Shri Bhavesh T Prasana, Parwanoo V. DCIT, Circle , Parwanoo

ITA 472/CHANDI/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8295 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-09-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 12-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND SUDERSHAN
• Keywords: Opportunity of being heard; Set aside
• Section: 201; 80IC; 80IC; 13; 20

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A CHANDIGARH !, ' # , $ % & ' ( , )* # BEFORE: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM ./ ITA NO. 472/CHD/2019 ASSESSMENT YEAR : 2015-16 SHRI BHAVESH T PRASANA, PLOT NO. 78, SECTOR-1, PARWANOO (H.P.). VS THE DCIT, CIRCLE, PARWANOO. PAN /TAN NO: AJSPP0728K APPELLANT RESPONDENT ! ASSESSEE BY : NONE ' ! REVENUE BY : SHRI ARVIND SUDERSHAN, SR.DR # $ % DATE OF HEARING : 25.09.2019 &'() % D ATE OF PRONOUNCEMENT : 04.10.2019 )-/ ORDER PER DIVA SINGH THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE WHEREIN THE CORRECTNESS OF THE ORDER DATED 15.02.2019 OF CI T(A) SHIMLA PERTAINING TO 2015-16 ASSESSMENT YEAR IS ASS AILED ON THE FOLLOWING GROUND : 1. THE LD. CIT(A) IS WRONG IN DISALLOWING THE BEN EFIT OF SUBSTANTIAL EXPANSION U/S 80IC(2) AND CONFIRMING THE DEDUCTION U/S 80IC O NLY TO THE EXTENT OF 25% AS AGAINST 100% AS CLAIMED BY ASSESSEE ON UNDERTAKING SUBSTANTIAL EXPANSION. 2. AT THE TIME OF HEARING, NO ONE WAS PRESENT ON BE HALF OF THE ASSESSEE. THE RECORD SHOWS THAT THE APPEAL CAM E UP FOR HEARING ON 23.09.2019. ON THE SAID DATE, THE APPEAL WAS ADJOURNED IN ORDER TO GIVE TIME TO THE REVENUE TO C ONSIDER ITA 472 /CHD/2019 A.Y. 2015-16 PAGE 2 OF 4 THE FACTS WHEREIN THE RECORD SHOWS THAT THE ASSESSE E IS CLAIMING 100% DEDUCTION U/S 80IC FOR ITS ALLEGED MANUFACTURING ACTIVITY OF CHEMICALS FROM PLOT NO. 7 8 SECTOR- 1, PARWANOO. 3. IN THE SECOND ROUND, THE LD. SR.DR AGREED THAT T HE ISSUE MAY BE REMANDED FOR ADDRESSING THE FACTS AS THE LEG AL POSITION AS APPRECIATED BY THE CIT(A) HAD UNDERGONE A CHANGE. 4. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE FA CTS. IT IS SEEN THAT THE CIT(A) IN THE PRESENT PROCEEDIN GS, AS IS EVIDENT FROM PAGES 13 TO 21 IN PARA 5.3 HAS DISMISS ED THE ASSESSEE'S PRAYER FOR ALLOWING DEDUCTION @ 100% REL YING UPON THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS M/S CLASSIC BINDING INDUSTRIES & ORS. IN CIVIL APPE AL NO. 7208 AND OTHERS OF 2018 DATED 20.08.2018. THE SAID DECISION, AS WE HAVE SEEN, HAS BEEN RE-CONSIDERED B Y THE APEX COURT IN THE CASE OF PCIT SHIMLA VS M/S AARHAM SOFTRONICS & OTHERS IN CIVIL APPEAL NO. 1784 OF 201 9 DATED 20.02.2019 WHEREIN THE COURT RECONSIDERED THE VIEW TAKEN IN M/S CLASSIC BINDING INDUSTRIES & ORS. AS UNDER : 22. IT WOULD BE PERTINENT TO POINT OUT THAT IN PARA 20 OF THE JUDGMENT IN CLASSIC BINDING INDUSTRIES, THIS COURT OBSERVED THA T IF DEDUCTION @ 100% FOR THE ENTIRE PERIOD OF 10 YEARS, IT WOULD BE DOING VIOLEN CE TO THE LANGUAGE OF SUB- SECTION (6) OF SECTION 80-IC. HOWEVER, THIS OBSERVATION CAME WITHOUT NOTICING THE DEFINITION OF INITIAL ASSESSMENT YEAR CONTAINED I N THE SAME VERY PROVISION. ITA 472 /CHD/2019 A.Y. 2015-16 PAGE 3 OF 4 23. HAVING EXAMINED THE MATTER IN THE AFORESAID PERSPECTIVE, JUDGMENT IN THE CASE OF MAHABIR INDUSTRIES V. PRINCIPAL COMMISSIONER OF INCOME TAX WOULD, IN FACT, HELP THE ASSESSEE. THE FINE DISTINCTION POINTED OUT IN C LASSIC BINDING INDUSTRIES ELOPES THEREBY. TO RECAPITULATE, IN MAHABIR INDUSTRIES, IT WAS HELD THAT IF AN ASSESSEE GET 100% 2 CIVIL APPEAL NOS. 4765-4766 OF 2018 DECIDED ON MA Y 18, 2018 24 EXEMPTION UNDER SECTION 80-IB OF THE ACT FOR FIVE YEARS AND T HEREAFTER CARRIES OUT THE SUBSTANTIAL EXPANSION BECAUSE OF WHICH SAID ASSESSEE BECOMES EN TITLED TO EXEMPTION UNDER THE NEW PROVISION I.E. SECTION 80-IC OF THE ACT, THE AS SESSEE WOULD BE ENTITLED TO DEDUCTION @ 100% EVEN AFTER FIVE YEARS. THIS RULING WAS PREDI CATED ON THE GROUND THAT THERE CAN BE TWO INITIAL ASSESSMENT YEARS, ONE FOR THE PURPOS E OF SECTION 80-IB AND OTHER FOR THE PURPOSES OF SECTION 80-IC OF THE ACT. ONCE WE FIND THAT THERE CAN BE TWO INITIAL ASSESSMENT YEARS, EVEN AS PER THE DEFINITION THEREO F IN SECTION 80-IC ITSELF, THE LEGAL POSITION COMES AT PAR WITH THE ONE WHICH WAS DISCUS SED IN MAHABIR INDUSTRIES. 24. THE AFORESAID DISCUSSION LEADS US TO THE FOL LOWING CONCLUSIONS: (A) JUDGMENT DATED 20TH AUGUST, 2018 IN CLASSIC BIN DING INDUSTRIES CASE OMITTED TO TAKE NOTE OF THE DEFINITION INITIAL ASSESSMENT YEA R CONTAINED IN SECTION 80-IC ITSELF AND INSTEAD BASED ITS CONCLUSION ON THE DEFINITION CONTAINED IN SECTION 80-IB, WHICH DOES NOT APPLY IN THESE CASES. THE DEFINITIONS OF INITIAL ASSESSMENT YEAR IN THE TWO SECTIONS, VIZ. SECTIONS 80-IB AND 80-IC ARE MATERIA LLY DIFFERENT. THE DEFINITION OF INITIAL ASSESSMENT YEAR UNDER SECTION 80-IC HAS M ADE ALL THE DIFFERENCE. THEREFORE, WE ARE OF THE OPINION THAT THE AFORESAID JUDGMENT D OES NOT LAY DOWN THE CORRECT LAW. (B) AN UNDERTAKING OR AN ENTERPRISE WHICH HAD SET U P A NEW UNIT BETWEEN 7TH JANUARY, 2003 AND 1ST APRIL, 2012 IN STATE OF HIMAC HAL 25 PRADESH OF THE NATURE MENTIONED IN CLAUSE (II) OF SUB-SECTION (2) OF SECT ION 80-IC, WOULD BE ENTITLED TO DEDUCTION AT THE RATE OF 100% OF THE PROFITS AND GA INS FOR FIVE ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR. FOR THE NEXT FIVE YEARS, THE ADMISSIBLE DEDUCTION WOULD BE 25% (OR 30% WHERE THE ASSESSEE I S A COMPANY) OF THE PROFITS AND GAINS. (C) HOWEVER, IN CASE SUBSTANTIAL EXPANSION IS CARRI ED OUT AS DEFINED IN CLAUSE (IX) OF SUB-SECTION (8) OF SECTION 80-IC BY SUCH AN UNDERTA KING OR ENTERPRISE, WITHIN THE AFORESAID PERIOD OF 10 YEARS, THE SAID PREVIOUS YEA R IN WHICH THE SUBSTANTIAL EXPANSION IS UNDERTAKEN WOULD BECOME INITIAL ASSES SMENT YEAR, AND FROM THAT ASSESSMENT YEAR THE ASSESSEE SHALL BEEN ENTITLED TO 100% DEDUCTIONS OF THE PROFITS AND GAINS. (D) SUCH DEDUCTION, HOWEVER, WOULD BE FOR A TOTAL P ERIOD OF 10 YEARS, AS PROVIDED IN SUB-SECTION (6). FOR EXAMPLE, IF THE EXPANSION IS C ARRIED OUT IMMEDIATELY, ON THE COMPLETION OF FIRST FIVE YEARS, THE ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION AGAIN FOR THE NEXT FIVE YEARS. ON THE OTHER HAND, IF SUBS TANTIAL EXPANSION IS UNDERTAKEN, SAY, IN 8TH YEAR BY AN ASSESSEE SUCH AN ASSESSEE WOULD B E ENTITLED TO 100% DEDUCTION FOR THE FIRST FIVE YEARS, DEDUCTION @ 25% OF THE PROFIT S AND GAINS FOR THE NEXT TWO YEARS AND @ 100% AGAIN FROM 8TH YEAR AS THIS YEAR BECOMES INITIAL ASSESSMENT YEAR ONCE AGAIN. 26 HOWEVER, THIS 100% DEDUCTION WOULD BE FOR REMAINING THREE YEARS, I.E., 8TH, 9TH AND 10TH ASSESSMENT YEARS. 25. IN VIEW OF THE AFORESAID, WE AFFIRM THE JUDGMEN T OF THE HIGH COURT ON THIS ISSUE AND DISMISS ALL THESE APPEALS OF THE REVENUE. LIKEWISE, APPEALS FILED BY THE ASSESSEES ARE HEREBY ALLOWED. (EMPHASIS SUPPLIED) ITA 472 /CHD/2019 A.Y. 2015-16 PAGE 4 OF 4 4.1. ACCORDINGLY, WE FIND THAT IN VIEW OF THE LATES T LEGAL POSITION AS ENUNCIATED BY THE APEX COURT, THE IMPUG NED ORDER CANNOT BE UPHELD. THUS, HOLDING THAT THE LEG AL ISSUE STANDS DECIDED IN ASSESSEE'S FAVOUR, THE ORDERS ARE SET ASIDE AND THE ISSUE IS RESTORED TO THE FILE OF THE AO. T HE AO SHALL PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW ADDRES SING THE FACTS. NEEDLESS TO SAY THAT THE ASSESSEE SHALL BE AFFORDED A REASONABLE OPPORTUNITY OF BEING HEARD. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH OCT.,2019. SD/- SD/- ( $ % & ' ( ) ( ! ) (ANNAPURNA GUPTA) (DIVA SINGH) )* #/ ACCOUNTANT MEMBER ' #/ JUDICIAL MEMBER POONAM '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR