ITO, Circle-1(2), Kashipur V. Agron Remedies P.Ltd, Kashipur

ITA 5524/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3920 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 30-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: S C AGARWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI SMC BENCH, NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO. 5 524 /DEL/201 7 [A.Y. 20 14 - 15 ] THE ITO, VS. AGRON REMEDIES PVT. LTD CIRCLE - 1 ( 2 , ) SARVERKHERA MORADABAD R OAD KASHIPUR KASHIPUR, U.S. NAGAR PAN : AA BCA 7572 K [ ASSESSEE ] [RESPONDENT] DATE OF HEARING : 2 7 . 1 2 .2017 DATE OF PRONOUNCEMENT : 08 .01 .201 8 ASSESSEE BY : SHRI S.C. AGARWAL , C. A. REVENUE BY : MS. ASHIMA NEB, SR. DR ORDER THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER OF THE LD. CIT(A) , HALDWANI VIDE ORDER DATED 28 .0 6 .201 7 FOR A.Y. 20 14 - 1 5 . 2. BRIEF FACTS OF THE CASE ARE T HE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IN THE RELEVANT A.Y. FILED THE RETURN OF INCOME DECLARING TOTAL INCOME AT NIL. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT BY ISSUANCE OF NOTICE U/S 143(2) OF THE INCOME - TAX AC T, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] ON 04.09.2014. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF MEDICINES AND 2 ITA NO. 5 524 /DEL/201 7 CLAIMED DEDUCTION U/S 80IC OF THE ACT AMOUNTING TO RS. 39,88,690/ - . THE ASSESSEE COMPLETED SUBSTANTIAL EXPANSI ON DURING F.Y. 2005 - 06 AND DECLARED A.Y. 2006 - 07 TO BE THE INITIAL ASSESSMENT YEAR FOR CLAIMING DEDUCTION U/S 80IC OF THE ACT . BY VIRTUE OF SUB SECTION (3) THE QUANTUM OF DEDUCTION FOR THE FIRST FIVE YEARS IS @ 100% FROM THE ELIGIBLE BUSINESS AND FOR THE S UBSEQUENT YEARS, DEDUCTION @ 30% IS ALLOWED. THE MAXIMUM NUMBER OF YEARS FOR WHICH THE SAID DEDUCTION CAN BE CLAIMED HAS BEEN RESTRICTED TO 10 YEARS UNDER SUB SECTION (6). THE ASSESSEE FURTHER CLAIMED COMPLETION OF SUBSTANTIAL EXPANSION DURING F.Y. 2007 - 08 AND RE - FIXED THE INITIAL ASSESSMENT YEAR AT A.Y. 2008 - 09. THE ASSESSEE AGAIN CLAIMED SUBSTANTIAL EXPANSION DURING F.Y. 2009 - 10 AND CLAIMED THE INITIAL ASSESSMENT YEAR AS A.Y. 2010 - 11. 3. ACCORDING TO THE AO, THE RELEVANT A.Y. 2014 - 15 IS THE EIGHTH YEAR F ROM THE INITIAL A.Y. 2006 - 07. THE AO HELD THAT THE ACTION OF THE ASSESSEE IN CLAIMING SUBSTANTIAL EXPANSION THRICE BY FIXING MULTIPLE ASSESSMENT YEARS WITHIN A SPAN OF 10 YEARS IS NEITHER IN CONFORMITY WITH THE LAW NOR WITH THE SPIRIT OF THE LEGISLATURE. T HE 100% DEDUCTION AMOUNTING TO RS. 54,21,553/ - CLAIMED BY THE ASSESSEE WAS REDUCED TO DEDUCTION @ 30% AT RS. 16,26,466/ - AND THE BALANCE AMOUNT OF RS. 37,95,087/ - WAS DISALLOWED. 3 ITA NO. 5 524 /DEL/201 7 4. THE LD. CIT (A) ALLOWED THE GROUND OF APPEAL RAISED BY THE ASSESSEE BY FOLL OWING HIS OWN ORDER IN THE CASE OF THE ASSESSEE FOR A.Y. 2012 - 13 UNDER IDENTICAL FACTS AND CIRCUMSTANCES. 5. THE REVENUE IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: '(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, CIT(A) HAS ERR ED IN ALLOWING 100% DEDUCTION UNDER SECTION 80IC TO THE ASSESSEE COMPANY IN THE 8 TH ASSESSMENT YEAR FROM ITS INITIAL ASSESSMENT YEAR. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE WHETHER INITIAL ASSESSMENT YEAR CAN BE CHANGED MULTIPLE TIMES FOR CLAIMIN G DEDUCTION U/S 80IC OF THE INCOME TAX ACT, 1961, IF ONCE IT IS FIXED BY THE ASSESSEE COMPANY ITSELF. (HI) WHETHER LD. CIT(A) ACCEPTED THE GROUND OF THE ASSESSEE COMPANY WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAS MADE SUBSTANTIAL EXPANSION IN THREE DIFFERENT FINANCIAL YEAR AND CLAIM MULTIPLE INITIAL ASSESSMENT YEAR FOR CLAIMING 100% DEDUCTION U/S 80IC OF THE INCOME TAX ACT, 1961. 6. THE L D. DR SUBMITTED THAT THE RELEVANT A.Y. WOULD BE THE EIGHTH ASSESSMENT YEAR FROM THE INITIAL ASSESSMENT YEAR 2006 - 07 AND THEREFORE, DEDUCT ION U/S 80IC IS NOT ALLOWABLE @ 100%. IT WAS FURTHER 4 ITA NO. 5 524 /DEL/201 7 SUBMITTED THAT THE INITIAL ASSESSMENT YEAR AS CONTEMPLATED U/S 80IC CAN BE FIXED ONLY ONCE DURING THE PERIOD OF 10 YEARS AND CANNOT BE RE - FIXED AS DONE IN THE PRESENT CASE. THE L D. DR RELIED UPON THE JUDGMENT OF ITAT CHANDIGARH BENCH, IN M/S ZEE LABORATORIES VS. ITO, ITA NO. 230/CHD/2016 DATED 11.08.2016 AND ALSO THE JUDGMENT IN THE CASE OF M/S CLASSIC BINDING INDUSTRIES VS. JCIT, ITA NO. 352/CHD/2016 DATED 11.08.2016. 7. THE L D. AR ON THE OTHER HAND SUBMITS THAT THERE IS NO PROHIBITION UNDER THE ACT TO CLAIM DEDUCTION @ 100% EVEN IF SUBSTANTIAL EXPANSION HAS BEEN CARRIED OUT AGAIN. HE FURTHER SUBMITTED THAT THE CASE OF THE ASSESSEE IS COVERED BY THE JUDGMENT OF THIS TRIBUNAL IN T HE CASE OF TIRUPATI LPG INDUSTRIES LTD. VS. ASSESSEE, ITA NO. 991/DEL/2013 DATED 29.01.2014. HE FURTHER RELIED UPON THE JUDGMENT OF THE HON'BLE HIGH COURT OF HIMACHAL PRADESH, SHIMLA IN THE CASE OF M/S STOVEKRAFT INDIA VS. CIT IN ITA NO. 20/2015. 8. WE H AVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. THE ONLY ISSUE TO BE DECIDED IS AS TO WHETHER SUBSTANTIAL EXPANSION CAN BE CONFINED TO ONE EXPANSION U/S 80IC OF THE ACT AND WHETHER THERE CAN BE MORE THAN ONE INITIAL ASSESSMENT YEARS. TH E SAID 5 ITA NO. 5 524 /DEL/201 7 ISSUE CAME FOR CONSIDERATION BEFORE THE HON'BLE HIGH COURT OF HIMACHAL PRADESH IN THE CASE OF M/S STOVEKRAFT INDIA (SUPRA) WHEREIN IT HAS BEEN HELD THAT SUBSTANTIAL EXPANSION CANNOT BE CONFINED TO ONE EXPANSION AS LONG AS THE REQUIREMENT OF SECTION 80IC (8)(IX) OF THE ACT IS MET. IN THE AFORESAID JUDGMENT IT HAS BEEN HELD AS UNDER: 'SUBSTANTIAL EXPANSION CANNOT BE CONFINED TO ONE EXPANSION. AS LONG AS REQUIREMENT OF SECTION 80 - IC(8)(IX) IS MET, THERE CAN BE NUMBER OF MULTIPLE SUBSTANTIAL EXPANSIONS , (D) CORRESPONDINGLY, THERE CAN BE MORE THAN ONE INITIAL ASSESSMENT YEARS, (E) WITHIN THE WINDOW PERIOD OF 7.1.20013 UPTO 1.4.2012, AN UNDERTAKING OR AN ENTERPRISE CAN BE ENTITLED TO DEDUCTION @ 100% FOR A PERIOD OF MORE THAN FIVE YEARS.' 9. IN THE CASE OF TIRUPATI LPG INDUSTRIES (SUPRA), THIS TRIBUNAL HELD AS UNDER: '10.4. THE ONLY DISPUTE THAT ARISES FOR OUR CONSIDERATION IS THE INTERPRETATION OF THE TERM 'INITIAL ASSESSMENT YEAR' AND WHETHER THE SAME COMES WITH ANY RESTRICTION. THE REVENUE SEEKS TO TA KE THE COLOR FROM THE OBJECT OF INTRODUCING SECTION 80 - IC. THE A.O. REFERRED TO POLICY OF THE GOVERNMENT FOR GIVING INCENTIVES TO THE STATE OF UTTARANCHAL AND HIMACHAL PRADESH. IT IS WELL SETTLED THAT EXTERNAL AIDS SHOULD NOT BE 6 ITA NO. 5 524 /DEL/201 7 TAKEN FOR THE PURPOSE OF IN TERPRETING THE STATUTE , WHEN THE LANGUAGE OF THE SECTION IS CLEAR AND UNAMBIGUOUS. A PLAIN READING OF SEC.80 - IC(8)(V) WHICH DEFINES THE TERM 'INITIAL ASSESSMENT YEAR' READ WITH SEC.80 - IC(8)(IX) WHICH DEFINES THE TERM 'SUBSTANTIAL EXPANSION' MAKES IT CLEAR THAT THERE IS NO RESTRICTION OR BAR ON MORE THAN ONE SUBSTANTIAL EXPANSION BEING UNDERTAKEN BY AN ASSESSEE. IN OUR VIEW, A UNIT CAN UNDERTAKE ANY NUMBER OF SUBSTANTIAL EXPANSIONS , IN THE ABSENCE OF ANY SPECIFIC RESTRICTION IN THE SECTION. THERE IS NO SUGGE STION IN THE LANGUAGE OF THE SECTION THAT INCENTIVE U/S 80 IC IS NOT AVAILABLE IF THE ASSESSEE SUBSTANTIALLY EXPANDS FOR A SECOND OR THIRD TIME. SUBSTANTIAL EXPANSION REQUIRES ADDITIONAL INVESTMENT AND RESULTS IN HIGHER PRODUCTION , EMPLOYMENT ETC. INDUSTRI ALISTS HAVE TO BE ENCOURAGED TO UNDERTAKE SUBSTANTIAL EXPANSION. THE SECTION RECOGNIZES THIS FACT AND PROVIDES FOR AN INCENTIVE , IF AN ASSESSEE UNDERTAKES 'SUBSTANTIAL EXPANSION'. 1 0 . THE LD. COUNSEL FOR THE REVENUE COULD NOT POINT OUT ANY CONTRARY JUDGM ENT OF ANY OTHER HON'BLE HIGH COURT OR THE HON'BLE APEX COURT TAKING A VIEW AGAINST THE ASSESSEE ON THE AFORESAID ISSUE. IN VIEW THEREOF, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) ON THE ISSUE CHALLENGED BEFORE ME AND THE SAME IS UPHELD. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. 7 ITA NO. 5 524 /DEL/201 7 11. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 5 52 4/DEL/2017 IS DISMISSED . THE ORDER IS PRO NOUNCED IN THE OPEN COURT ON 08 . 0 1 .201 8 . SD/ - [B.P. JAIN] ACCOUNTANT MEMBER DATED: 08 TH JANUARY , 201 8 VL/ COPY FORWARDED TO: 1 . ASSESSEE 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI