M/s Super LPG Appliances, Solan V. ITO, Baddi

ITA 341/CHANDI/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95464 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 08-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMARVEER SINGH
• Assessee Lawyers: K C JAIN
• Keywords: Depreciation; Proportionate interest; Advance ruling; Condonation of delay
• Section: 244A; 80IB; 263; 11

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. 341/CHD/2015 ASSESSMENT YEAR: 2011-12 M/S SUPER LPG ALLIANCES, VS. THE ITO, BADDI,(HP) BADDI, DISTT. SOLAN (HP) PAN NO. ABDFS7491K (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI K. SAMPATH & K.C.JAIN RESPONDENT BY : SHRI AMARVEER SINGH DATE OF HEARING : 28.07.2015 DATE OF PRONOUNCEMENT : 04/08/2015 ORDER PER T.R.SOOD, A.M. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 23.02.2015 OF CIT(A), SHIMLA. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1 THAT THE ORDER PASSED UNDER SECTION 250(6) BY THE ID. COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA (H.P) IN APPEAL NO. IT/397/13-14/SML, DATED 23.02.2015 IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ID COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRE D IN UPHOLDING THE ACTION OF THE ID. ASSESSING OFFICER I N DENYING APPELLANT BENEFIT OF SUBSTANTIAL EXPANSION UNDERTAK EN BY THE APPELLANT AND 100% DEDUCTION UNDER SECTION 80IC FOR UNDERTAKING SUBSTANTIAL EXPANSION DURING THE YEAR. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN UPHOLDING THE ACTION OF THE ID. ASSESSING OFFICER I N DENYING 100% DEDUCTION UNDER SECTION 80IC OF THE INCOME TAX ACT, 1961 AND RESTRICTING IT TO 25% ONLY. 2 4 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN UPHOLDING THE ACTION OF THE ID. ASSESSING OFFICER I N CONFIRMING THE DISALLOWANCE OF DEDUCTION OF RS. 11,57,64,532/- OUT OF THE TOTAL DEDUCTION OF RS. 15,43,52,709/- CLAIMED BY THE APPE LLANT UNDER SECTION 80IC OF THE INCOME TAX ACT 5, THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN UPHOLDING THE ACTION OF THE ID- ASSESSING OFFICER I N CONFIRMING THE ADDITION OF DEEMED INTEREST INCOME OF RS. 6,73,208/ -ON ACCOUNT OF INTEREST FREE ADVANCES GIVEN BY THE APPELLANT. 6. THAT THE APPELLANT CRAVES TO ADD, AMEND OR ALTER ANY GROUND OF APPEAL BEFORE OR AT THE LIME OF HEARING OF APPEAL W ITH THE PERMISSION OF THE HON'BLE INCOME TAX APPELLATE TRIB UNAL, CHANDIGARH. 3. THE BRIEF FACTS ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF LPG GAS STOVES. DURING THE YEAR TH E ASSESSEE FILED A RETURN OF INCOME DECLARING INCOME AT RS. 4,90,210/- AFTER CLAIMING 100% DEDUCTION U/S 80IC AMOUNTING TO RS. 15,43,52,709/-. IT WAS NOTICED THAT ASSESSEE STARTED MANUFACTURING ACTIVITIES W.E.F. 31 .5.2005 AND, THEREFORE, DEDUCTION WAS CLAIMED FOR THE FIRST YEAR BEING ASSE SSMENT YEAR 2006-07 @ 100%. THIS DEDUCTION WAS CLAIMED UP TO ASSESSMENT Y EAR 2010-11 I.E. FOR THE PERIOD OF FIVE YEARS. LATER ON, DURING FINANCIA L YEAR 2010-11 THE ASSESSEE CLAIMED TO HAVE MADE SUBSTANTIAL EXPANSION AND, THEREFORE, AGAIN CLAIMED DEDUCTION @ 100% U/S 80IC FOR THE ASSESSMEN T YEAR 2011-12. THE ASSESSING OFFICER AFTER DETAILED DISCUSSION ALLOWED THE DEDUCTION ONLY @ 25%. 4. ON APPEAL, ACTION OF THE ASSESSING OFFICER WAS C ONFIRMED BY LD. CIT(A). 5. THIS CASE WAS FIXED FOR HEARING ON 22.7.2015 AND ON THAT DATE AN ADJOURNMENT APPLICATION WAS FILED STATING THAT SHRI K. SAMPATH WHO WAS TO ARGUE 3 THIS APPEAL WAS AWAY TO CHENNAI FOR SOME OFFICIAL W ORK. THE CASE WAS ADJOURNED TO 28.7.20105. ON THAT DATE ALSO AN ADJOURNMENT APP LICATION WAS FILED STATING THAT ASSESSEE HAS REQUESTED THE HON'BLE PRESIDENT OF THE TRIBUNAL FOR CONSTITUTION OF A SPECIAL BENCH ON THE ISSUE UNDER CONSIDERATION. THE REFORE, CASE SHOULD BE ADJOURNED TILL THE TIME SPECIAL BENCH IS CONSTITUTE D. DURING THE COURSE OF HEARING IT TRANSPIRED THAT THE ISSUE HAS BEEN ADJU DICATED IN DETAILED ORDER IN THE CASE OF HYRCRON ELECTRONICS, SOLAN VS. ITO & OTHERS IN ITA NO. 798/CHD/2012 & OTHERS. ORDER DATED 27.5.2015 AND ISSUE WAS SQUARELY COVERED AGAINST THE ASSESSEE. IN THIS BACKGROUND, THE REVENUE STRONGLY OBJECTED TO THE ADJOURNMENT. IT FURTHER TRANSPIRED THAT SPECIAL BENCH HAD NOT S O FAR BEEN CONSTITUTED BY THE HON'BLE PRESIDENT ITAT AND THIS ISSUE HAS BEEN TAK EN TO THE HON'BLE HIGH COURT OF HIMACHAL PRADESH BY VARIOUS ASSESSES AND ,THEREF ORE, WE DECLINE TO ADJOURN THE CASE BECAUSE HIGH COURT HAS NOT STAYED THE OPERATIO N OF THE ORDER OF THE TRIBUNAL. THE LD. COUNSEL WAS ASKED TO ARGUE THE C ASE AND POINT OUT ANY DISTINGUISHING FEATURES OF THE CASE, IF ANY. 6. THE LD. COUNSEL MADE CERTAIN SUBMISSIONS BUT WAS UNABLE TO POINT OUT ANY DISTINGUISHING FEATURE OF THE CASE BEFORE US FR OM THE DECISION OF THE TRIBUNAL IN THE CASE OF HYRCRON ELECTRONICS, SOLAN VS. ITO & OTHERS (SUPRA). HE SOUGHT PERMISSION OF THE BENCH FOR FILING A SYNO PSIS WITHIN 3 DAYS TIME AND THIS TIME WAS GRANTED. LATER ON, BRIEF SUBMISSI ONS MADE THROUGH SYNOPSIS WERE RECEIVED BY THE TRIBUNAL THROUGH FAX MESSAGE WHICH HAVE BEEN PLACED ON RECORD AND HAVE BEEN CONSIDERED. 7. ON THE OTHER HAND LD. DR VEHEMENTLY ARGUED THAT ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN HYRCRON ELECTRONICS, SOLAN VS. ITO & OTHERS. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. WE HAVE ALSO PERUSED THE WRITTEN SYNOPSIS FILED ON BEHALF OF THE ASSESSEE. WE FIND THAT NO 4 DISTINGUISHING FEATURES HAVE BEEN POINTED OUT IN TH ESE WRITTEN SUBMISSIONS AS WELL AS IN ORAL SUBMISSION. IN FACT VARIOUS CON TENTIONS HAVE BEEN REPEATED WHICH WERE RAISED IN THE CASE OF HYRCRON E LECTRONICS, SOLAN VS. ITO & OTHERS (SUPRA). THE ISSUE BEFORE HAND HAS BEEN A DJUDICATED IN DETAIL IN THE CASE OF HYRCRON ELECTRONICS, SOLAN VS. ITO & OTHERS (SUPRA) AND RELEVANT FINDINGS OF THE TRIBUNAL ARE CONTAINED IN PARAS 22 TO 49 WHICH ARE AS UNDER:- 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 PRINCI PLES OF INTERPRETATIONS. THIS IS CLEAR FROM THE OBSERVATION S MADE BY HON'BLE 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 COMPA NY [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 HO USE SITTING JUDICIALLY IS NOT CONCERNED WITH THE QUESTION WHETH ER THE POLICY 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) : 5 . . . 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. NOTHING 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] HON'BLE APEX COURT 119; [1945] 2 ALL ER 499. LORD THANKERTO N ALSO IN A MANNER SIMILAR IN IRC V. ROSS AND COULTER (BLADNOCH DISTILLERY CO. LTD. [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 HARSHN ESS. 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 MANIFEST THE INTENTION OF THE LEGISLATURE ARTIFICIAL AND UNDULY LATIDUDINARIAN RULES OF CONST RUCTION, WHICH WITH THEIR GENERAL TENDENCY TO GIVE THE TAXP AYER THE 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:- 6 A STATUTORY PROVISION MUST BE SO CONSTRUED, IF POSSIBLE, THAT ABSURDITY AND MISCHIEF MAY BE AVOIDE D. WHERE THE PLAIN LITERAL INTERPRETATION OF A STATUTORY PRO VISION PRODUCES A MANIFESTLY ABSURD AND UNJUST RESULT WHIC H COULD NEVER HAVE BEEN INTENDED BY THE LEGISLATURE, THE CO URT MAY MODIFY THE LANGUAGE USED BY THE LEGISLATURE OR EVEN DO SOME VIOLENCE TO IT, SO AS TO ACHIEVE THE OBVIOUS INTENT ION OF THE LEGISLATURE AND PRODUCE A RATIONAL CONSTRUCTION. L UKE V . IRC [1963] H ON ' BLE A PEX C OURT 557; [1964] 54 ITR 692 (HL) FOLLOWED. SPEECHES MADE BY THE MEMBERS OF THE LEGISLATURE ON THE FLOOR OF THE HOUSE WHEN THE BILL IS BEING DEBAT ED ARE 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 CA N CERTAINLY BE RELIED UPON AS INDICATING THE DRIFT OF THE SECTI ON OR TO SHOW WHAT THE SECTION IS DEALING WITH. IT CANNOT CONTROL THE INTERPRETATION OF THE WORDS OF A SECTION, PARTICULA RLY WHEN THE LANGUAGE OF THE SECTION IS CLEAR AND UNAMBIGUOUS BU T, BEING PART OF THE STATUTE, IT PRIMA FACIE FURNISHES SOME CLUE AS TO THE MEANING 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 ASUNDER:- 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 FI ND 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 DEPART MENT BUT ARE ALSO IN THE NATURE OF CONTEMPORANEA EXPOSITION FURNISHING LEGITIMATE AID IN THE CONSTRUCTION OF A PROVISION. 7 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 AR E NOT BINDING ON THE COURTS, THEREFORE, THE SAME SHOULD NOT BE CONSIDERE D FOR INTERPRETATION OF A PARTICULAR PROVISION. AS FAR A S THE DECISION IN THE CASE OF COMMISSIONER OF CENTRAL EXCISE VS. M/S RATT AN MELTING & WIRE (SUPRA) IS CONCERNED, THIS DOES NOT SUPPORT TH E PROPOSITION MADE BY THE LD. COUNSEL FOR THE ASSESSEE. IN THAT CASE THE QUESTION WAS WHETHER A CIRCULAR ISSUED BY THE DEPARTMENT WHICH I S GENERALLY BINDING ON THE AUTHORITIES WOULD TAKE PRECEDENCE OV ER THE INTERPRETATION MADE BY THE SUPREME COURT OR HIGH CO URT IN RESPECT OF PARTICULAR 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 UNDER 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 CIRCULAR SHOULD BE GIVEN EFFECT TO AND NOT THE VIEW EXPRESSED IN A DECISION OF THIS COURT OR T HE HIGH COURT. SO FAR AS THE CLARIFICATIONS/CIRCULARS ISSUED BY THE CENTRAL 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. LOOK ED AT FORM ANOTHER ANGEL, A CIRCULAR WHICH IS CONTRARY TO THE STATUTORY PROVISIONS 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 LAYS 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 B ELATED RETURN DECLARING INCOME OF RS. 50,240/- AND WAS CLAIMING R EFUND OF RS. 2,14,505/- ON ACCOUNT OF TAX DEDUCTED AT SOURCE. TH E LAST DATE OF FILING THE RETURN WAS 31.3.1997 BUT THE RETURN WAS FILED L ATE ON 8 TH SEPTEMBER 1997. THE ASSESSEE SOUGHT CONDONATION OF DELAY BY AN APPLICATION FILED ON 21 ST SEPT, 1998 BY INVOKING SECTION 119(2)(B) OF 8 THE ACT WHICH WAS INITIALLY REJECTED. HOWEVER, ON A WRIT PETITION THE ORDER FOR REJECTION WAS QUASHED BY A SINGLE JUDGE A ND REMITTED THE MATTER BACK FOR FRESH CONSIDERATION. ON REMAND, TH E COMMISSIONER WHO WAS VESTED WITH THE JURISDICTION UNDER INSTRUCT ION NO.13 OF 2006 IN RESPECT OF CLAIM UPTO RS. 10 LAKHS ACCEPTED THE CAUSE SHOWN FOR DELAY IN FILING THE RETURN BUT DENIED INTEREST ON R EFUND AMOUNT IN VIEW OF THE CONDITION SET OUT IN CIRCULAR NO. 670 DATED 26 TH OCT 1993. THEREFORE, QUESTION BEFORE THE COURT WAS WHETHER TH ESE INSTRUCTIONS WERE CONTRARY TO THE PROVISION OF SECTION 244A OF THE ACT WHICH PROVIDED FOR PAYMENT OF INTEREST ON REFUNDS. THIS BECOMES ABSOLUTELY CLEAR FROM THE QUESTION FRAMED BY HON'BLE COURT WHI CH IS CONTAINED AT PLACITUM 6 AND READS AS UNDER:- (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 MAKING 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 PROVIS IONS 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 CONSIDERED 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 9 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 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 ZON E 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 TH IS REGARD, 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 OR INTEG RATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TE CHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY THE B OARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE 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 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 TH IS REGARD, IN ANY OF THE 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 10 (II) ON THE 7 TH DAY OF JANUARY, 2003 AND ENDING BEFORE THE 1 ST DAY OF APRIL 2012, IN THE STATE OF HIMACHAL PRADES H 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 (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 ASSESSMENT 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 TH ERE- ESTABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BUSINESS OF ANY SUCH UNDERTAKING AS IS REFERRED TO IN SECTION 33B, IN THE CIRCUMSTANCES AN D 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 O F CLAUSE (II) OF THIS SUB-SECTION AS THEY APPLY FOR THE PURPOSES OF CLAUS E (II) 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-SECTION (4) OF 11 SECTION 80-IB OR UNDER SECTION 10C, AS THE CASE MAY BE, EXCEEDS 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,- (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, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICI AL GAZETTE, SPECIFY IN ACCORDANCE WITH THE SCHEME FRAM ED 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 COMPLETES SUBSTANTIAL EXPANSION; (VI) INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE MEANS SUCH CENTRES, WHICH THE BOARD, MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT (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 IN ACCORDANCE WITH THE SOFTWARE TECHNOLOGY PARK SCHEME NOTIFIED BY THE GOVERNMENT OF INDIA IN THE MINISTRY OF COMMERCE AND INDUSTRY; 12 (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; (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 SECTIO N [2] IS THE ENABLING PROVISION WHICH PROVIDES FOR THE TYPES OF UNDERTAKINGS AND CIRCUMSTANCES WHERE DEDUCTION UNDER SECTION 80IC WO ULD BE ALLOWED. IT ALLOWS DEDUCTION TO VARIOUS UNDERTAKINGS WHICH H AVE EITHER BEGUN OR BEGINS MANUFACTURING OF ANY ARTICLE OR THINGS NO T BEING ANY ARTICLE OR THING SPECIFIED IN SCHEDULE XIII AND ALSO UNDERT AKES 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 BEHALF OF THE ASSESSEE IS THAT SINCE DEDUCTION IS AVAILABLE TO TH E UNDERTAKING WHICH UNDERTAKES SUBSTANTIAL EXPANSION AND SINCE THERE IS NO RESTRICTION IN THIS SUB SECTION ITSELF, THEREFORE, THE DEDUCTION W AS AVAILABLE ON SUBSTANTIAL EXPANSION BY OLD UNDERTAKINGS AS WELL A S NEW UNDERTAKINGS DURING THE WINDOW PERIOD. HOWEVER, THERE IS NO FORC E IN THIS INTERPRETATION. SUB SECTION (2) BEGINS WITH THE EX PRESSION THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTERPRISE WH ICH HAS BEGUN OR BEGINS THIS ITSELF SHOWS THAT PROVISION MADE EVEN THE EXISTING UNDERTAKINGS ENTITLED FOR THE DEDUCTION BECAUSE THE EXPRESSION BEGUN WOULD REFER TO THE UNDERTAKING WHICH WERE A LREADY EXISTING AND BEGAN THE MANUFACTURE BEFORE THE WINDOW PERIOD MENTIONED IN THE SUB SECTION. THE LAST LINE OF THE SUB SECTION READS AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING ... THIS WOULD NATURALLY REFER TO THE UNDERTAKING WHICH WERE ALREA DY EXISTING. IF IT IS READ THE WAY THE LD. COUNSEL OF THE ASSESSEE WOULD LIKE US TO READ THEN THE PROVISION WOULD BECOME UNWORKABLE BECAUSE IF TH ERE IS AN UNDERTAKING WHICH IS ESTABLISHED DURING THE WINDOW PERIOD THEN THE SAME CANNOT POSSIBLY UNDERTAKES SUBSTANTIAL EXPANSI ON ALSO SIMULTANEOUSLY. THE EXPRESSION AND WOULD REFER T O THE CUMULATIVE CONDITION THAT IS BOTH PARTS OF THE CONDITIONS NEED TO BE COMPLIED. THE EXPRESSION AND CAN BE JOINED ONLY WITH THE EXPRES SION BEGUN. THIS IS BECAUSE BEGUN REFERS TO SOMETHING WHICH HAS AL READY STARTED IN THE PAST WHEREAS BEGINS CONNOTES SOMETHING WHICH WOULD COMMENCE IN THE PRESENT. THEREFORE, THE EXPRESSION AND CA N BE CORRELATED ONLY WITH EXISTING UNIT BECAUSE AS WE HAVE ALREADY SEEN A NEW UNIT WHICH HAS BEEN SET UP AND BEGINS PRODUCTION CANNOT SIMULT ANEOUSLY UNDERGO SUBSTANTIAL EXPANSION ALSO SO AS TO BECOME ELIGIBLE FOR DEDUCTION UNDER THIS SECTION. 13 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 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 HI MACHAL PRADESH, SIKKIM, UTTARANCHAL AND NORTH-EASTERN STAT ES. 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, UTTARANCHAL, SIKKIM AND NORTH-EASTERN STATES . FOR THIS PURPOSE, SUBSTANTIAL EXPANSION IS DEFINED AS INCREA SE IN THE INVESTMENT IN THE PLANT AND MACHINERY BY AT LEAST 5 0% OF THE BOOK VALUE OF THE PLANT AND MACHINERY (BEFORE TAKIN G DEPRECIATION IN ANY YEAR), AS ON THE FIRST DAY OF T HE PREVIOUS YEAR IN WHICH THE SUBSTANTIAL EXPANSION IS UNDERTAK EN. 49.2 THE SECTION PROVIDES THAT THE DEDUCTION SHALL BE AVAILABLE TO SUCH UNDERTAKINGS OR ENTERPRISES WHICH MANUFACTURE OR PRODUCE ANY ARTICLE OR THING, NOT BE ING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDU LE AND WHICH COMMENCE OPERATION IN ANY EXPORT PROCESSING Z ONE, OR INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GROWTH CENTRE OR INDUSTRIAL ESTATE, OR I NDUSTRIAL PARK, OR SOFTWARE TECHNOLOGY PARK OR INDUSTRIAL ARE A OR THEME PARK, AS NOTIFIED BY THE BOARD IN ACCORDANCE WITH RULES PRESCRIBED IN THIS REGARD. SIMILAR DEDUCTION SHALL BE AVAILABLE TO THRUST SECTOR INDUSTRIES, AS SPECIFIED IN THE FOURTEENTH SCHEDULE. 14 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 CENT FOR COMPANIES ) FOR THE NEXT FIVE ASSESSMENT YEARS. 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 TH E ASSESSEE, NO DEDUCTION SHALL BE ALLOWED UNDER ANY O THER SECTION CONTAINED IN CHAPTER VIA OR IN SECTION 10A OR 10B, IN RELATION TO THE PROFITS AND GAINS OF THE UNDERTA KING 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 U NDER SECTION 80-IC. FURTHER, A NEW FOURTEENTH SCHEDULE H AS ALSO BEEN INSERTED, WHICH SPECIFIES THE LIST OF ARTICLES AND THINGS, BEING THRUST SECTOR INDUSTRIES, WHICH ARE ELIGIBLE FOR THE PURPOSES OF AVAILING DEDUCTION UNDER THIS SECTION. CONSEQUENT TO THESES AMENDMENTS, THE PROVISIONS OF SECTION 10C AND SUB-SECTION(4) OF SECTION 80-IB HAVE BEEN M ADE INOPERATIVE IN RESPECT OF THE UNDERTAKINGS OR ENTER PRISES IN THE STATE OF HIMACHAL PRADESH OR IN NORTH-EASTERN R EGION INCLUDING SIKKIM, WITH EFFECT 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 UNI ON CABINET. 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 SUBS TANTIAL EXPANSION (SEE HIGHLIGHTED PORTION OF THE CIRCULAR). THE CONT ENTION OF THE LD. COUNSEL OF THE ASSESSEE WAS THAT WORD EXISTING QU ALIFIES 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 D ICTIONARIES ARE AS UNDER:- 15 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 DEFINE AS UNDER 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 WIT H VERY LITTLE MONEY: WE EXISTED ON A DIET OF RICE. THEY CANT EXI ST ON THE MONEY HES EARNING THE ABOVE DEFINITION CLEARLY SHOWS THAT EXIST WOU LD REFER TO SOMETHING WHICH IS IN FORCE PRESENTLY. EXIST WOUL D GENERALLY AND IN COMMON SENSE REFERS TO SOMETHING WHICH IS ALREADY T HERE. WITH REFERENCE TO THIS PROVISION, THIS WOULD REFER TO AN UNDERTAKING WHICH WAS ALREADY PRESENT ON THE DATE WHEN THIS PROVISION WAS INTRODUCED. IN ANY CASE THE NOTIFICATION ISSUED BY THE GOVT. OF INDIA, MINISTRY OF COMMERCE AND INDUSTRY, DEPARTMENT OF INDUSTRIAL POL ICY AND PROMOTION WHICH IS PUBLISHED IN THE GAZETTE OF INDI A REMOVED ALL THE DOUBTS. THIS NOTIFICATION IS RELEVANT BECAUSE THIS WAS ISSUED WITH REFERENCE TO SAME PACKAGE ANNOUNCED BY THE UNION CA BINET 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 ABSOL UTELY CLEAR WHEN SUB SECTION (2) IS READ ALONGWITH SUB-SECTION (3) O F SECTION 80IC. AS 16 NOTED EARLIER, SUB SECTION (2) IS ENABLING PROVISIO N WHICH 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 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 CASE 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 EXTENDE D BENEFIT 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 17 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 SECTION 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 OF THE MACHINERY OR PLANT OR PART SO TRANSFERRED DOES NOT EXCEED TWENTY PER CENT OF THE TOTAL VALUE OF THE MACHINERY OR PLANT USED IN THE BUSINESS, THEN, FOR THE PURPOSES OF CLAUSE (II) OF THIS SUB- SECTION, THE 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 UNI T WOULD NOT BE ELIGIBLE FOR DEDUCTION UNDER THIS SECTION THAT IS S ECTION 80IC. NOW FOR CARRYING OUT SUBSTANTIAL EXPANSION THE INVESTMENT I N PLANT & MACHINERY IS REQUIRED TO BE MADE BY ATLEAST 50%. S O IF 50% FRESH MACHINERY IS ADDED TO THE NEW UNIT THEN IT WILL VIO LATE SUB SECTION (4) OF SECTION 80IC, THEREFORE, INTERPRETATION CANVASSE D ON BEHALF OF THE ASSESSEE IS NOT POSSIBLE BECAUSE SECTION 80IC(4) WO ULD BECOME REDUNDANT AND SUCH AN INTERPRETATION IS NOT POSSIBL E. 35. FURTHER, SUB SECTION (6) PROVIDES THAT IN NO CA SE THE TOTAL PERIOD OF DEDUCTION COULD EXCEED THE PERIOD OF 10 Y EARS INCLUDING DEDUCTION AVAILED UNDER SUB SECTION (4) OF SECTION 80IB AND SECTION 10A AND 10B. IT WAS CONTENDED BEFORE US THAT SIN CE THERE IS NO RESTRICTION IN CARRYING OUT OF SUBSTANTIAL EXPANSIO N IN THE NEW UNITS AND AS SUCH SUBSTANTIAL EXPANSION CAN BE CARRIED OU T ANY NUMBER OF TIMES. IF THIS INTERPRETATION IS ACCEPTED THEN SUB SECTION (6) WOULD BE RENDERED OTIOSE OR MEANINGLESS BECAUSE IF A UNIT WA S SET UP ON THE COMMENCEMENT OF THIS SECTION AND THE SAME CLAIMS D EDUCTION @ 100% AND LATER ON EVERY FIVE YEARS A SUBSTANTIAL EXPANSI ON IS CARRIED OUT THEN ACCORDING TO THE INTERPRETATION CANVASSED ON B EHALF OF THE ASSESSEE, SUCH UNIT WOULD AGAIN BECOME ENTITLED TO 100% DEDUCTION FOR ANOTHER FIVE YEARS AND FURTHER BLOCK OF FIVE YE ARS EVERY TIME SUBSTANTIAL EXPANSION IS CARRIED OUT. IF THIS INT ERPRETATION IS ADOPTED THEN DEDUCTION WOULD BECOME ALMOST PERCEPTUAL AS LO NG AS THE ASSESSEE HAS CARRIED OUT SUBSTANTIAL EXPANSION BUT IN THAT CASE SUB SECTION (6) WOULD LOOSE ITS MEANING. SUCH AN UNLIMI TED PERIOD OF DEDUCTION WOULD NOT BE IN CONSONANCE OF LAW. AT TH E COST OF REPETITION, WE WOULD LIKE TO EMPHASIZE THAT NO PRIN CIPLE OF INTERPRETATION CAN BE ADOPTED WHICH LEADS TO A SITU ATION WHERE A PARTICULAR PART OF THE SECTION BECOMES TOTALLY REDU NDANT. IN FACT THOUGH IT WAS CONTENDED THAT IN THE PRESENT CASE (I .E. IN CASE OF HYCRON ELECTRONICS) DEDUCTION HAS BEEN CLAIMED ONLY OF 10 YEARS BUT 18 ON THE DATE OF HEARING SOME OTHER APPEALS WERE ALSO LISTED 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 CONTENTION 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 APPEALS HERE). THEREFORE, THE CONTENTION OF THE ASSESSEE THAT ANY NUMBER OF EXPANSIONS ARE ALLOWED IS NOT POSSIBL E 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 EIGHTH SCHEDULE SHALL BE HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVE D FROM SUCH INDUSTRIAL UNDERTAKING FOR FIVE ASSESSMENT YEARS BE GINNING WITH THE INITIAL ASSESSMENT YEAR AND THEREAFTER TWENTY-FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFIT S 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 G OVERNMENT, THE AMOUNT OF DEDUCTION SHALL BE HUNDRED PER CENT OF PR OFITS AND GAINS FOR A PERIOD OF TEN ASSESSMENT YEARS, AND THE TOTAL PER IOD OF DEDUCTION SHALL IN SUCH A CASE NOT EXCEED TEN ASSESSMENT YEAR S: 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 19 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 CO NSECUTIVE ASSESSMENT YEARS. THE SECOND PROVISO FURTHER MAKES IT CLEAR THAT IN THE CASE OF STATES OF NORTH-EASTERN REGIONS, THE DE DUCTION WOULD BE @ 100% FOR ALL THE 10 YEARS. THUS, EVEN IN THE EARLI ER 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 DEDUCTION WAS ALLOWABLE @ 100% FOR FIRST FIVE YEARS AND 25% FOR NEXT FIVE YEARS. 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 L AWS BY CHATURVEDI & PITHISARIAS - SIXTH EDITION HAS EXP RESSED THE SAME OPINION. THE RELEVANT EXTRACT AT PAGES 6351 OF THE COMMENTARY READS 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 BOTH 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 SUBSTANT IAL EXPANSION. HERE THE EXPRESSION OR IS TO BE READ AS A MUTUALL Y EXCLUSIVE EXPRESSION WHICH REFERS TO A PARTICULAR SITUATION B Y EXCLUDING THE OTHER SITUATION. THEREFORE, INITIAL ASSESSMENT YEA R WOULD CLEARLY COMMENCE EITHER ON COMMENCEMENT OF OPERATION OR AT COMPLETION OF SUBSTANTIAL EXPANSION OF EXISTING UNIT. IN ANY CASE THE WORD INITIAL CANNOT BE USED TWICE BY REFERRING TO SERIES OF EVEN TS. THIS CAN BE UNDERSTOOD WITH A VERY SIMPLE EXAMPLE. LET US SAY A PERSON A PASSES OUT HIS EXAMINATION OF LLB AND GET EMPLOYED AS LEGA L OFFICER IN AN ORGANIZATION. LATER ON, HE QUITS THE JOB AND STARTS THE PRACTICE IN 20 LEGAL PROFESSION AND ULTIMATELY HE IS ELEVATED AS A JUDGE. THEN IN SUCH A SITUATION IT CANNOT BE SAID THAT INITIALLY A WA S WORKING IN A ORGANIZATION AND THEN INITIALLY HE WAS IN THE PROFE SSION AND THEN ELEVATED AS A JUDGE. INITIALLY CAN BE USED ONLY ONC E AS A MATTER OF USAGE OF ENGLISH LANGUAGE. THEREFORE, READING OF TH E ABOVE PROVISION CLEARLY SHOWS THAT INTENTION OF THE LEGISLATURE WAS VERY CLEAR TO ALLOW 100% FOR FIRST FIVE YEARS IN CASE OF UNITS SITUATED IN THE STATE OF HIMACHAL PRADESH (SINCE ALL THE CASES BEFORE US ARE SITUATED IN THE STATE OF HIMACHAL PRADESH) AND THEREAFTER 25% DEDUC TION FOR ANOTHER FIVE YEARS ON THE NEW UNITS OR THE EXISTING UNITS W HERE 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 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 P URPORT OF ITEM-6 OF THE TABLE APPENDED TO THE EXEMPTION NOTIF ICATION, THE BENEFIT OF SUCH AMBIGUITY SHOULD GO TO THE ASSESSEE MANUFACTURER AND THE ENTRY MUST BE CONSTRUED AS TAK ING IN THE MFPBS AS WELL. 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 EXE MPTIONS FROM TAXATION HAVE A TENDENCY TO INCREASE THE BURDEN ON THE OTHER UN-EXEMPTED CLASS OF TAX PAYERS AND SHOULD BE CONST RUED AGAINST THE SUBJECT IN CASE OF AMBIGUITY. IT IS AN EQUALLY WELL KNOWN PRINCIPLE THAT A PERSON WHO CLAIMS AN EXEMPTI ON 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 21 VIOLENCE IS DONE TO THE LANGUAGE EMPLOYED. IT MUST, HOWEVER, BE BORNE IN MIND THAT ABSURD RESULTS OF CONSTRUCTION S HOULD 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 LAW. THE PRINCIPLE THAT IN CASE OF AMBIGUITY, A TAXING STATUTE SHOULD BE CONSTRUED IN FAVOUR OF THE ASSESSEE ASSUMING THAT THE SAID PRINCIPLE IS GOOD AND SOUND- DOES NOT APPLY TO THE CONSTRUCTION OF AN EXCEPTION OR AN EXE MPTING PROVISION; THEY HAVE TO BE CONSTRUED STRICTLY. A PE RSON INVOKING AN EXCEPTION OR AN EXEMPTION PROVISION TO RELIEVE H IM OF THE TAX LIABILITY MUST ESTABLISH CLEARLY THAT HE IS COVERED BY THE SAID PROVISION. IN CASE OF DOUBT OR AMBIGUITY, BENEFIT O F ITS MUST GO TO THE 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 INTRODUCIN G SOME 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 INTENT. INCIDENTALLY, IT CANNOT BUT BE SAID THAT AN EXEMPTION IS AN EXCEPTION TO THE GENERAL RULE AND SINCE THE SAME IS OPPOSED TO THE NATURAL TENOR OF THE STATUTE, THE ENTITLEMEN T FOR EXEMPTION, THEREFORE, OUGHT NOT TO BE READ WITH ANY LATITUDE T O 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 CARR IED OUT IN SUCH OLD UNITS AND DEDUCTION WAS AVAILABLE ONLY FOR A PERIOD OF 10 YEARS. THEREFORE, THERE IS NO QUESTION OF GIVING ANY INTER PRETATION MUCH LESS LIBERAL INTERPRETATION TO SECTION 80IC WHEN THE REA DING OF WHOLE SECTION MAKES THE PROVISION VERY CLEAR. AS OBSERVE D IN CASE OF M/S 22 NOVAPAN INDIA LTD V COLLECTOR OF CENTRAL EXCISE AND CUSTOMS (SUPRA) THE BURDEN WAS ON THE ASSESSEE TO SHOW UNDER WHICH CLAUSE HE WAS ENTITLED TO THE DEDUCTION BUT ASSESSEE IS SIMPLY AS SERTING BEFORE US THAT THERE IS NO RESTRICTION FOR DEDUCTION IN CASE OF SUBSTANTIAL EXPANSION OF NEW UNITS. IN OUR OPINION, THAT IS NO T ENOUGH BECAUSE ABSENCE OF RESTRICTION DOES NOT MEAN THAT PARTICULA R 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 DEDU CTION FOR 100% FOR FIRST FIVE YEARS AND AGAIN @ 100% ON SUBSTANTIA L EXPANSION. SUCH DISCRIMINATORY INTENTION CANNOT BE IMPUTED TO THE L EGISLATURE. 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 S IMPLY OBSERVED THAT MAIN DISPUTE IS ON THE DEFINITION OF INITIAL ASSES SMENT YEAR. THE PROVISIONS OF SUB SECTION (2) AND SUB SECTION (3) A S DISCUSSED IN DETAIL ABOVE HAVE BEEN TOTALLY IGNORED AND, THEREFORE, THI S 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 DED UCTION WAS CLAIMED @ 100% FOR FIVE YEARS AND THEN DEDUCTION WA S CLAIMED @ 30% ON THE PROFITS IN THE NEXT YEAR. THE ASSESSEE UNDERTOOK SUBSTANTIAL EXPANSION IN FINANCIAL YEARS 2004-05 & 2005-06 AND CLAIMED DEDUCTION AT THE RATE OF 100% ON THE BASIS OF SUCH SUBSTANTIAL EXPANSION IN ASSESSMENT YEAR 2006-07. HOWEVER, THE DEDUCTION WAS WRONGLY CLAIMED U/S 80IB INSTEAD OF SECTION 80IC. THE CIT(A) ALLOWED THE DEDUCTION BY OBSERVING THAT DEDUCTION C OULD NOT BE DENIED SIMPLY BECAUSE ASSESSEE HAS QUOTED A WRONG SECTION. ON THE APPEAL FILED BY REVENUE, THE DEDUCTION WAS HELD TO BE ALLO WABLE BECAUSE SUBSTANTIAL EXPANSION WAS CARRIED OUT IN A UNIT WHI CH WAS ALREADY IN EXISTENCE AS ON 7.1.2003. THEREFORE, IN OUR OPINIO N, THIS DECISION DOES NOT PROVIDE 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 ENHANC ING ADDITIONAL 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 23 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 AND 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. 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) HELD THAT SINCE VIEW TAKEN BY THE ASSESSING OFFICER IS ALSO POSSIBL E VIEW, 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 PROVISIONS OF THE SECTION WERE NOT DISCUSSED IN THAT SECTION A ND THAT IS PER INQUERIM, THEREFORE, IN OUR OPINION, THIS ORDER DOE S 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 UND ER:- 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 :-------------------- 24 (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) :------------------------- 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 ASSESS EE TO STATE WHETHER BUSINESS IS A NEW BUSINESS? COLUMN (D) CLEARLY ASK THE ASSESSEE WHETHER EXISTING BUSINESS HAS UNDERTAKEN SUBSTANTIA L EXPANSION, THEREFORE, THERE ARE TWO CATEGORIES OF BUSINESS AND SUBSTANTIAL EXPANSION IS POSSIBLE ONLY IN CASE OF EXISTING BUSI NESS. 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 I TA NO. 798/CHD/2012 IS ENTITLED TO ONLY 25% OF DEDUCTION D URING THE PRESENT YEAR BECAUSE THE ASSESSEE HAS ALREADY AVAILED THE PERIOD OF FULL 25 DEDUCTION @ 100% IN THE EARLIER FIVE YEARS I.E. FRO M ASSESSMENT YEARS 2004-05 TO 2008-09. IN THIS BACKGROUND, WE FIND NOT HING WRONG WITH THE ORDER OF LD. CIT(A) AND WE UPHOLD THE SAME. AC CORDINGLY, ASSESSEES APPEAL IS DISMISSED. 9. FOLLOWING THE ABOVE DECISION AND IN THE ABSENCE OF ANY DISTINGUISHING FEATURES IN THE PRESENT CASE, WE DECIDE THE ISSUE R AISED BEFORE US VIDE GROUND NOS. 1 TO 4 AGAINST THE ASSESSEE. 10. GROUND NO.5 : AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT ASSESSEE HAS ADVANCED INTEREST FREE LOANS TO THE FOLLOWING PERSO NS:- S.NO. NAME OF THE PARTY TO WHOM MONEY ADVANCED MONTH CLOSING BALANCE RATE OF INTEREST INTEREST ACCRUAL 1 MANOJ KUMAR GARG JUNE, 2010 3,00,000 10% 25,000 2 NIDHI GUPTA APRIL, 2010 MAY, 2010 JUNE, 2010 JULY, 2010 AUGUST 2010 OCT, 2010 JAN, 2010 24,00,000 48,00,000 84,25,000 34,25,000 19,25,000 22,25,000 15,25,000 10% 20,000 40,000 70,008 28,542 16,042 15,542 12,708 3 PRABHAT CHEMICALS APRIL 2010 25,00,000 10% 2,49,9 99 4 SUNSHINE INDUSTRIES APRIL 2010 JULY, 2010 FEB., 2010 MARCH, 2010 -- 50,00,000 1,00,00,000 50,00,000 10% -- 41,667 83,333 41,667 5 VINOD KUMAR MANGLA APRIL, 2010 2,55,000 10% 25,50 0 6,73,208 11. HE FURTHER NOTICED THAT ASSESSEE HAS OBTAINED S ECURED AND UNSECURED LOANS ON WHICH INTEREST HAVE BEEN PAID. ACCORDING T O ASSESSING OFFICER THE INTEREST FREE ADVANCES HAVE BEEN MADE WITHOUT ANY B USINESS PURPOSE, THEREFORE, HE DISALLOWED THE PROPORTIONATE INTEREST AMOUNTING TO RS. 6,73,208/-. 26 12. ON APPEAL, SINCE NO SUBMISSIONS WERE MADE, THE ISSUE WAS DECIDED AGAINST THE ASSESSEE BY LD. CIT(A). 13. BEFORE US, IT WAS SUBMITTED THAT ASSESSEE IS H AVING SURPLUS FUNDS AND THEREFORE, THERE IS NO QUESTION OF PROPORTIONATE DI SALLOWANCE. HOWEVER, NO DETAILS HAVE BEEN FILED. 14. ON THE OTHER HAND LD. DR STRONGLY SUPPORTED THE ORDER OF CIT(A). HE ALSO REFERRED TO THE DECISION OF HON'BLE PUNJAB & H ARYANA HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES LTD VS. CIT 286 IT R 1 WHICH IS BEING REGULARLY FOLLOWED BY THIS BENCH. HE POINTED OUT TH AT IN THAT CASE IT WAS CLEARLY HELD IF ANY SURPLUS FUNDS WERE THERE, THEN WHY ASSESSEE HAD MADE BORROWINGS. 15. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND FORCE IN THE SUBMISSIONS OF LD. DR. WE FAIL TO UNDERSTAND THAT IF ASSESSEE HAD SURPLUS FUNDS THEN WHAT WAS THE NEED FOR BORROWING INTEREST BEARING FUNDS AS OBSERVED IN CASE OF ABHISHEK INDUSTRIES LTD VS. CIT (SUPRA). IN ANY CASE, NO MATERIAL HAS BEEN FILED BEFORE CIT(A) OR EVEN BEFOR E US TO SHOW THAT SURPLUS FUNDS WERE GIVEN AS INTEREST FREE ADVANCES TO THE P ERSONS MENTIONED BY ASSESSING OFFICER. IN VIEW OF THIS FACT WE CONFIRM THE ORDER OF LD. CIT(A). 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/08/2015 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 4 TH AUGUST, 2015 RKK 27 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR