DCIT, Circle, Parwanoo V. M/s Raghav Life Style Product (Unit II), Baddi

ITA 678/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8459 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-09-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 11-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside

Judgement Text

ITA NO. 678//CHD/2018- RAGHAV LIFE STYLE PRODUCTS, BADDI, SOLAN 2 HOWEVER, DESPITE SPECIFIC QUERY, NO ONE HAS COME PR ESENT RATHER AN UNSIGNED ADJOURNMENT APPLICATION ON EMAIL HAS BEEN RECEIVED. SINCE THE ISSUE IS COVERED BY THE DECISION OF THE HON'BLE SUP REME COURT, HENCE, WE DO NOT FIND ANY JUSTIFICATION FOR ADJOURNMENT OF TH E CASE. 2. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE CLAIMED DEDUCTION U/S 80IC OF THE ACT @100% ON ACCO UNT OF SUBSTANTIAL EXPANSION OF THE UNIT. THE ASSESSING OF FICER, HOWEVER, DENIED THE CLAIM OBSERVING THAT ASSESSEE ONCE HAD A VAILED THE DEDUCTION U/S 80IC AT THE TIME OF ESTABLISHMENT OF UNIT AND THUS WAS NOT ENTITLED TO 100% DEDUCTION SUBSEQUENTLY ON ACCO UNT OF SUBSTANTIAL EXPANSION. THE LD. CIT(A), HOWEVER, RELYING ON THE JUDGEMENT OF THE HONBLE HIMACHAL PRADESH HIGH COURT DT. 28 NOVE MBER 2017 IN THE GROUP OF CASES WITH THE LEAD CASE TITLED AS M/S ST OVEKRAFT INDIA VS. COMMISSIONER OF INCOME TAX, ITA NO.20 OF 2015, HAS ALLOWED THE CLAIM OF THE ASSESSEE. 3. THE LD. DR HAS SUBMITTED THAT THE ISSUE RELATING TO SUBSTANTIAL EXPANSION RAISED IN THIS APPEAL HAS BEEN DULY ADJUD ICATED BY THE HON'BLE SUPREME COURT AND IS NOW DECIDED IN FAVOUR OF THE REVENUE BY THE RECENT DECISION DATED 20.8.2018 IN THE GROUP OF CASES WITH THE LEAD CASE TITLED AS CIT VS. M/S CLASSIC BINDING INDUSTR IES, IN CIVIL APPEAL NO(S) 7208 OF 2018. THE RELEVANT PART OF THE ORDER IS REPRODUCED AS UNDER:- 17. THE QUESTION IS AS TO WHETHER THESE ASSE SSEES, WHO HAD AVAILED DEDUCTIONS @ 100% FOR FIRST FIVE YEARS ON T HE GROUND THAT THEY HAD SET UP A MANUFACTURING UNIT AS PRESCRIBED UNDER SUB -SECTION (2) OF THE ACT, ITA NO. 678//CHD/2018- RAGHAV LIFE STYLE PRODUCTS, BADDI, SOLAN 4 (A) THOSE UNDERTAKINGS OR ENTERPRISES FULFILLING TH E CONDITIONS MENTIONED IN SUB-SECTION (2) OF SECTION 80-IC BECOME ENTITLED TO DEDUCTION UNDER THIS PROVISION. (B) THIS DEDUCTION IS ALLOWABLE FROM THE INITIAL AS SESSMENT YEAR. INITIAL ASSESSMENT YEAR IS DEFINED IN SECTION 80- IB(14)(C) OF THE ACT. (C) THE DEDUCTION IS @ 100% OF SUCH PROFITS AND GAI NS FOR FIRST 5 ASSESSMENT YEARS AND THEREAFTER A DEDUCTION IS PERM ISSIBLE @ 25% (OR 30% WHERE THE ASSESSEE IS A COMPANY). (D) TOTAL PERIOD OF DEDUCTION IS 10 YEARS, WHICH M EANS 100% DEDUCTION FOR FIRST 5 YEARS FROM THE INITIAL ASSESS MENT YEAR AND 25% (OR 30% WHERE THE ASSESSEE IS A COMPANY) FOR THE NE XT 5 YEARS. 20. WHEN WE KEEP IN MIND THE AFORESAID SCHEME AND SPIRIT BEHIND THIS PROVISION, SUCH A SITUATION CANNOT BE COUNTENANCED WHERE AN ASSESSEE IS ABLE TO SECURE DEDUCTION @ 100% FOR THE ENTIRE PERI OD OF 10 YEARS. IF THAT IS ALLOWED IT WILL AMOUNT TO DOING VIOLENCE TO THE PRO VISIONS OF SUB-SECTION (3) READ WITH SUB-SECTION (6) OF SECTION 80-IC. A PRAGM ATIC AND REASONABLE INTERPRETATION OF SECTION 80-IC WOULD BE TO HOLD TH AT ONCE THE INITIAL ASSESSMENT YEAR COMMENCES AND AN ASSESSEE, BY VIRTU E OF FULFILLING THE CONDITIONS LAID DOWN IN SUB-SECTION (2) OF SECTION 80-IC, STARTS ENJOYING DEDUCTION, THERE CANNOT BE ANOTHER INITIAL ASSESSM ENT YEAR FOR THE PURPOSES OF SECTION 80-IC WITHIN THE AFORESAID PERI OD OF 10 YEARS, ON THE BASIS THAT IT HAD CARRIED SUBSTANTIAL EXPANSION IN ITS UNIT. 21. WE ARE CONSCIOUS OF OUR RECENT JUDGMENT RENDER ED BY THIS VERY BENCH IN MAHABIR INDUSTRIES V. PRINCIPAL COMMISSION ER OF INCOME TAX (CIVIL APPEAL NOS. 4765-4766 OF 2018 DECIDED ON MAY 18, 2018). HOWEVER, A FINE DISTINCTION NEEDS TO BE NOTED BETWEEN THE TW O SETS OF CASES. IN MAHABIR INDUSTRIES, THE ASSESSEES HAD AVAILED THE I NITIAL DEDUCTION UNDER A DIFFERENT PROVISION, NAMELY, SECTION 80-IA OF THE A CT, I.E. BY FULFILLING THE CONDITIONS MENTIONED IN SUB-SECTION (4) OF SECTION 80-IA. THOSE CONDITIONS ARE ALTOGETHER DIFFERENT. DEDUCTION IN RESPECT OF P ROFITS AND GAINS UNDER THE SAID PROVISION IS ADMISSIBLE WHEN THESE PROFITS AND GAINS ARE FROM ITA NO. 678//CHD/2018- RAGHAV LIFE STYLE PRODUCTS, BADDI, SOLAN 6 6. IN VIEW OF THE ABOVE DISCUSSION AND AS PER THE R ECENT RULING OF HON'BLE SUPREME COURT ON THE ISSUE IN THE CASE OF CIT VS. M/S CLASSIC BINDING INDUSTRIES (SUPRA), THE IMPUGNED OR DER OF THE CIT(A) IS SET ASIDE. AS SUCH, THE ASSESSEE IS ENTITLED TO ONLY 25% OF DEDUCTION DURING THE PRESENT YEAR BECAUSE THE ASSESSEE HAS AL READY AVAILED THE PERIOD OF FULL DEDUCTION @ 100% IN THE EARLIER FIVE YEARS. ACCORDINGLY, THE APPEAL OF THE REVENUE STANDS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.09.2018 SD/- SD/- (ANNAPURNA GUPTA) / ACCOUNTANT MEMBER (SANJAY GARG ) / JUDICIAL MEMBER DATED : 04.10. 2018 RKK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / CIT 4. ( )/ THE CIT(A) 5. , ! ' , #$%& / DR, ITAT, CHANDIGARH 6. %' () / GUARD FILE * / BY ORDER, *+ ,- / ASSISTANT REGISTRAR