Sh. Ram Gopal, Karnal V. ACIT, Karnal

ITA 5477/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2961 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 24-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Assessment record
• Section: 143(3); 263; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE MR. N.S. SAINI , ACCOUNTANT MEMBER AND MR S. SUCHITRA KAMBLE , JUDICIAL MEMBER ITA N O. 5477 /DEL/201 6 A SSESSMENT YEAR: 20 1 3 - 14 SH. RAM GOPAL PROP. M/S JAGDAMBA MEDICAL HALL & GMH LAB ORATORIES, 687/13, U.E. KARNAL (HARYANA) VS. ACIT CIRCLE, KARNAL PAN : ABFPG9454L (APPELLANT) (RESPONDENT) O R D E R PER N.S. SAINI , AM . : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT DATED 23.8.2016. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE ASSESSEE IS THAT THE PRINCIPAL CIT, KARNAL WAS NOT JUSTIFIED TO HOLD THAT AN ORDER PASSED BY THE LEARNED ASSESSING OFFICER DATD 26.8.2015 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE BY PASSING AN ORDER UNDER SECTION 263 OF THE INCOME TAX ACT, 1961. ASSESSEE BY SH. ASHWANI KUMAR, CA RESPONDENT BY SMT. PARAMITA TRIPATHY, CIT (DR) DATE OF HEARING 13.03.2018 DATE OF PRONOU NCEMENT .03.2018 2 ITA NO . 5477 /DEL/201 6 3 . THE BRIEF FACTS OF THE CASE, ARE THAT, THE ASSESSEE FILED RETURN OF INCOME SHOWING INCOME OF RS. 1,68,730/ - . A SSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 26.8.2015 AT AN INCOME OF RS. 24,28,380/ - . THE ASSESSING OFFICER ALLOWED DEDUCTION UNDER SECTION 80IC AT 10 0 PER CENT OF THE PROFITS EARNED OF RS. 1,23,58,287/ - . ACCORDING TO CIT, THE ELIGIBLE BUSINESS OF THE ASSESSEE COMMENCED ON 13.7.2006 AND ACCORDINGLY, THE INITIAL ASSESSMENT YEAR WAS THE ASSESSMENT YEAR 2007 - 08. SECTION 80IC PROVIDES FOR 10 0 PER CENT DEDUCTION OF THE PROFITS OF THE BUSINESS FOR T HE FIRST FIVE ASSESSMENT YEARS AND 25 PER CENT OF THE PROFITS OF THE ELIGIBLE BUSINESS FOR THE NEXT FIVE ASSESSMENT YEARS. IN VIEW OF THIS, THE FIRST FIVE YEARS OF THE BUSINESS OF THE ASSESSEE ENDED ON 31.3.201 2 RELEVANT TO THE ASSESSMENT YEAR 201 2 - 1 3 AND 1 0 0 PER CENT DEDUCTION OF THE PROFITS OF THE ELIGIBLE BUSINESS WAS ALLOWABLE UP TO ASSESSMENT YEAR 201 2 - 1 3 . THE CIT HAS ALSO OBSERVED THAT THE BUSINESS UNIT WAS SETUP IN BADDI (HIMACHAL PRADESH) ON 13.07.2006 AND BUSINESS ACTIVITY WAS COMMENCED FROM TH AT DATED WHICH MEANS THAT THE INITIAL ASSESSMENT YEAR OF THE BUSINESS WAS 2007 - 08. THEREAFTER THE ASSESSEE MADE SUBSTANTIAL EXPANSION ON 31.3.2012 AND CLAIMED 100 PER CENT DEDUCTION ON PROFIT OF RS. 1,25,08,000/ - IN ASSESSMENT YEAR 2013 - 14 BY CONSIDERING I T AS INITIAL ASSESSMENT YEAR WHEREAS INITIAL AY WAS 2 0 07 - 08 AND THE ASSESSEE WAS ENTITLED FOR 100 PER CENT DEDUCTION OF PROFITS EARNED FOR THE FIRST FIVE YEAR S UP TO THE ASSESSMENT YEAR 201 2 - 1 3 AND AFTER ASSESSMENT YEAR 201 2 - 1 3 , THE ASSESSEE WAS REQUIRED 3 ITA NO . 5477 /DEL/201 6 T O CLAIM DEDUCTION U/S 80IC @ 25 PER CENT ONLY. DURING THE ASSESSMENT YEAR 201 3 - 1 4 ASSESSEE CLAIMED DEDUCTION @ 100 PER CENT WHICH WAS WRONGLY ALLOWED BY THE AO. HENCE, THE ASSESSMENT ORDER DATED 26.8.2015 OF THE ASSESSING OFFICER HAS BECOME ERRONEOUS AS WE LL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THEREFORE, THE SAME NEEDS TO BE REVISED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961. 4 . IN REPLY TO THE SHOW CAUSE ISSUED TO THE ASSESSEE, THE LEARNED AR OF THE ASSESSEE APPEARED BEFORE THE CIT AND RE LIED ON THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF TIRUPATI LPG INDUSTRIES LTD., NEW DELHI VS. DCIT, CIRCLE - 2, DEHRADUN , PASSED IN ITA NO. 991/DEL/2013 (A.Y. 2009 - 10) ORDER DATED 29.1.2014 AND CONTENDED THAT THE DEDUCTION U/S 80IC WAS RIGHT LY CLAIMED BY THE ASSESSEE AND ACCORDINGLY ALLOWED BY THE LD. ASSESSING OFFICER. 5 . THE LEARNED CIT DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND OBSERVED THAT THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF HYCRON EELCTRONICS, BADDI VS. ITO AND IT A NO. 798/CHD./2012 (AY 2009 - 10) AND ITA NO. 374/CHD./2014 (AY. 2010 - 11) ORDER DATED 27.5.2015 HELD THAT DEDUCTION UNDER 80IC IS ALLOWABLE AT 100 PER CENT FOR FIRST FIVE ASSESSMENT YEARS AND @ 25 PER CENT FOR THE SUBSEQUENT FIVE ASSESSMENT YEARS. THE LEARN ED CIT FURTHER OBSERVED THAT HON BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. VS. CIT, 243 ITR 83 HAS HELD THAT ASSESSMENT ORDER PASSED BY THE AO WITHOUT APPLICATION OF MIND WHILE SATISFY THE 4 ITA NO . 5477 /DEL/201 6 REQUIREMENTS OF THE ORDER BEING ERRONEOUS . IT WAS ALS O HELD BY THE HON BLE SUPREME COURT THAT IF DUE TO ERRONEOUS ORDER OF THE AO, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THEREFORE, EXERCISE OF JURISDICTION UNDER SECTION 263(1) OF THE ACT WAS JUSTIFIED AND LEGAL. 6 . THE CIT FURTHER OBSERVED THAT IT IS A FACT THAT ON THIS ISSUE JUDGMENTS IN THE FAVOUR OF THE DEPARTMENT AS WELL AS IN THE FAVOUR OF THE ASSESSEE ARE AVAILABLE. HOWEVER, A PLAIN READING OF THE PROVISIONS OF THE ACT, IT APPEARS THAT DEDUCTION @ 100 PER CENT IS AVAILABLE IN THE 1 ST FIVE ASSESSMENT YEARS AND IN THE NEXT FIVE ASSESSMENT YEARS, DEDUCTION IS AVAILABLE AT THE RATE OF 25 PER CENT IN THE CASE OF NON - CORPORATE ASSESSEES OR 30 PER CENT IN THE CASE OF CORPORATE ASSESSEES. BUT , IF IN THE YEAR SUBSTANTIAL EXPANSION, ASSESSMENT YEAR IS AGAIN TAKEN AS INITIAL ASSESSMENT YEAR, AND IF THE EXPANSION IS EFFECTED IN THE SIXTH YEAR IS AGAIN TAKEN AS INITIAL ASSESSMENT YEAR, AND IF THE EXPANSION IS EFFECT IN THE SIXTH YEAR , THE IF THE ASSESSEE S VIEW IS ACCEPTED THEN 1 0 0 PER CENT DEDUCTION UNDER SECTION 80IC WOULD BE AVAILABLE FOR ALL THE TEN ASSESSMENT YEARS. HE OBSERVED THAT USUALLY THE ASSESSEES SHOW MAXIMUM PRODUCTION/PROFITS IN SUCH UNITS UPTO THE YEAR, TILL 100 PER CEN T DEDUCTION IS AVAILABLE. ONCE THIS PERIOD OF 100 PER CENT DEDUCTION IS OVER, THE PRODUCTION / PROFITS DIPS DRAMATICALLY. 5 ITA NO . 5477 /DEL/201 6 7 . FROM A PERUSAL ASSESSMENT RECORDS, IT IS APPARENT THAT DURING THE SCRUTINY, PROCEEDINGS, THIS ISSUE WAS NOT EXAMINED / VERIFIED BY THE AO IN THE REQUISITE DETAILS. THE AO HAS SIMPLY ACCEPTED THE CLAIM OF THE ASSESSEE. 8 . HE FURTHER OBSERVED THAT AS PER THE PROVISIONS OF SECTION 263(1) EXPLANATION 2 EFFECTIVE FROM 0106.2015, AN ORDER PASSED BY THE AO SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS THE IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IF IN THE OPINION OF THE PR. CIT/CIT , THE ORDER IS PASSED BY THE AO WITHOUT MAKING ENQUIRIES / VERIFICATION WHICH SHOULD HAVE BEEN MADE OR THE ORDER IS PASS ED ALLOWING ANY RELIEF WITHOUT I NQUIR ING INTO THE CLAIM. HE OBSERVED THAT HE WAS OF THE VIEW THAT THE AO HAS NOT MADE THE ENQUIRIES / VERIFICATIONS WHICH HE SHOULD HAVE MADE BEFORE ALLOWING THE 80IC CLAIM @ 100 PER CENT. THEREFORE, THE CASE WAS SQUARELY COVERED BY THESE PROVISIONS, EFFECTIVE FROM 1.6.2015. ACCORDINGLY, HE HELD THAT THE ASSESSMENT ORDER DATED 26.8.2015 PASSED BY THE AO HAS BECOME ERRONEOUS SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY ASSESSMENT ORDER DATED 26.8.2015 PASSED IN THE CASE OF THE ASSESSEE IS SET ASIDE ON THE ISSUE OF ALLOWANCE OF DEDUCTION UNDER SECTION 80IC @ 100 PER CENT INSTEAD OF 25 PER CENT IN THE SEVENTH ASSESSMENT YEAR OF BUSINESS CONSIDERING IT INITIAL ASSESSMENT YEAR ON SUBSTANTIAL EXPANSION IN FIXED ASSETS MADE BY THE ASSESSEE COMPA NY DURING THE SIXTH ASSESSMENT YEAR. HE DIRECTED THE AO TO DECIDE THE ISSUE AFRESH AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 6 ITA NO . 5477 /DEL/201 6 9 . BEFORE US, THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT AT PAGE NOS. 9 TO 11 OF THE PAPER BOOK, COPY O F QUESTIONNAIRE DATED 21.7.2015 ISSUED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 143(2) IS PLACED . HE SUBMITTED THAT AT PARA NO. 3, THE ASSESSING OFFICER HAS ASKED THE ASSESSEE THAT HE HAS CLAIMED DEDUCTION UNDER SECTION 80IC AT R S. 1,25,08,000/ - AND REQUIRED THE ASSESSEE TO JUSTIFY THE SAME IN VIEW OF THE PROVISIONS OF THE INCOME TAX ACT, 1961. HE SUBMITTED THAT IN RESPONSE TO THE QUERY, THE ASSESSEE FILED ITS REPLY ON 4 .8.2015 . A FURTHER REPLY WAS FILED ON 26.8. 2015 . HE ARGUED THAT AFTER RAISING A QUERY AND FURTHER CONSIDERING THE WRITTEN SUBMISSIONS OF THE ASSESSEE WHICH WERE FILED BEFORE HIM DURING THE COURSE OF HEARING, THE ASSESSING OFFICER BEING SATISFIED ALLOWED DEDUCTION UNDER SECTION 80 IC AT 100 PER CENT OF THE PROFIT EARNED RS. 1,25,08,000/ - , HENCE, THE CIT IS NOT JUSTIFIED IN OBSERVING IN HIS ORDER THAT DEDUCTION UNDER SECTION 80 IC WAS ALLOWED TO THE ASSESSEE BY THE AO WITHOUT ANY VERIFICATION. HE SUBMITTED THAT IN THE WRITTEN SUBMISSION FILED BEFORE THE A O, THE ASSESSEE RELIED ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF TIRUPATI LPG INDUSTRIES LTD., NEW DELHI VS. DCIT, CIRCLE - 2, DEHRADUN IN ITA NO. 991/DEL/2013 ORDER DATED 29.1.2014 WHERE IT WAS HELD THAT THIS SECTION IMPOSES A RESTRI CTION FOR A PERIOD OF TEN YEARS FOR CLAIMING OF DEDUCTION, THE ASSESSEE CANNOT CLAIM DEDUCTION FOR A PERIOD OF EXCEEDING TEN YEARS. FURTHER, IT WAS SUBMITTED THAT SECTION 80 IC BEING AN INCENTIVE PROVISION THAT DECISION IN DCIT VS. M/S S.R. PARYAVARAN 7 ITA NO . 5477 /DEL/201 6 ENGI NEERS PRIVATE LTD., IN ITA NO. 340/CHD./2010 ORDER DATED 30 . 8.2010 , THE ISSUE AS TO WHETHER AN INITIAL YEAR WOULD ONCE AGAIN BE RECKONED FOR THE PURPOSE OF SECTION 80 IC DESPITE THE FACT THAT THE UNIT WAS SETUP EARLIER AND DEDUCTION UNDER SECTION 80 IC WAS ALLOWED WAS DECIDED IN FAVOUR OF THE ASSESSEE. IT WAS SUBMITTED THAT THERE WAS NO AMBIGUITY IN THE PROVISIONS AND A PLAIN READING THE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED. IT WAS FURTHER ARGUED THAT AN INTERPRETATION IN FAVOUR OF THE ASSESSEE HAS TO BE TAKEN WHEN THERE ARE TWO POSSIBLE INTERPRETATION TO THE SECTION FOR WHICH RELIANCE WAS PLACED ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF VEGETABLE PRODUCTS 88 ITR 198 SC. 10 . ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHE MENTLY OPPOSED THE SUBMISSION OF THE AR OF THE ASSESSEE AND SUBMITTED THAT DEDUCTION UNDER SECTION 80 IC WAS WRONGLY ALLOWED AT 100 PER CENT TO THE ASSESSEE BY APPLYING THE RATIO OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF TIRUPATI LPG INDUSTRIES LTD ., NEW DELHI VS. DCIT, CIRCLE - 2, DEHRADUN (SUPRA) . SHE ARGUED THAT LATER ON CHANDIGARH BENCH OF THE TRIBUNAL IN ITS DECISION RENDERED ON THE ISSUE OF DEDUCTION UNDER SECTION 80 IC IN THE CASE OF M/S HYCRON EELCTRONICS, BADDI VS. ITO WHEREIN THE DECISION O F THE DELHI BENCH OF THE TRIBUNAL HAS BEEN CONSIDERED AND IT HAS BEEN HELD THAT THE ASSESSEES WHO ARE BEING ELIGIBLE BUSINESS WHICH CLARIFIES FOR DEDUCTION UNDER SECTION 80 IC ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IC AT 100 PER CENT FOR INITIAL FIRST FIVE YEARS OF 8 ITA NO . 5477 /DEL/201 6 BUSINESS SINCE THE DATE OF COMMENCEMENT OF BUSINESS AND AFTER FIVE YEARS SUCH ASSESSEES ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IC @ 25 PER CENT THUS THE DECISION OF CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF M/S HYCRON EELCTRONICS , BADDI VS. ITO WAS IN FAVOUR OF THE REVENUE. HENCE, THE CIT WAS JUSTIFIED IN PASSING THE ORDER OF THE AO TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 11. IN THE REJOINDER TO THE SUBMISSION OF THE DR, THE AR OF THE ASSESSEE RELIED ON THE DE CISION OF HON BLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF STOVEKRAFT INDIA & ORS. VS. COMMISSIONER OF INCOME TAX REPORTED IN (201 8 ) 4 00 ITR 225 (HP) WHEREIN IT WAS HELD AS UNDER: - CLAUSE (V) OF SUB - S. (8) OF S. 80 - IC, DEFINES WHAT IS AN 'INITIAL ASSESSMENT J YEA R'. IT IS ONLY FOR THE PURPOSE OF THIS SECTION. NOW, 'INITIAL ASSESSMENT YEAR' HAS BEEN HELD TO MEAN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE 'UNIT' BEGINS TO MANUFACTURE OR PRODUCE ARTICLE OR THING OR COMMENCES OPERATION OR COMPLETES SUBSTANTIAL EXPANSION. SIGNIFICANTLY, THE ACT DOES NOT STIPULATE THAT ONLY UNITS ESTABLISHED PRIOR TO 7TH JAN., 2003 SHALL BE ENTITLED TO THE BENEFITS UNDER S. 80 - IC. THE DEFINITION OF 'INITIAL ASSESSMENT YEAR' IS DISJUNCTIVE AND NOT CONJUNCTIVE. THE INIT IAL ASSESSMENT YEAR HAS TO BE SUBSEQUENT TO THE YEAR IN WHICH THE 'UNIT' COMPLETES SUBSTANTIAL EXPANSION OR COMMENCES MANUFACTURING ETC., AS THE CASE MAY BE. A BARE LOOK AT EXPLN. (B) OF S. 80 - IB(11C) AND S. 80 - IB(14)(C) WOULD REFLECT THAT, EARLIER [TILL S . 80 - IC WAS INSERTED W.E.F. 1ST APRIL, 2004], 'SUBSTANTIAL EXPANSION' WAS NOT INCLUDED IN THE DEFINITION OF 'INITIAL ASSESSMENT YEAR'. EARLIER DEFINITION HAD USED WORDS 'STARTS FUNCTIONING', 'COMPANY IS APPROVED', 'COMMENCES PRODUCTION', 'BEGINS BUSINESS', 'STARTS OPERATING', 'BEGINS TO PROVIDE SERVICES'. BUT S. 80 - IC(8)(V) CHANGED WORDINGS (OF 'INITIAL ASSESSMENT YEAR') TO 'BEGINS TO MANUFACTURE', 'COMMENCES OPERATION', OR 'COMPLETES SUBSTANTIAL EXPANSION'. THUS, LEGISLATURE CONSCIOUSLY EXTENDED THE BENEFI T OF 'INITIAL ASSESSMENT YEAR' TO A UNIT THAT COMPLETED SUBSTANTIAL EXPANSION. THIS IS ABSOLUTELY IN CONJUNCTION AND HARMONY WITH CL. (B) OF SUB - S. (2) OF S. 80 - IC, WHICH POSTULATES TWO THINGS (A) AN UNDERTAKING OR AN ENTERPRISE HAS 'BEGUN', IT IS IN THE P AST TENSE OR (B) 'BEGINS', WHICH IS IN PRESENTI. SIGNIFICANTLY, WHAT IS IMPORTANT IS THE WORD 'AND' PREFIXED TO THE WORDS 'UNDERTAKES SUBSTANTIAL EXPANSION' DURING THE PERIOD 7TH JAN., 2003 TO 1ST APRIL, 2012. WORDS 'COMMENCING WITH THE INITIAL ASSESSMENT YEAR' ARE RELEVANT. IT IS THE TRIGGER POINT FOR ENTITLING THE UNIT, SUBJECT TO THE FULFILMENT OF ITS ELIGIBILITY FOR DEDUCTION @ 100 PER CENT, FOR HAD IT NOT BEEN SO, THERE WAS NO PURPOSE OR OBJECT OF HAVING INSERTED THE SAID WORDS IN THE SECTION. IF THE I NTENT WAS ONLY TO GIVE 100 PER CENT DEDUCTION FOR THE FIRST FIVE YEARS AND THEREAFTER @ 25 PER CENT FOR NEXT FIVE 9 ITA NO . 5477 /DEL/201 6 YEARS , THE LEGISLATURE WOULD NOT HAVE INSERTED THE SAID WORDS. THEY WOULD HAVE PLAINLY SAID, FOR THE FIRST INITIAL FIVE YEARS A UNIT WOULD BE ENTITLED TO DEDUCTION @ 100 PER CENT AND FOR THE REMAINING FIVE YEARS @ 25 PER CENT . 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE O N RECORD. IN THE INSTANT CASE, ASSESSMENT WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) OF THE ACT BY THE AO VIDE ORDER DATED 26.8.2015 . IN THE SAID ASSESSMENT , THE AO ACCEPTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION @ 100 PER CENT OF PROFIT DERIVED FROM INDUSTRIAL UNDERTA KING SITUATED AT 13 BATOLI KALAN, DISTT. SOLAN UNDER SECTION 80 IC OF THE ACT. THEREAFTER, THE CIT INVOKED PROVISIONS OF S E CTION 263 OF THE ACT AND HE WAS OF THE VIEW THAT DEDUCTION UNDER SECTION 80 IC OUGHT TO HAVE BEEN ALLOWED @ 25 PER CENT IN PLACE OF 100 PER CENT ALLOWED BY THE AO. THE UNDISPUTED RELEVANT FACTS ARE THAT THE ASSESSEE SETUP AN NEWLY ESTABLISHED INDUSTRIAL UNDERTAKING AND COMMENCED ITS PRODUCTION ON 13.7.2006 AND THEREFORE, CLAIMED 100 PER CENT DEDUCT ION UNDER SECTION 80 IC UP TO THE ASSESSMENT YEAR 2011 - 12. IT IS ALSO NOT IN DISPUTE THAT THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE UNDERTOOK A SUBSTANTIAL EXPANSION WITHIN THE MEANING OF SECTION 80 IC DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 20012 - 13. THE CONTENTION OF THE ASSESSEE IS THAT ON BEING SUBSTANTIALLY EXPA NDED THE INCOME OF THE INDUSTRIAL UNDERTAKING IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IC @ 100 PER CENT FOR FIVE YEARS W.E.F. ASSESSMENT YEAR 2012 - 13. T HE ABOVE CLAIM OF THE ASSESSEE WAS ACCEPTED BY THE AO WHICH WAS ALSO SUPPORTED BY THE 10 ITA NO . 5477 /DEL/201 6 DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF TIRUPATI LPG INDUSTRIES LTD ., NEW DELHI VS. DCIT, CIRCLE - 2, DEHRADUN (SUPRA) . CIT AFTER CONSIDERING THE ABOVE , TOOK THE VIEW THAT AS THE ASSESSEE HAS ALREADY AVAILED DEDUCTION UNDER SECTION 80 IC @ 100 PER CENT FOR FIVE YEARS AND THEREFORE, EVEN AFTER THE SUBSTANTIAL EXPANS ION OF THE INDUSTRIAL UNDERTAKING, THE ASSESSEE SHALL BE EL IGIBLE FOR DEDUCTION UNDER SECTION 80 IC @ 25 PER CENT OF THE INCOME OF THE INDUSTRIAL UNDERTAKING ONLY. THE CIT DERIVED SUPPORT FROM THE DECISION OF CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF M/S HYCRON EELCTRONICS , BADDI VS. ITO (SUPRA) . 13. WE FIND THAT THE ISSUE STANDS COVERED BY THE DECISION OF HON BLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF STOVEKRAFT INDIA & ORS. VS. COMMISSIONER OF INCOME TAX REPORTED AT (201 8 ) 4 00 ITR 225 (HP) . THE HON BLE HIGH COURT IN THE ABOVE CASE HELD AS UNDER: - 45. SECTION 80 - IC(3)(II) [FOR HIMACHAL PRADESH] STIPULATES THAT DEDUCTION SHALL BE @ 100% FOR FIVE YEARS COMMENCING WITH INITIAL ASSESSMENT YEAR AND THEREAFTER @ 25%. INITIAL ASSESSMENT YEAR , AS PER SECTION 80 - IC (8)(V) MEANS, YEAR IN WHICH THE UNIT BE GINS/COMMENCES TO MANUFACTURE/PRODUCE OR COMPLETES SUBSTANTIAL EXPANSION [AS PER SECTION 80 - IC(8)(IX)] . 46. THE MOMENT SUBSTANTIAL EXPANSION IS COMPLETED AS PER SECTION 80 - IC (8)(IX), THE STATUTORY DEFINITION OF INITIAL ASSESSMENT YEAR [SECTION 80 - IC(8)(V)] COMES INTO PLAY. AND CONSEQUENTLY, SECTION 80 - IC(3)(II) ENTITLES THE UNIT TO 100% DEDUCTION FOR FI VE YEARS COMMENCING WITH COMPLETION OF SUBSTANTIAL EXPANSION , SUBJECT TO MAXIMUM OF TEN YEARS AS PER SECTION 80 - IC(6) . 47. A UNIT THAT STARTED OPERATING/EXISTED BEFORE 7.1.2003 WAS ENTITLED TO 100% DEDUCTION FOR FIRST FIVE YEARS UNDER SECTION 80 - IB(4). IF THIS UNIT COMPLETES SUBSTANTIAL EXPANSION DURING THE WINDOW PERIOD (7.1.2003 TO 31.3.2012), IT WOULD BE ELIGIBLE FOR 100% DEDUCTION AGAIN FOR ANOTHER FIVE YEARS UNDER SECTION 80 - IC(3)(II), SUBJECT TO CEILING OF TEN YEARS AS STIPULATED UNDER SECTION 80 - I C(6) . 11 ITA NO . 5477 /DEL/201 6 1 4. THE REVENUE COULD NOT POINT OUT ANY CONTRARY DECISION OF ANY HIGH COURT OR SUPREME COURT. IN THE CIRCUMSTANCES, WE RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HON BLE HIMACHAL PRADESH HIGH COURT FIND NO ERROR IN THE ORIGINAL ORDER OF THE AO AND CONSEQUENTIAL LY THE IMPUGNED ORDER PASSED BY THE CIT UNDER SECTION 263 OF THE A C T IS UNSUSTAINABLE . WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE CIT UNDER S E CTION 263 OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. 15 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ( ORDER PRONOUNCED IN THE COURT ON W EDNESDAY THE 14 TH DAY OF MARCH, 2018 AT NEW DELHI). SD/ - SD/ - ( SUCHITRA KAMBLE ) ( N.S. SAI NI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 14 . 0 3 .2018 SH COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR , ITAT NEW DELHI 12 ITA NO . 5477 /DEL/201 6 DATE 1. DRAFT DICTATED ON PS 2. DRAFT PLACED BEFORE AUTHOR 3. 201 8 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED /APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 3 . 201 8 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 3 .201 8 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.