M/s Amit Engineers, Solan V. DCIT, Parwanoo

ITA 496/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6805 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2017
• 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
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: B M MONGA SH ROHIT KAURA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR,ACCOUNTANT MEMBER ITA NO. 496/CHD/2017 ASSESSMENT YEAR: 2014-15 AMIT ENGINEERS VS. DCIT VILL- JUDDIKALAN, BADDI CIRCLE SOLAN PARWANOO PAN NO. AAKFA5620L (APPELLANT) (RESPONDENT) APPELLANT BY : SH. B.M. MONGA SH. ROHIT KAURA RESPONDENT BY : SH. MANJIT SINGH DATE OF HEARING : 09/08/2017 DATE OF PRONOUNCEMENT : 28/09/2017 ORDER PER DR. B.R.R. KUMAR: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A), SHIMLA, H.P. DT. 13/01/201 7. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD.CIT(A), IS NOT JUSTIFIED IN NOT ALLOWIN G THE 100% DEDUCTION BY NOT ACCEPTING THE YEAR OF SUBSTANTIAL EXPANSION A S INITIAL YEAR THUS NOT INTERPRETING THE PROVISIONS OF SECTION 80-INCOME IN ITS TRUE AND LIBERAL SPIRIT BEING AN INCENTIVE PROVISION. 2. THAT THE LD. CIT(A), IS NOT JUSTIFIED IN MISCONSTRU ING THE PROVISION OF SECTION 80-INCOME OF THE INCOME-TAX ACT BY NOT FOLLOWING OR DISTINGUISHING THE JUDGMENT OF HONBLE DELHI TRIBUNAL IN THE CASE OF TIRUPATI L PG INDUSTRIES LTD. NEW DELHI VS. DCIT, DEHRADUN. 3. THAT LD. CIT(A) IS NOT JUSTIFIED BY NOT GIVING THE BENEFIT OF DOCTRINE OF PROMISSORY ESTOPPEL ENSHRINED UNDER THE CONSTITU TION OF INDIA AND ALSO NOT FOLLOWING THE WELL SETTLED LAW THAT IF TWO REASONA BLE CONSTRUCTIONS OF A TAXING PROVISION ARE POSSIBLE, THEN THAT CONSTRUCTION WHIC H FAVORS THE ASSESSEE MUST BE ADOPTED. 4. THAT THE LD. CIT(A), IS NOT JUSTIFIED IN NOT ALLOWI NG DEDUCTION @100% ON THE COMMISSIONS EXPENSES CLAIMED AT RS. 38,500/- AND RE STRICTING THE DEDUCTION UNDER SECTION 80IC ON THIS DISALLOWANCE AT 25%. 2 5. THAT THE LD. CIT(A), IS NOT JUSTIFIED IN NOT ALLOWI NG DEDUCTION AT THE RATE OF 100% ON THE DEFERRED REVENUE EXPENSES OF RS. 2,09 ,705/- AND RESTRICTING THE DEDUCTION UNDER SECTION 80IC ON THIS DISALLOWANCE A T 25%. 3. BRIEF FACTS RELEVANT TO THE CASE ARE THAT THE AS SESSEE STARTED ITS MANUFACTURING ACTIVITY/OPERATION ON 25.04.2015 AND INITIAL ASSESSMENT YEAR FOR CLAIM OF DEDUCTION U/S 80IC OF THE ACT WAS A.Y. 200 607. THE ASSESSEE CLAIMED DEDUCTION U/S 80 IC TO THE EXTENT OF 100% OF THE EL IGIBLE PROFITS FOR 5 YEARS PERIOD STARTING FROM A.Y.200607 TO A.Y. 201011. DURING A SSESSMENT PROCEEDINGS FOR THE IMPUGNED YEAR THE AO NOTICED THAT THE ASSESSEE FIRM HAD AGAIN CLAIMED HUNDRED PERCENT DEDUCTION OF ITS ELIGIBLE PROFITS O N ACCOUNT OF HAVING CARRIED OUT SUBSTANTIAL EXPANSION IN F.Y. 201112. THE ASSE SSING OFFICER, FOR DETAILED REASONS MENTIONED IN THE ASSESSMENT ORDER ,HELD THA T THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80IC ONLY AT THE RATE OF 25% AS A GAINST THE CLAIM OF 100% MADE BY THE ASSESSEE. 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(APPEAL) WHO DISMISSED THE ASSESSEES APPEAL AND RESTRICTED THE DEDUCTION CLAIMED TO 25% OF THE PROFITS, RELYING UPON THE JUDGEMENT OF THE CHAN DIGARH BENCH OF THE ITAT IN THE CASE OF M/S HYCRON ELECTRONICS VS ITO IN ITA NO . 798/CHD/2012 AND OTHER RELATED CASES. 5. AGGRIEVED BY THE SAME THE ASSESSEE HAS NOW COME UP IN APPEAL BEFORE US. 6. DURING THE COURSE OF HEARING BEFORE US, IT WAS F AIRLY CONCEDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE WAS COVERED AGAINST IT BY THE DECISION OF THE CHANDIGARH BENCH OF THE ITAT, IN THE CASE OF M/ S HYCRON ELECTRONICS VS ITO IN ITA NO. 798/CHD/2012 AND OTHER RELATED CASES. 3 7. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW. FACTS EMERGING IN THE PRESENT C ASE AND WHICH ARE RELEVANT FOR ADJUDICATING THE ISSUE AT HAND ARE THAT THE ASS ESSEE CAME INTO EXISTENCE AND COMMENCED ITS MANUFACTURING ACTIVITY/OPERATION ON 25.04.2005, WAS ELIGIBLE TO CLAIM DEDUCTION OF 100% OF ITS PROFITS U/S 80IC OF THE INCOME TAX ACT,1961, AND HAD CLAIMED THE SAME FOR FIVE YEARS F ROM A.Y 2006-07 TO A.Y 2010- 11. FURTHER IT IS NOT DISPUTED THAT THE ASSESSEE UN DERTOOK SUBSTANTIAL EXPANSION OF ITS UNDERTAKING IN F.Y. 2011-12 AND ON ACCOUNT OF T HE SAME CLAIMED DEDUCTION AGAIN @ 100% OF ITS ELIGIBLE PROFITS WHICH HAS BEEN DENIED TO IT, RESTRICTING THE SAME TO 25% OF THE PROFITS ,WHICH HAS BEEN CHALLENG ED BEFORE US. 8. WE HAVE GONE THROUGH THE ORDER OF THE LD CIT(A) AND FIND NO INFIRMITY IN THE SAME. AS CONCEDED BY THE LD COUNSEL FOR THE ASS ESSEE, THE ISSUE OF QUANTUM OF DEDUCTION AVAILABLE TO NEW UNDERTAKINGS WHICH CAME INTO EXISTENCE AFTER 01.07.2003, AND WHICH HAVE ALREADY CLAIMED DEDUCTION OF 100% OF THEIR ELIGIBLE PROFITS FOR THE STATUTORILY SPECI FIED PERIOD OF FIVE YEARS, ON SUBSTANTIAL EXPANSION OF THE SAID UNDERTAKING, HAS BEEN DEALT WITH BY THE ITAT CHANDIGARH BENCH IN THE CASE OF M/S HYCRON ELECTRON ICS (SUPRA).THE HONBLE BENCH IN THE SAID ORDER, AFTER DEEPLY ANALYZING THE PROVISIONS OF SECTION 80IC ,HAS CATEGORICALLY HELD THAT THE BENEFIT OF CLAIMI NG 100% DEDUCTION OF PROFITS ON UNDERTAKING SUBSTANTIAL EXPANSION IS NOT AVAILABLE TO NEW UNDERTAKINGS SET UP AFTER 01.07.2003. IT HAS BEEN CATEGORICALLY HELD B Y THE ITAT THAT THERE CAN BE ONLY ONE INITIAL ASSESSMENT YEAR FOR THE PURPOSE OF CLAIMING DEDUCTION @ 100% OF PROFITS U/S 80IC OF THE ACT. IT HAS ALSO BEEN HELD THAT AS PER SECTION 80IC, ELIGIBLE UNDERTAKINGS SET UP IN SPECIFIED AREAS OF THE STA TE OF HIMACHAL PRADESH ARE NOT ENTITLED TO CLAIM DEDUCTION @ 100% OF THE PROFITS B EYOND A PERIOD OF FIVE YEARS. 4 9. THE LD CIT(A) ,WE FIND HAS CORRECTLY APPRECIATED THE FACTS OF THE PRESENT CASE AND APPLIED THE AFORESAID DECISION OF THE ITA T TO RESTRICT THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IC @ 25% OF THE PROFI TS, SINCE UNDISPUTEDLY THE ASSESSEE COMMENCED BUSINESS OPERATIONS AFTER 01.07. 2003, I.E. ON 25.04.2005 AND HAD ALREADY CLAIMED DEDUCTION OF 100% OF ITS PR OFITS FOR FIVE YEARS FROM A.Y 2006-07 TO A.Y 2010-11. THE LD CIT(A) HAS CORRECTLY HELD THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION @ 100% OF ITS PROFI TS IN THE IMPUGNED YEAR ON ACCOUNT OF HAVING UNDERTAKEN SUBSTANTIAL EXPANSION IN F.Y 2011-12 IN VIEW OF THE DECISION OF THE ITAT IN THE CASE OF M/S HYCRON ELEC TRONICS (SUPRA). 10. IN VIEW OF THE SAME WE FIND NO MERIT IN THE GRO UND OF APPEAL RAISED BY THE ASSESSEE AND THE SAME IS THEREFORE DISMISSED. 11. THE APPEAL OF THE ASSESSEE, THEREFORE, STANDS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/09/2017. SD/- SD/- (DIVA SINGH) (DR. B.R.R. KUMA R) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED : 28/09/2017 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR