MIL India P. Ltd,(Formerly known as MIL India Ltd), Delhi V. DCIT, Circle-16(2), New Delhi

ITA 6165/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2665 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 04-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAYABUDDIN ANSARI
• Keywords: Set aside
• Section: 143(3); 80IC; 143(2); 80IC; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI E BEN CH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI KULDIP SINGH, JUDICIAL MEM BER ITA NO. 6165/DEL/2017 [ASSESSMENT YEAR: 2013-14] MIL INDIA PVT. LTD VS. THE DY. C.I.T FORMERLY KNOWN AS MIL INDIA. LTD CIRCLE - 16(2) UNIT NO. 3F/307 MAMRAM EAST PLAZA NEW DELHI PLOT NO. C1 & C2, LSC BLOCK C KONDLI GHAROLI, NEW DELHI PAN : AACCM 4710 E [APPELLANT] [RESPONDENT] DATE OF HEARING : 10.03.2021 DATE OF PRONOUNCEMENT : 10.03.2021 ASSESSEE BY : SHRI GAUTAM JAIN, ADV REVENUE BY : SHRI GAYABUDDIN ANSARI, SR.DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A) - 28, NEW DELHI DATED 01.08.2017 PERTAIN ING TO A.Y 2013-14. 2 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE LD. CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY DISALLOWING 70% OF THE DEDUCTION CLAIMED U/S 80IC O F THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] AMOUNTING TO RS. 5,30,284/-. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE RETURN OF INCOME OF RS. 1,77,34,550/- WAS E-FILED ON 28.11.2012 AND ASSESSMENT WAS FRAMED VIDE ORDER DATED 24.03.2014 U/S 143(3) OF TH E ACT. RETURN OF INCOME WAS ASSESSED AT RS. 2,22,70,670/-. 4. THE MATTER WAS AGITATED BEFORE THE LD. CIT(A) AN D THE LD. CIT(A) ALLOWED SUBSTANTIAL RELIEF TO THE ASSESSEE. 5. SUBSEQUENTLY, THE PCIT ASSUMED JURISDICTION U/S 263 OF THE ACT AND SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE ASSESSING OFFICER TO EXAMINE THE EXCESS CLAIM OF DEDUCTION U/S 80IC O F THE ACT. 6. PURSUANT TO THE DIRECTIONS OF THE PCIT, THE ASSE SSING OFFICER EXAMINED THE CLAIM OF DEDUCTION U/S 80IC OF THE ACT AND DISALLOWED 70% OF THE CLAIM AND MADE ADDITION OF RS. 5,30,284/ -. 3 7. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 8. THE LD. CIT(A) WAS OF THE FIRM BELIEF THAT THE S CHEME OF DEDUCTION FOR 10 YEARS IS IN TOTALITY AND IT CANNOT BE BROKEN INTO PARTS FOR TAKING BENEFIT OF 100% DEDUCTION IN DIFFERENT P ERIOD OF 10 YEARS AS IT HAS BEEN DONE BY THE APPELLANT. THE LD. CIT(A) OBSERVED THAT THE APPELLANT HAS TRIED TO TREAT THE SAME UNDERTAKING O R ENTERPRISE INTO TWO UNDERTAKINGS OR ENTERPRISES FOR TAKING BENEFITS OF DEDUCTIONS @ 100% TWICE, FIRSTLY WHILE BEGINNING TO MANUFACTURE OR PRODUCE THE ARTICLES OR THINGS AND SECONDLY, WHILE UNDERTAKING SUBSTANTIAL EXPANSION WHEREAS SUB-SECTION (2) CLEARLY SAYS THAT THE PROVISIONS APPLIED TO ANY [ONE] UNDERTAKING OR ENTERPRISE WHIC H BEGINS TO MANUFACTURE OR PRODUCE THE ARTICLES OR UNDERTAKES S UBSTANTIAL EXPANSION. 9. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE, AT THE VERY OUTSET, STATED THAT THE QUARREL IS NOW WELL SETTLED IN FAVO UR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE JUDGMENT OF THE HON' BLE SUPREME COURT IN THE CASE OF AARHAM SOFTRONICS 412 ITR 623. 4 10. PER CONTRA, THE LD. DR STRONGLY SUPPORTED THE F INDINGS OF THE LOWER AUTHORITIES. 11. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. THE QUARREL CAN BE UNDERSTOOD FR OM THE FOLLOWING OBSERVATIONS OF THE ASSESSING OFFICER: 2. ON PERUSAL OF THE AUDITORS REPORT I.E. THE INITIAL ASSESSMENT YEAR WAS 2007-08 FROM WHEN THE ASSESSEE IS CLAIMING DEDUCTION U/S 80IC. ACCORDING TO THIS, ASSESSMENT YEAR 2012-1 3 IS THE 6 TH YEAR OF CLAIM OF DEDUCTION AND AS SUCH AS PER THE P ROVISION OF 80IC, THE ASSESSEE SHOULD HAVE CLAIMED DEDUCTION @3 0% AND NOT @100% AS HAS BEEN CLAIMED BY THE ASSESSEE FOR THE A .Y. 2012-13. 3. IN VIEW OF THIS, A PROPOSAL FOR REVIEW OF AS SESSMENT U/S 263 OF THE IT ACT, 1961 WAS MADE TO THE PR. COMMISSIONE R OF INCOME TAX-06, NEW DELHI ON 03.03.2016. THE PR. COMMISSION ER OF INCOME TAX-06, NEW DELHI BY EXERCISING HIS POWERS U/S 263 VIDE HIS ORDER DATED 18.03.2016 HAS SET ASIDE THE ASSESSMENT ORDER PASSED U/S 143(3) BY THE AO. 4. DISALLOWANCE OF EXCESS CLAIM U/S 80IC 4.1 IN VIEW OF THE 263 ORDER, NOTICE U/S 143(2) DAT ED 23.03.2016 WAS ISSUED AND SERVED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE EXCESS 70% CLAIM MADE BY THE ASSESSEE U/S 80IC SHOU LD NOT BE DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF TH E ASSESSEE FOR 5 THAT PARTICULAR ASSESSMENT YEAR. IN RESPONSE TO THE NOTICE DATED 23.03.2016, SHRI UMAPATI MISHRA, CA & AR OF THE ASS ESSEE COMPANY ATTENDED AND FILED HIS REPLY DATED 29.03.20 16 WHICH HAS BEEN DULY CONSIDERED AND FOUND TO BE NOT ACCEPTABLE . IN VIEW OF THE FACTS MENTIONED ABOVE, IT IS CLEAR THAT THE EXC ESS CLAIM OF DEDUCTION AMOUNTING TO RS. 5,30,284/- (DIFFERENCE O F RS. 7,57,548 - 2,27,264) WAS MADE BY THE ASSESSEE IN THE RETURN OF INCOME FOR THE A.Y. 2012-13 AND WRONGLY ALLOWED BY ASSESSING O FFICER AS WELL 12. A PERUSAL OF THE ASSESSMENT ORDER VIS A VIS THE ORDER OF THE FIRST APPELLATE AUTHORITY MAKES IT EVIDENT THAT THE BASIS FOR RESTRICTION OF DEDUCTION @30% INSTEAD OF 100% OF PROFITS AND GAINS U/S 80IC OF THE ACT IS THAT THE YEAR UNDER CONSIDERATION IS SIX A.YS AN D THE APPELLANT HAS CLAIMED DEDUCTION @ 100% FOR 5 A.YS I.E. 2007-08 TO 2011-12 WHICH HAS BEEN DULY ALLOWED BY THE REVENUE. THE FACT WHICH H AS BEEN COMPLETELY IGNORED BY THE LOWER AUTHORITIES IS THAT THE APPELLANT HAS UNDERTAKEN SUBSTANTIAL EXPANSION AS PRESCRIBED U/S 80IC(IIA) OF THE ACT. IGNORING THIS FACT, THE REVENUE AUTHORITIES T OOK A VIEW THAT THE BLOCK OF 5 YEARS FOR CLAIMING DEDUCTION CANNOT BE U SED AGAIN AND AGAIN FOR DIFFERENT SETS OF SITUATIONS OF THE SAME ENTERP RISES OR UNDERTAKINGS. 6 13. ON THIS VERY ISSUE, THE HON'BLE SUPREME COURT I N THE CASE OF ARHAM SOFTRONICS [SUPRA] HAS DECIDED THE ISSUE IN F AVOUR OF THE ASSESSEE AND AGAINST THE ASSESSEE. THE RELEVANT FI NDINGS OF THE HON'BLE SUPREME COURT [SUPRA] READ AS UNDER: 24. THE AFORESAID DISCUSSION LEADS US TO THE FOLLO WING CONCLUSIONS: {A) JUDGMENT DATED 20TH AUGUST, 2018 IN CLASSIC BINDING INDUSTRIES CASE OMITTED TO TAKE NOTE OF THE DEFINITION 'INITI AL ASSESSMENT YEAR' CONTAINED IN SECTION 80-IC ITSELF AND INSTEAD BASED ITS CONCLUSION ON THE DEFINITION CONT AINED 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 MATERIALLY DIFFER ENT. THE DEFINITION OF 'INITIAL ASSESSMENT YEAR' UNDER SECTI ON 80-IC HAS MADE ALL THE DIFFERENCE. THEREFORE, WE ARE OF T HE OPINION THAT THE AFORESAID JUDGMENT DOES NOT LAY DOWN THE C ORRECT LAW. (B) AN UNDERTAKING OR AN ENTERPRISE WHICH HAD SET UP A NEW UNIT BETWEEN 7TH JANUARY, 2003 AND 1ST APRIL, 2012 IN ST ATE OF HIMACHAL PRADESH OF THE NATURE MENTIONED IN CLAUSE (II) OF SUB-SECTION (2) OF SECTION 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 7 ASSESSMENT YEAR'. FOR THE NEXT FIVE YEARS, THE ADMI SSIBLE 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 CARRIED OUT AS DEFINED IN CLAUSE (IX) OF SUB-SECTION (8) OF SECTIO N 80-IC BY SUCH AN UNDERTAKING OR ENTERPRISE, WITHIN THE AFORE SAID PERIOD OF 10 YEARS, THE SAID PREVIOUS YEAR IN WHICH THE SU BSTANTIAL EXPANSION IS UNDERTAKEN WOULD BECOME 'INITIAL ASSES SMENT YEAR', AND FROM THAT ASSESSMENT YEAR THE ASSESSEE S HALL BEEN ENTITLED TO 100% DEDUCTIONS OF THE PROFITS AND GAIN S. (D) SUCH DEDUCTION, HOWEVER, WOULD BE FOR A TOTAL PERIO D OF 10 YEARS, AS PROVIDED IN SUB-SECTION (6). FOR EXAMPLE, IF THE EXPANSION IS CARRIED OUT IMMEDIATELY, ON THE COMPLE TION OF FIRST FIVE YEARS, THE ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION AGAIN FOR THE NEXT FIVE YEARS. ON THE OTH ER HAND, IF SUBSTANTIAL EXPANSION IS UNDERTAKEN, SAY, IN 8TH YE AR BY AN ASSESSEE SUCH AN ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION FOR THE FIRST FIVE YEARS, DEDUCTION @ 25% OF THE PROFITS AND GAINS FOR THE NEXT TWO YEARS AND @ 100% AGAIN FROM 8TH YEAR AS THIS YEAR BECOMES 'INITIAL ASSESSM ENT YEAR' ONCE AGAIN. HOWEVER, THIS 10U% DEDUCTION WOULD BE F OR REMAINING THREE YEARS, I.E., 8TH, 9TH AND 10TH ASSE SSMENT YEARS. 8 23. IN VIEW OF THE AFORESAID, WE AFFIRM THE JUDGMENT O F THE HIGH COURT ON THIS ISSUE AND DISMISS ALL THESE APPEALS OF THE REVENUE. LIKEWISE, APPEALS FILED BY THE ASSESSE ES ARE HEREBY ALLOWED. 14. IN LIGHT OF THE AFOREMENTIONED RATIO LAID DOWN BY THE HON'BLE SUPREME COURT [SUPRA] AND ON PERUSAL OF THE FINANCI AL STATEMENTS AND IN PARTICULAR, THE SCHEDULE OF FIXED ASSETS WE FIND THAT AS ON 01.04.2011, THE COST OF PLANT AND MACHINERY WAS AT RS. 3,16,51,410/- AND THE ADDITIONS MADE WERE TO THE TUNE OF RS. 1,85 ,23,460/- WHICH MAKES THE ADDITION MORE THAN 50% AND JUSTIFYING THA T THERE WAS SUBSTANTIAL EXPANSION AS PER THE RELEVANT PROVISION S OF THE ACT AND SECTION 80IC OF THE ACT WHICH FACT IS ALSO SUBSTANT IATED BY THE AUDITORS REPORT IN FORM 10CCB WHEREIN THE AUDITORS WERE SATI SFIED THAT THERE WAS SUBSTANTIAL EXPANSION AS PER PROVISIONS OF THE LAW. 15. IN LIGHT OF THE ABOVE FACTS, RESPECTFULLY FOLLO WING THE RATIO LAIDDOWN BY THE HON'BLE SUPREME COURT [SUPRA], WE S ET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLOW 100% OF THE DEDUCTION CLAIMED U/S 80IC OF THE ACT. 9 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IN ITA NO. 6165/DEL/2017 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF BOTH THE RIVAL REPRESENTATIVES ON 10.03.2021. SD/- SD/- [KULDIP SINGH] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10 TH MARCH, 2021 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 10 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER