEDUCTION - UNDER SECTION 80-IC, OR - UNDER THE SECOND PROVISO TO SECTION 80-IB(4) OR - UNDER SECTION 10C AS THE CASE MAY BE, EXCEEDS 10 ASSESSMENT YEARS. 39. LASTLY, IT WAS CONTENDED THAT INITIAL ASSESSMEN T YEAR AS DEFINED IN CLAUSE (V) OF SUB SECTION (8) OF SECTION 80IC US ES THE EXPRESSION OR THEREFORE, IT CAN BE CONSTRUED THAT IT RELATES TO B OTH SITUATIONS SEPARATELY I.E. FOR NEW UNIT AND SUBSTANTIAL EXPAND ED UNIT. WE FIND NO FORCE IN THIS CONTENTION. THE INITIAL ASSESSMENT Y EAR HAS BEEN DEFINED AND THE EXPRESSION OR HAS BEEN USED IN RESPECT OF NEW UNITS BY STATING COMMENCES OPERATION OR COMPLETE SUBSTANTIAL EXPA NSION. HERE THE EXPRESSION OR IS TO BE READ AS A MUTUALLY EXCLUSI VE EXPRESSION WHICH REFERS TO A PARTICULAR SITUATION BY EXCLUDING THE O THER SITUATION. THEREFORE, INITIAL ASSESSMENT YEAR WOULD CLEARLY CO MMENCE EITHER ON COMMENCEMENT OF OPERATION OR AT COMPLETION OF SUBST ANTIAL EXPANSION OF EXISTING UNIT. IN ANY CASE THE WORD INITIAL CANNOT BE USED TWICE BY REFERRING TO SERIES OF EVENTS. THIS CAN BE UNDERSTO OD WITH A VERY SIMPLE EXAMPLE. LET US SAY A PERSON A PASSES OUT HIS EXA MINATION OF LLB AND GET EMPLOYED AS LEGAL OFFICER IN AN ORGANIZATION. L ATER ON, HE QUITS THE JOB AND STARTS THE PRACTICE IN LEGAL PROFESSION AND ULTIMATELY HE IS ELEVATED AS A JUDGE. THEN IN SUCH A SITUATION IT CA NNOT BE SAID THAT INITIALLY A WAS WORKING IN A ORGANIZATION AND THE N INITIALLY HE WAS IN THE PROFESSION AND THEN ELEVATED AS A JUDGE. INITIA LLY CAN BE USED ONLY ONCE AS A MATTER OF USAGE OF ENGLISH LANGUAGE. THER EFORE, READING OF THE ABOVE PROVISION CLEARLY SHOWS THAT INTENTION OF THE LEGISLATURE WAS VERY CLEAR TO ALLOW 100% FOR FIRST FIVE YEARS IN CA SE OF UNITS SITUATED IN THE STATE OF HIMACHAL PRADESH (SINCE ALL THE CASES BEFORE US ARE SITUATED IN THE STATE OF HIMACHAL PRADESH) AND THER EAFTER 25% DEDUCTION FOR ANOTHER FIVE YEARS ON THE NEW UNITS O R THE EXISTING UNITS WHERE SUBSTANTIAL EXPANSION WAS CARRIED OUT. 40. IT HAS ALSO BEEN CONTENDED THAT INCENTIVE PROVISION SHOULD BE CONSTRUED LIBERALLY. FURTHER, IT WAS CONTENDED WI TH REFERENCE TO THE DECISION OF M/S NOVAPAN INDIA LTD VS COLLECTOR OF C ENTRAL EXCISE AND 19 CUSTOMS (SUPRA) BY THE REVENUE IS NOT CORRECT BECAU SE THAT PROVISION WAS RENDERED UNDER INDIRECT TAX ACT. WE FIND NO FOR CE IN THESE SUBMISSIONS. EVERY DECISION OF THE HON'BLE SUPREME COURT OR FOR THAT MATTER OF ANY HIGH COURT HAS TO BE SEEN FOR THE RAT IO LAID DOWN IN A PARTICULAR DECISION AND IT DOES NOT MATTER UNDER WH ICH PARTICULAR ACT SUCH PRINCIPLES HAS BEEN DECIDED. NO DOUBT THE INC ENTIVE PROVISIONS ARE REQUIRED TO BE INTERPRETED LIBERALLY BUT IN CAS E OF M/S NOVAPAN INDIA LTD V COLLECTOR OF CENTRAL EXCISE AND CUSTOMS (SUPRA), IT WAS OBSERVED AS UNDER:- THE LEARNED COUNSEL FOR THE APPELLANT THEN CONTEN DED THAT SINCE THERE IS AN AMBIGUITY ABOUT THE MEANING AND PURPORT OF ITEM-6 OF THE TABLE APPENDED TO THE EXEMPTION NOTIFICATION, T HE BENEFIT OF SUCH AMBIGUITY SHOULD GO TO THE ASSESSEE MANUFACTUR ER AND THE ENTRY MUST BE CONSTRUED AS TAKING IN THE MFPBS AS W ELL. IT IS NOT POSSIBLE TO AGREE WITH THIS SUBMISSION. IN MANGALORE CHEMICALS& FERTILIZERS LTD.. V. DEPUTY COMMISSIONER OF COMMERCIAL TAXES & ORS., [1992) SUP PL. 1 S.C.C, 21, A BENCH OF THIS COURT COMPRISING M.N. VENKATACHALIAH, J. (AS THE LEARNED CHIEF JUSTICE TH EN WAS) AND S.C AGRAWAL, J. STATED THE RELEVANT PRINCIPLE IN TH E FOLLOWING WORDS: SHRI NARASIMHAMURTY AGAIN RELIED ON CERTAIN OBSERV ATIONS IN CCE V. PARLE EXPORTS (P)LTD. [1989] 1 SCC 345, IN S UPPORT OF STRICT CONSTRUCTION OF A PROVISION CONCERNING EXEMP TIONS. THERE IS SUPPORT OF JUDICIAL OPINION TO THE VIEW THAT EXEMPT IONS FROM TAXATION HAVE A TENDENCY TO INCREASE THE BURDEN ON THE OTHER UN- EXEMPTED CLASS OF TAX PAYERS AND SHOULD BE CONSTRUE D AGAINST THE SUBJECT IN CASE OF AMBIGUITY. IT IS AN EQUALLY WELL KNOWN PRINCIPLE THAT A PERSON WHO CLAIMS AN EXEMPTION HAS TO ESTABLISH HIS CASE. INDEED, IN THE VERY CASE OF PARLE EXPORTS (P) LTD. RELIED UPON BY SHRI NARASIMHAMURTHY, IT WAS OB SERVED. WHILE INTERPRETING AN EXEMPTION CLAUSE, LIBERAL IN TERPRETATION SHOULD BE IMPARTED TO THE LANGUAGE THEREOF, PROVIDE D NO VIOLENCE IS DONE TO THE LANGUAGE EMPLOYED. IT MUST, HOWEVER, BE BORNE IN MIND THAT ABSURD RESULTS OF CONSTRUCTION SHOULD BE AVOIDED. THE CHOICE BETWEEN A STRICT AND A LIBERAL CONSTRUCT ION ARISES ONLY IN CASE OF DOUBT IN REGARD TO THE INTENTION OF THE LEGISLATURE MANIFEST ON THE STATUTORY LANGUAGE. INDEED, THE NEE D TO RESORT TO ANY INTERPRETATIVE PROCESS ARISES ONLY WHERE THE ME ANING IS NOT MANIFEST ON THE PLAIN WORDS OF THE STATUTE. IT THE WORDS ARE PLAIN AND CLEAR AND DIRECTLY CONVEY THE MEANING, THERE IS NOT NEED FOR ANY INTERPRETATION. WE ARE, HOWEVER, OF THE OPINION THAT, ON PRINCIPLE , THE DECISION OF THE COURT IN MANGALORE CHEMICALS AND IN UNION OF INDIA V. WOOD PAPERS , REFERRED TO THEREIN REPRESENTS THE CORRECT VIEW OF 20 LAW. THE PRINCIPLE THAT IN CASE OF AMBIGUITY, A TAX ING STATUTE SHOULD BE CONSTRUED IN FAVOUR OF THE ASSESSEE ASS UMING THAT THE SAID PRINCIPLE IS GOOD AND SOUND- DOES NOT APPLY TO THE CONSTRUCTION OF AN EXCEPTION OR AN EXEMPTING PROVIS ION; THEY HAVE TO BE CONSTRUED STRICTLY. A PERSON INVOKING AN EXCEPTION OR AN EXEMPTION PROVISION TO RELIEVE HIM OF THE TAX LI ABILITY MUST ESTABLISH CLEARLY THAT HE IS COVERED BY THE SAID PR OVISION. IN CASE OF DOUBT OR AMBIGUITY, BENEFIT OF ITS MUST GO TO TH E STATE. THE HONBLE SUPREME COURT IN ORISSA STATE WAREHOUSI NG CORPORATIONS CASE (SUPRA) HAS LAID DOWN THAT WHIL E IT IS TRUE THAT IN THE EVENT OF THERE BEING ANY DOUBT IN THE M ATTER OF INTERPRETATION OF A FISCAL STATUTE, THE SAME GOES I N FAVOUR OF THE ASSESSEE, BUT THE FACT REMAINS AND THE LAW IS WELL- SETTLED ON THIS SCORE THAT IN THE MATTER OF INTERPRETATION OF THE T AXING STATUTES THE LAW COURTS WOULD NOT BE JUSTIFIED IN INTRODUCING SO ME OTHER EXPRESSIONS WHICH THE LEGISLATURE THOUGHT FIT TO OM IT. IN THE PRESENT CONTEXT, THERE IS NO DOUBT AS TO THE MEANIN G OF THE WORDS USED IN THE SECTION BY REASON OF THE LANGUAGE USED, NEITHER THERE IS ANY DIFFICULTY IN ASCERTAINING THE STATUTORY INT ENT. INCIDENTALLY, IT CANNOT BUT BE SAID THAT AN EXEMPTION IS AN EXCEP TION TO THE GENERAL RULE AND SINCE THE SAME IS OPPOSED TO THE N ATURAL TENOR OF THE STATUTE, THE ENTITLEMENT FOR EXEMPTION, THEREFO RE, OUGHT NOT TO BE READ WITH ANY LATITUDE TO THE TAX-PAYER OR EVEN WITH A WIDER CONNOTATION. 41. THEREFORE, IT BECOMES CLEAR THAT LIBERAL INTERP RETATION OF AN INCENTIVE PROVISION IS POSSIBLE IF THERE IS ANY DOU BT. AS WE HAVE SEEN ABOVE THAT IF VARIOUS SUB SECTIONS OF SECTION 80IC ARE READ CAREFULLY IT LEAVES NO DOUBT THAT DEDUCTION WAS MEANT ONLY FOR N EW UNITS OR IN CASE OF OLD UNITS IF SUBSTANTIAL EXPANSION WAS CARRIED O UT IN SUCH OLD UNITS AND DEDUCTION WAS AVAILABLE ONLY FOR A PERIOD OF 10 YEARS. THEREFORE, THERE IS NO QUESTION OF GIVING ANY INTERPRETATION M UCH LESS LIBERAL INTERPRETATION TO SECTION 80IC WHEN THE READING OF WHOLE SECTION MAKES THE PROVISION VERY CLEAR. AS OBSERVED IN CASE OF M /S NOVAPAN INDIA LTD V COLLECTOR OF CENTRAL EXCISE AND CUSTOMS (SUPRA) T HE BURDEN WAS ON THE ASSESSEE TO SHOW UNDER WHICH CLAUSE HE WAS ENTI TLED TO THE DEDUCTION BUT ASSESSEE IS SIMPLY ASSERTING BEFORE U S THAT THERE IS NO RESTRICTION FOR DEDUCTION IN CASE OF SUBSTANTIAL EX PANSION OF NEW UNITS. IN OUR OPINION, THAT IS NOT ENOUGH BECAUSE ABSENCE OF RESTRICTION DOES NOT MEAN THAT PARTICULAR DEDUCTION WAS ALLOWABLE. 42. WE ALSO FIND FORCE IN THE SUBMISSIONS OF LD. CI T-DR THAT IF INTERPRETATION GIVEN BY THE ASSESSEE IS TO BE ACCEP TED, THE PROVISION WOULD BECOME DISCRIMINATORY FOR TWO CLASSES OF UNDE RTAKINGS I.E. NEW UNITS AND OLD UNITS. BECAUSE THE OLD UNITS WOULD BE ENTITLED TO 100% DEDUCTION ON EXPANSION FOR FIRST FIVE YEARS AND 25% THEREAFTER WHEREAS THE NEW UNITS WOULD BECOME ENTITLED TO DEDUCTION FO R 100% FOR FIRST FIVE YEARS AND AGAIN @ 100% ON SUBSTANTIAL EXPANSION. SU CH DISCRIMINATORY INTENTION CANNOT BE IMPUTED TO THE LEGISLATURE. 21 43. BEFORE US, RELIANCE WAS ALSO PLACED ON THE DECI SION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF TRIPUTI LPG IN DUSTRIES LIMITED VS. DCIT(SUPRA). IN THIS DECISION, THE BENCH HAS SIMPLY OBSERVED THAT MAIN DISPUTE IS ON THE DEFINITION OF INITIAL ASSESSMENT YEAR. THE PROVISIONS OF SUB SECTION (2) AND SUB SECTION (3) AS DISCUSSED IN DETAIL ABOVE HAVE BEEN TOTALLY IGNORED AND, THEREFORE, THIS DECISION, IN OUR OPINION, IS PER INQUERIM AND CANNOT BE FOLLOWED. 44. THE LD. COUNSEL HAS ALSO RELIED ON THE DECISION IN THE CASE OF S.R. PARYAVARAN ENGINEERS PVT LTD (SUPRA) OF THE CH ANDIGARH BENCH. THE FACTS IN THAT CASE ARE THAT ASSESSEE HAS CLAIME D DEDUCTION U/S 80IB IN ASSESSMENT YEAR 1999-2000 @ 100% . THE DEDUCTIO N WAS CLAIMED @ 100% FOR FIVE YEARS AND THEN DEDUCTION WAS CLAIMED @ 30% ON THE PROFITS IN THE NEXT YEAR. THE ASSESSEE UNDERTOOK S UBSTANTIAL EXPANSION IN FINANCIAL YEARS 2004-05 & 2005-06 AND CLAIMED DE DUCTION AT THE RATE OF 100% ON THE BASIS OF SUCH SUBSTANTIAL EXPANSION IN ASSESSMENT YEAR 2006-07. HOWEVER, THE DEDUCTION WAS WRONGLY CLAIME D U/S 80IB INSTEAD OF SECTION 80IC. THE CIT(A) ALLOWED THE DE DUCTION BY OBSERVING THAT DEDUCTION COULD NOT BE DENIED SIMPLY BECAUSE ASSESSEE HAS QUOTED A WRONG SECTION. ON THE APPEAL FILED BY REVENUE, THE DEDUCTION WAS HELD TO BE ALLOWABLE BECAUSE SUBSTANT IAL EXPANSION WAS CARRIED OUT IN A UNIT WHICH WAS ALREADY IN EXISTENC E AS ON 7.1.2003. THEREFORE, IN OUR OPINION, THIS DECISION DOES NOT P ROVIDE ANY ASSISTANCE TO THE CASE OF THE ASSESSEE. 45. THE LD. COUNSEL HAS ALSO RELIED ON THE DECISION OF ABHISHEK BHARGAV AAR NO. 1097 OF 2011 (SUPRA). THE FACTS IN THAT CASE ARE THAT A PARTNERSHIP FIRM NAMELY M/S. HIMACHAL POWER PRODU CTS WAS FORMED ON 23.05.2009. THE FIRM COMMENCED COMMERCIAL PRODUC TION IN MARCH, 2010. SHRI ABHISHEK BHARGAV WHILE PLANNING TO JOIN THE FIRM AS PARTNER BY ACQUIRING 20% SHARE OF PROFIT AND ENHANCING ADDI TIONAL MANUFACTURING FACILITY BY UNDERTAKING SUBSTANTIAL E XPANSION SOUGHT ADVANCE RULING ON THE ISSUE WHETHER THE INTRODUCTIO N OF NEW PARTNER WOULD BE TREATED AS RECONSTRUCTION OF THE EXISTING BUSINESS OR THE FIRM WILL BE ENTITLED TO THE BENEFIT OF SUBSTANTIAL EXPA NSION AS PER THE PROVISIONS OF SECTION 80IC(2)(A)(II) IF IT STARTS C OMMERCIAL PRODUCTION BEFORE 01.04.2012. THE AUTHORITY HELD THAT THE ASSE SSEE WAS ENTITLED TO THE BENEFIT OF SUBSTANTIAL EXPANSION IN TERMS OF AN D TO THE EXTENT PROVIDED BY SECTION 80IC OF THE ACT IF IT STARTS CO MMERCIAL PRODUCTION IN THE SUBSTANTIALLY EXPANDED UNIT BEFORE 01.04.201 2. IN THIS CASE THE ASSESSE SHALL BE ENTITLED TO DEDUCTION OF 100% OF I TS PROFITS UPTO A.Y. 2014-15 SINCE THE INITIAL ASSESSMENT YEAR WAS A.Y. 2010-11 AND CLAIM OF DEDUCTION CANNOT BE DENIED MERELY ON THE GROUND OF EXPANSION OF MANUFACTURING CAPACITY SO LONG IT IS NOT A CASE OF RESTRUCTURING OF BUSINESS ALREADY IN EXISTENCE. HOWEVER, THE QUESTIO N WHETHER THE ASSESSEE SHALL BE ENTITLED TO DEDUCTION OF 100% OF ITS PROFIT EVEN AFTER A.Y. 2014-15 I.E. FOR 2 MORE YEARS BEYOND A.Y. 2014 -15 IS LEFT OPEN AND NOT DECIDED BY THE AAR. THEREFORE THIS DECISION IS TOTALLY DISTINGUISHABLE AND DOES NOT HELP THE CASE OF THE A SSESSEE. 22 46. THE LAST DECISION RELIED ON WAS IN THE CASE OF SINTEX INDUSTRIES LTD V CIT (SUPRA). IN THIS CASE THE DEDUCTION U/S 80IC WAS ALLOWED BY THE ASSESSING OFFICER BUT LATER ON A REVISIONARY OR DER WAS PASSED U/S 263 OF THE ACT. THE BENCH MAINLY DEALT WITH THE PRO VISION OF SECTION 263 AND IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES CO LTD V CIT 243 ITR 83 (SC) H ELD THAT SINCE VIEW TAKEN BY THE ASSESSING OFFICER IS ALSO POSSIBLE VIE W, THEREFORE, ASSESSMENT ORDER WAS NOT ERRONEOUS. IN FACT THE BEN CH REFERRED TO THE DECISION OF DELHI BENCH IN THE CASE OF TRIPUTI LPG INDUSTRIES LIMITED VS. DCIT (SUPRA) WITHOUT CONSIDERING THE PROVISION OF SECTION 80IC IN DETAIL FOR REACHING THE CONCLUSION THAT IT IS ONE O F THE POSSIBLE VIEW. SINCE WE HAVE ALREADY DISCUSSED THE DECISION OF TR IPUTI LPG INDUSTRIES LIMITED VS. DCIT (SUPRA) AND FOUND THAT ALL THE PR OVISIONS OF THE SECTION WERE NOT DISCUSSED IN THAT SECTION AND THAT IS PER INQUERIM, THEREFORE, IN OUR OPINION, THIS ORDER DOES NOT HELP THE CASE OF THE ASSESSEE. 47. THE LAST ARGUMENT WAS IN RESPECT OF COLUMN IN FORM NO. 10CCB. THE COLUMN 25 OF FORM NO. 10CCB READS AS UNDER:- 25 (I) WHETHER THE UNDERTAKING OR ENTERPRISE I S LOCATED IN AN AREA NOTIFIED BY THE BOARD FOR THE PURPOSES OF SEC TION 80-IC :---YES ---NO (II) IF YES PLEASE INDICATE,- A. NAME OF THE EXPORT PROCESSING ZONE / INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE / INDUSTRIAL GROWTH CENTRE/INDUSTRIAL PARK/ESTATE/SOFTWARE TECHNOLOGY PARK/INDUSTRIAL AREA/THEME PARK AND THE DISTRICT/STATE IN WHICH LOCATED :------------ -------- (B) KHASRA NO. OF THE UNDERTAKING OR ENTERPRISE :-------------------- (ALSO INDICATE THE BOARDS NOTIFICATION NO. ) (C) IF THE ELIGIBLE BUSINESS IS NEW, PLEASE GIVE THE DATE OF COMMENCEMENT OF PRODUCTION OR MANUFACTUR E OF ARTICLE OR THING. :--------------------- (D) IF THE EXISTING BUSINESS HAS UNDERTAKEN SUBST ANTIAL EXPANSION, PLEASE SPECIFY,- :----------- ----------- (I) THE DATE OF SUBSTANTIAL EXPANSION (II) THE TOTAL BOOK VALUE OF PLANT AND MACHINERY (BEFORE TAKING DEPRECIATION IN ANY YEAR)AS ON FIRST DAY OF THE PREVIOUS YEAR IN WHICH SU B- STANTIAL EXPANSION TOOK PLACE. :-------- -------------- (III) VALUE OF INCREASE IN THE PLANT AND MACHINE RY IN THE YEAR OF SUBSTANTIAL EXPANSION. :- --------------------- (E) DOES THE UNDERTAKING OR ENTERPRISE MANUFACTUR E OR PRODUCE ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDULE. :---YES ---NO (IF YES, PLEASE SPECIFY THE ARTICLE OR THING) :----------------------- (F) DOES THE UNDERTAKING OR ENTERPRISE MANUFACTURE OR PRODUCE ANY ARTICLE OR THING SPECIFIED IN THE FOURTEENTH SCHEDULE. :---YES ---NO (IF YES, PLEASE SPECIFY THE ARTICLE OR THING O R OPERATION) :------------------------- 23 48. THE CAREFUL READING OF THE FORM IN A SERIAL ORD ER WOULD CLEARLY SHOW THAT THE ASSESSEE IS REQUIRED TO INFORM THE LO CATION OF THE INDUSTRY AND COLUMN (C) SPECIFICALLY ASK THE ASSESSEE TO STA TE WHETHER BUSINESS IS A NEW BUSINESS? COLUMN (D) CLEARLY ASK THE ASSE SSEE WHETHER EXISTING BUSINESS HAS UNDERTAKEN SUBSTANTIAL EXPANS ION, THEREFORE, THERE ARE TWO CATEGORIES OF BUSINESS AND SUBSTANTIA L EXPANSION IS POSSIBLE ONLY IN CASE OF EXISTING BUSINESS. IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY ADJUDICATED THIS ISSUE. 49. IN VIEW OF THE ABOVE DETAILED DISCUSSION WE HOL D THAT THE ASSESSEE BEFORE US I.E. M/S HYCRON ELECTRONICS IN ITA NO. 79 8/CHD/2012 IS ENTITLED TO ONLY 25% OF DEDUCTION DURING THE PRESEN T YEAR BECAUSE THE ASSESSEE HAS ALREADY AVAILED THE PERIOD OF FULL DED UCTION @ 100% IN THE EARLIER FIVE YEARS I.E. FROM ASSESSMENT YEARS 2 004-05 TO 2008-09. IN THIS BACKGROUND, WE FIND NOTHING WRONG WITH THE ORD ER OF LD. CIT(A) AND WE UPHOLD THE SAME. ACCORDINGLY, ASSESSEES AP PEAL IS DISMISSED. FOLLOWING THE ABOVE ORDER, WE DECIDE THE ISSUE RAIS ED BY THE ASSESSEE AGAINST THE ASSESSEE. 8. GROUND NO. 1(II):- THE ISSUE OF INITIATING OF PE NALTY PROCEEDINGS IS PRE- MATURE AT THIS STAGE AND, THEREFORE, THE SAME IS DI SMISSED AS INFRUCTUOUS. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 03/08/2015 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 03/08/2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 24 25