M/s Smart Enterprises, Parwanoo V. DCIT, Parwanoo

ITA 495/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6917 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2014-2015
• Appeal Filed On: 16-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.495/CHD/2017 (ASSESSMENT YEAR : 2014-15) M/S SMART ENTERPRISES, VS. THE D.C.I.T., KHASRA NO.186-187, CIRCLE PARWANOO, OPP. TERMINAL MARKET, H.P. SECTOR-6, PARWANOO, H.P. PAN: ABJFS5729C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANOJ KUMAR, CA RESPONDENT BY : SMT.CHANDER KANTA, SR.DR DATE OF HEARING : 09.08.2017 DATE OF PRONOUNCEMENT : 31.08.2017 O R D E R PER ANNAPURNA GUPTA, A.M. : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE LD.CIT(APPEALS), SHIMLA, H.P. D ATED 18.1.2017 RELATING TO ASSESSMENT YEAR 2014-15. 2. IN THE PRESENT APPEAL THE ASSESSEE HAS CHALLENGE D THE RESTRICTION OF DEDUCTION CLAIMED U/S 80IC OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT) @ 100% OF THE ELIGIB LE PROFITS TO 25%. THE ASSESSEE AS A CONSEQUENCE HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL: 1. THE ID. CIT(A) IS WRONG IN DISALLOWING THE BENEFIT OF SUBSTANTIAL EXPANSION U/S 80IC(2) AND CONFIRMING THE DEDUCTION U/S SOIC ONLY TO THE EXTENT OF 25% AS AGAIN ST 100% BY HOLDING THAT BENEFIT OF SUBSTANTIAL EXPANSION IS ALLOWABLE ONLY TO THE UNDERTAKING WHIC H WERE EXISTING AS ON 07.01.2003. 2. IN VIEW OF ABOVE & SUCH OTHER GROUNDS, WHICH MAY BE TAKEN AT THE TIME OF HEARING, THE APPEAL MAY PLEASE BE ALLOWED & JUSTICE RENDERED. 2 3. BRIEF FACTS RELEVANT TO THE CASE ARE THAT THE AS SESSEE FIRM IS ENGAGED IN MANUFACTURING OF WATER GEYSER AN D ELECTRIC IRON AND HAD E-FILED HIS RETURN DECLARING INCOME OF RS.21,000/- ON 22.9.2014 AFTER CLAIMING DEDUCTION U /S 80IC OF THE ACT, AMOUNTING TO RS.2,66,84,694/-. IN THE PRESENT CASE, THE ASSESSEE HAD STARTED ITS MANUFACT URING ACTIVITY/OPERATION ON 5.7.2007 AND THE INITIAL ASSE SSMENT YEAR FOR CLAIM OF DEDUCTION U/S 80IC OF THE ACT, WA S ASSESSMENT YEAR 2008-09. THE ASSESSING OFFICER NOT ICED THAT THE ASSESSEE HAD ALREADY CLAIMED DEDUCTION U/S 80IC OF THE ACT TO THE EXTENT OF 100% OF THE ELIGIBLE PR OFITS FOR FIVE YEARS PERIOD STARTING FROM ASSESSMENT YEAR 200 8-09 TO 2012-13 AND AGAIN CLAIMED 100% DEDUCTION AGAINST TH E ELIGIBLE PROFITS IN THE RELEVANT ASSESSMENT YEAR 20 14-15 WHICH WAS 7 TH YEAR OF PRODUCTION FOR THE FIRM BY CLAIMING TO HAVE CARRIED OUT SUBSTANTIAL EXPANSION IN FINANCIAL YEAR 2011-12 RELEVANT TO ASSESSMENT YEAR 2012-13. THE ASSESSEE CLAIMED THAT THE YEAR UNDER CONSIDERATION BE TREATED AS THE 3 RD YEAR FOR ELIGIBILITY OF DEDUCTION U/S 80IC OF THE ACT AND NOT AS THE 7 TH YEAR OF CLAIM OF DEDUCTION U/S 80IC OF THE ACT. THE ASSESSING OFFICER FOR THE DET AILED REASONS MENTIONED IN THE ASSESSMENT ORDER, HELD THA T THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT ONLY @ 25% AS AGAINST THE CLAIM OF 100% MADE BY THE ASSE SSEE. 4. AGGRIEVED BY THE SAME, THE ASSESSEE WENT IN APPE AL BEFORE THE LD.CIT(APPEALS) WHO UPHELD THE ORDER OF THE ASSESSING OFFICER FOLLOWING THE DECISION OF THE ITA T 3 CHANDIGARH BENCH IN THE CASE OF M/S HYCRON ELECTRON ICS VS. ITO IN ITA NO.798/CHD/2012 AND OTHER RELATED CA SES. IT IS AGAINST THIS ORDER OF THE LD.CIT(APPEALS) THA T THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 5. DURING THE COURSE OF HEARING BEFORE US THE LD. C OUNSEL FOR ASSESSEE FAIRLY CONCEDED THAT THE ISSUE WAS COV ERED AGAINST IT BY THE DECISION OF THE ITAT CHANDIGARH B ENCH IN THE CASE OF M/S HYCRON ELECTRONICS (SUPRA). 6. THE LD. DR RELIED UPON THE ORDER OF THE LD.CIT(APPEALS). 7. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S. WE SEE NO REASON TO INTERFERE IN THE ORDER OF THE LD.CIT(APPEALS) RESTRICTING THE DEDUCTION CLAIMED U /S 80IC OF THE ACT, TO THE EXTENT OF 25% OF THE ELIGIBLE PR OFITS AS AGAINST 100% CLAIMED BY THE ASSESSEE. THE UNDISPUT ED FACTS IN THE PRESENT CASE BEING THAT THE INITIAL AS SESSMENT YEAR FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IC OF THE ACT WAS ASSESSMENT YEAR 2008-09 AND THE ASSESSEE HA D ALREADY CLAIMED DEDUCTION OF 100% OF ITS PROFITS UN DER THE SAID SECTION FOR FIVE YEARS PERIOD STARTING FROM AS SESSMENT YEAR 2008-09 TO ASSESSMENT YEAR 2012-13. IT IS ALS O NOT DISPUTED THAT IN FINANCIAL YEAR 2011-12 RELEVANT TO ASSESSMENT YEAR 2012-13 THE ASSESSEE HAD CARRIED OU T SUBSTANTIAL EXPANSION ON ACCOUNT OF WHICH IT HAD CL AIMED 100% DEDUCTION OF ITS PROFITS IN THE IMPUGNED ASSES SMENT YEAR WHICH IS 7 TH YEAR OF PRODUCTION BY THE ASSESSEE FIRM. WE HAVE ALSO GONE THROUGH THE ORDER OF THE I.T.A.T. IN THE 4 CASE OF M/S HYCRON ELECTRONICS (SUPRA) AND FIND THA T THE I.T.A.T. IN THE SAID CASE HAD EXHAUSTIVELY INTERPR ETED THE PROVISIONS OF SECTION 80IC OF THE ACT AND STATED T HAT THE BENEFIT TO CLAIM 100% DEDUCTION ON ACCOUNT OF SUBST ANTIAL EXPANSION WAS AVAILABLE AS PER THE SECTION ONLY TO THE EXISTING UNITS I.E. WHICH WERE EXISTING ON THE DATE THE SECTION WAS BROUGHT ON STATUTE I.E. 1.4.2004. THE TRIBUNAL HELD THAT NEW UNDERTAKINGS WHICH CAME INTO EXISTEN CE AFTER THAT DATE WERE NOT ENTITLED TO CLAIM 100% DEDUCTION OF PROFITS ON ACCOUNT OF SUBSTANTIAL EXPANSION UNDERTA KEN. INTERPRETING VARIOUS SUB-SECTION OF SECTION 80IC TH E I.T.A.T. HELD THAT AN ELIGIBLE UNIT SET UP IN THE STATE OF H IMACHAL PRADESH WAS IN ANY CASE ENTITLED TO DEDUCTION OF 10 0% OF ITS ELIGIBLE PROFITS FOR A PERIOD OF 5 YEARS ONLY BEGIN NING FROM THE YEAR IN WHICH IT BEGAN MANUFACTURING AND IN NO CASE THE SECTION COULD BE INTERPRETED SO AS TO ALLOW 100 % DEDUCTION OF ELIGIBLE PROFITS BEYOND THAT. SINCE T HE FACTS IN THE PRESENT CASE DEMONSTRATE THAT THE ASSESSEE UNDE RTAKING WAS A NEW UNDERTAKING WHICH HAD COME INTO EXISTENCE AFTER 01.04.2004 AND IT HAD ALSO CLAIMED DEDUCTION OF IT S ELIGIBLE PROFITS FOR A PERIOD OF 5 YEARS, WE FIND THAT THE I SSUE IS SQUARELY COVERED BY THE DECISION OF THE ITAT CHANDI GARH BENCH IN THE CASE OF M/S HYCRON ELECTRONICS (SUPRA) . WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(APPEALS) RESTRICTING THE DEDUCTION CLAIMED B Y THE ASSESSEE IN THE PRESENT CASE @ 25% OF THE ELIGIBLE PROFITS. 5 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS, TH EREFORE, DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST AUGUST, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH