Emmbros Autocamp Limited, Panchkula V. DCIT, Parwanoo

ITA 751/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6662 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2014-2015
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: N K SAINI
• Section: 80IB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 751/CHD/2017 ASSESSMENT YEAR: 2014-15 EMMBROS AUTOCOMP LIMITED, VS. THE DCIT, CIRCLE, (VILLAGE KATHA BADDI) PARWANOO PANCHKULA PAN NO. AAACE3489Q (APPELLANT) (RESPONDENT) APPELLANT BY : SH. N.K. SAINI RESPONDENT BY : SH. MANJIT SINGH DATE OF HEARING : 23.10.2017 DATE OF PRONOUNCEMENT : 16.11.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), [HEREINAFTER REFERRED TO AS CIT(A)], SHIMLA DATED 28.02.2017. 2. THE ASSESSEE IN THIS APPEAL HAS ORIGINALLY TAKEN THE FOLLOWING GROUND:- THAT THE LEARNED C.I.T. (A) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80IC OF THE I.T. ACT AT RS. 2 2,34,07,305/- WHICH WAS CLAIMED @ 100% OF THE SUCH PROFITS AND GAINS OF UNIT NO. II AND OF RS. 81,09,108/- WHICH WAS CLAIMED ON EXPORT UNIT @ 30% BASED ON SUBSTANTIAL EXPANSION CARRIED OUT BY THESE UNIT IN ASSESSMENT YEAR 2012-13 & 2009-10 RESPECTIVELY. HOWEVER, SUBSEQUENTLY THE ASSESSEE HAS TAKEN THE FO LLOWING ADDITIONAL GROUND:- THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80IC OF IT ACT RS. 2,34,07,205/- WHICH WAS CLAIMED @ 100% OF SUCH PROFITS AND GAINS OF UNIT NO. II AND OF RS. 81,09,108/- WHICH WAS CLAIMED ON EXPORT UNIT @ 30% BASED ON SUBSTANTIAL EXPANSION CARRIED OUT BY THESE UNITS IN ASSESSMENT YEAR 2012- 13 & 2009-10 RESPECTIVELY. IN ANY CASE DEDUCTION U/S 80IC WAS ADMISSIBLE ON UNIT II @ 30% OF CLAIM OF RS. 2,34,07,205/- BASED ON SUBSTANTIAL EXPANSION BY UNIT II IN ASSESSMENT YEAR 2007-08. 3. THE BRIEF FACTS AS DERIVED FROM THE IMPUGNED ORD ER OF THE CIT(A) ARE THAT ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING AND SALE OF AUTO SPARE. THE ASSESSEE IS ALSO DOING JOB WORK. THE ASSESSEE C OMPANY IS DOING MANUFACTURING ACTIVITIES FROM THREE UNITS (UNIT II, UNIT III AND UNIT- EMMBROS EXPORTS) AND JOB WORK FROM A SEPARATE UNIT (UNIT-ACE). ASSESSEE COMPANY FILED ITS RETURN OF INCOME DECLARI NG INCOME OF RS. 1,54,78,590/- ON 26.09.2014 AFTER CLAIMING OF DEDUC TION U/S 80IC OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AMOUNTIN G TO RS. 3,15,16,313/-. ITS UNIT II STARTED PRODUCTION ON 09.06.2002 AND IN ITIAL ASSESSMENT YEAR FOR CLAIM OF DEDUCTION U/S 80IC OF THE ACT WAS ASSESSME NT YEAR 2003-04. UNIT III STARTED ITS MANUFACTURING ACTIVITIES W.E.F. 7.6 .2006 I.E. DURING THE 3 ASSESSMENT YEAR 2007-08 AND ANOTHER UNIT I.E. EMMBR OS EXPORTS ON 16.12.2003 I.E. DURING THE ASSESSMENT YEAR 2004-05. WITH REGARD TO UNIT II, THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE HAD ALREADY CLAIMED DEDUCTION U/S 80IC TO THE EXTENT OF 100% OF THE ELIGIBLE PROFIT FOR FIVE YEARS PERIOD STARTING FROM ASSESSMENT YEARS 2003-04 TO 2007-08. IT WAS NOTICED THAT THE ASSESSE E FIRM HAD AGAIN CLAIMED DEDUCTION @ 100% U/S 80IC AGAINST ELIGIBLE PROFITS FROM ASSESSMENT YEARS 2007-08 ONWARDS ON ACCOUNT OF SUBS TANTIAL EXPANSION CARRIED OUT IN FINANCIAL YEAR 2006-07. THE ASSESSE E AGAIN CLAIMED 100% DEDUCTION IN ASSESSMENT YEAR 2014-15 BY CLAIMING TO HAVE CARRIED OUT SECOND SUBSTANTIAL EXPANSION. THE ASSESSING OFFICER , FOR THE DETAILED REASONS MENTIONED IN THE ASSESSMENT ORDER HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IC AS THE PERIOD OF CL AIM FOR DEDUCTION U/S 80IC EXCEEDED 10 YEARS THIS BEING THE 12 TH YEAR OF CLAIM OF DEDUCTION. WITH RESPECT OF UNIT EMMBROS EXPORTS, THE COMPANY COMMENCED ITS BUSINESS ACTIVITIES ON 18.12.2003 AND CLAIMED DEDUC TION @ 100% FOR ASSESSMENT YEARS 2004-05 TO 2008-09. THE ASSESSEE M ADE SUBSTANTIAL EXPANSION IN THE UNIT IN ASSESSMENT YEAR 2008-09 AN D CLAIMED DEDUCTION @ 30% U/S 80IC FOR THE YEAR UNDER CONSIDERATION I.E A SSESSMENT YEAR 2014-15. THE ASSESSING OFFICER FOR THE DETAILED REASONS MENT IONED IN THE ASSESSMENT ORDER HELD THAT THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTION U/S 80IC AS THE PERIOD OF CLAIM OF DEDUCTION U/S 80IC EXCEEDS 10 Y EARS THIS BEING THE 11 TH YEAR OF CLAIM FOR DEDUCTION. IN RESPECT OF UNIT III, THE COMPANY COMMENCED ITS B USINESS ACTIVITIES ON 7.8.2006 AND CLAIMED DEDUCTION @ 100% FOR ASSESS MENT YEAR 2007-08 4 ONWARDS. THE UNIT IN THE YEAR UNDER CONSIDERATION H AD SHOWN A LOSS OF RS. (-) 34,30,359/- AND, HENCE, NO CLAIM FOR DEDUCTION U/S 80IC WAS MADE. IN NUTSHELL, THE ASSESSING OFFICER DID NOT ALLOW THE C LAIM OF DEDUCTION U/S 80IC CLAIMED BY THE ASSESSEE. 4. BEING AGGRIEVED BY THE ABOVE ORDER OF THE ASSESS ING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). TH E LD. CIT(A), HOWEVER, DISMISSED THE APPEAL OF THE ASSESSEE WHILE RELYING ON THE DECISION OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF M/ S HYCRON ELECTRONICS VS. ITO IN ITA NO. 798/CHD/2012 & OTHERS VIDE ORDE R 27.05.2015 WHEREIN THE ASSESSEE CARRIED OUT SUBSTANTIAL EXPANSION OF I TS INDUSTRIAL UNIT AND CLAIMED DEDUCTION @ 100% U/S 80IC OF THE ACT, IT WA S HELD THAT SINCE THE ASSESSEE HAD ALREADY CLAIMED 100% DEDUCTION FOR FI RST FIVE YEARS FROM THE DATE OF SETTING UP ITS UNIT, IN VIEW OF CLAUSE (II ) OF SUB SECTION (3) OF SECTION 80IC, IT WOULD BE ELIGIBLE TO ONLY 30% OF DEDUCTION OF ITS BUSINESS PROFITS FROM 6 TH ASSESSMENT YEAR. THE TRIBUNAL WHILE HOLDING SO OB SERVED THAT BENEFIT OF SUBSEQUENT EXPANSION U/S 80-IC IS A PPLICABLE TO UNITS WHICH WERE IN EXISTENCE AT THE TIME OF ANNOUNCEMENT OF SC HEME I.E. ASSESSMENT YEAR 2004-05. IT WAS, THEREFORE, HELD THAT ASSESSEE S WHO INSTALLED NEW UNITS DURING THIS PERIOD WERE NOT ELIGIBLE TO CLAIM THE D EDUCTION ON ACCOUNT OF SUBSTANTIAL EXPANSION. THE TRIBUNAL OBSERVED THAT A UNIT U/S 80IC CAN EITHER CLAIM THE BENEFIT WHICH HAS BEGUN OR BEGUNS TO MANUFACTURE OR BY THE ALREADY EXISTING UNIT ON ACCOUNT OF SUBSTANTIAL EXPANSION. THE UNITS WHICH HAVE CLAIMED THE DEDUCTION ON ACCOUNT OF COMM ENCEMENT OF PRODUCTION WERE NOT FURTHER ELIGIBLE TO CLAIM THE B ENEFIT ON ACCOUNT OF SUBSTANTIAL EXPANSION. THE LD. CIT(A), THEREFORE, H ELD THAT SINCE THE ASSESSEE HAD ALREADY CLAIMED DEDUCTION U/S 80IC OF THE ACT @ 100% FOR 5 FIRST FIVE YEARS, THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION @ 100% ON ACCOUNT OF SUBSTANTIAL EXPANSION OF THESE UNITS. HE FURTHER RELIED UPON THE PROVISIONS OF SECTION 80IC (6) AND HELD THAT EVEN O THERWISE DEDUCTION U/S 80IC CANNOT BE EXTENDED BEYOND 10 YEARS. 6. BEING AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A) , THE ASSESSEE HAS COME IN APPEAL BEFORE US. 7. SO FAR AS THE DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF SUBSTANTIAL EXPANSION IN RESPECT OF EXPORT UNIT IS CONCERNED, THE LD. AR OF THE ASSESSEE HAS BEEN FAIR ENOUGH TO ADMIT THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF HYCRON ELECTRONICS VS. ITO (SUPRA). HE, HOWEVER, RESERVED HIS RIGHT T O CONTEST THE SAID ISSUE BEFORE THE HIGHER AUTHORITIES. SO FAR AS THE UNIT N O. III WAS CONCERNED, THE ASSESSEE DID NOT CLAIM ANY DEDUCTION U/S 80IC, THE SAID UNIT BEING IN LOSS AND THE ASSESSEE THUS HAS NOT COME WITH ANY GRIEVAN CE IN THIS RESPECT. SO FROM AS THE UNIT NO. II IS CONCERNED, THE LD. COUNS EL FOR THE ASSESSEE HAS SUBMITTED THAT THE SAID UNIT CAME INTO PRODUCTION O N 9.6.2002 AND CLAIMED DEDUCTION U/S 80IB FOR ASSESSMENT YEAR 2003-04 ONWA RDS. HOWEVER, THE ASSESSING OFFICER WRONGLY NOTED THAT THE UNIT NO. I I WAS CLAIMING DEDUCTION U/S 80IC SINCE 2003-04. HE IN THIS RESPE CT HAS STATED THAT IN FACT THE PROVISIONS OF SECTION 80IC CAME INTO EFFECT FRO M 1.4.2004 I.E. FROM ASSESSMENT YEAR 2004-05, HENCE, THE ABOVE FACT OF M ENTIONING THAT THE UNIT WAS CLAIMING DEDUCTION U/S 80IC OF THE ACT WAS INC ORRECT. HE HAS FURTHER SUBMITTED THAT EVEN IF THE PROPOSITION LAID DOWN BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF HYCRON ELECTRONICS ( SUPRA) IS APPLIED, EVEN THEN THE UNIT II OF THE ASSESSEE WAS ELIGIBLE FOR C LAIM OF DEDUCTION U/S 80IC OF THE ACT AS THE YEAR UNDER CONSIDERATION WAS 8 TH YEAR FOR ELIGIBILITY 6 OF DEDUCTION U/S 80IC OF THE ACT AND NOT THE 12 TH YEAR REPORTED BY THE ASSESSING OFFICER. HE SUBMITTED THAT EARLIER THE UN IT II OF THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB AND NOT U/S 80IC OF THE ACT. THE UNIT II CARRIED OUT SUBSTANTIAL EXPANSION IN THE YEAR 2007-08 AND A CCORDINGLY CLAIMED DEDUCTION U/S 80IC OF THE ACT FOR THE FIRST TIME AN D HENCE THIS WAS THE 8 TH YEAR OF CLAIM OF DEDUCTION. HE HAS FURTHER SUBMITTE D THAT THOUGH, THE SUBSTANTIAL EXPANSION HAS BEEN CARRIED OUT FOR THE YEAR 2014-15 AND THE ASSESSEE HAS CLAIMED THE DEDUCTION @ 100%, YET, EVE N APPLYING THE PRINCIPLE LAID DOWN IN THE CASE OF M/S HYCRON ELECT RONICS (SUPRA), THE ASSESSEE ATLEAST IS ENTITLED TO DEDUCTION @ 30%. HE HAS SUBMITTED THAT AS PER THE PROVISIONS OF CLAUSE 80IC(6) OF THE ACT, NO DEDUCTION U/S 80IC IS ALLOWED TO ANY UNDERTAKING OR WHERE THE TOTAL PERIO D OF DEDUCTION INCLUSIVE OF THE PERIOD OF DEDUCTION U/S 80IC OR TH E SECOND PROVISO TO SUB SECTION (4) OF SECTION 80IB OR U/S 10C OF THE ACT E XCEEDS TEN ASSESSMENT YEARS. HE HAS CONTENDED THAT THOUGH THE ASSESSEE WA S CLAIMING DEDUCTION U/S 80IB OF THE ACT BUT THE CASE OF ASSESSEE DID NO T FALL UNDER THE SECOND PROVISO TO SUB SECTION (4) OF SECTION 80IB OF THE A CT. HE, THEREFORE, HAS SUBMITTED THAT RESTRICTIONS OF SECTION 80IC(6) OF T HE ACT WERE NOT APPLICABLE TO THE CASE OF THE ASSESSEE. BEFORE PROC EEDING FURTHER, WE DEEM IT FIT TO REFER TO THE PROVISIONS OF SECTION 80IC(6 ), WHICH ARE AS UNDER:- SPECIAL PROVISIONS IN RESPECT OF CERTAIN UNDERTAKI NGS OR ENTERPRISES IN CERTAIN SPECIAL CATEGORY STATES. 80-IC. .. (6) NOTWITHSTANDING ANYTHING CONTAINED IN THIS ACT, NO DEDUCTION SHALL BE ALLOWED TO ANY UNDERTAKING OR ENTERPRISE UNDER THIS SECTION, WHERE THE TOTAL PERI OD OF DEDUCTION INCLUSIVE OF THE PERIOD OF DEDUCTION UNDE R THIS SECTION, OR UNDER THE SECOND PROVISO TO SUB-SECTION (4) OF SECTION 80-IB OR UNDER SECTION 10C, AS THE CASE MAY BE, EXCEEDS TEN ASSESSMENT YEARS. 7 .. WE WOULD ALSO LIKE TO REFER TO THE PROVISIONS OF SE CTION 80IB (4), WHICH ARE AS UNDER:- 80 IB - DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM CERT AIN INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS. (4) THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUS TRIAL UNDERTAKING IN AN INDUSTRIALLY BACKWARD STATE SPECI FIED IN THE EIGHTH SCHEDULE SHALL BE HUNDRED PER CENT OF THE PR OFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR FIVE ASSESSMENT YEARS BEGINNING WITH THE INITIAL ASSESSM ENT YEAR AND THEREAFTER TWENTY-FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING : PROVIDED THAT THE TOTAL PERIOD OF DEDUCTION DOES NOT EXCEED TEN CONSECUTIVE ASSESSMENT YEARS (OR TWELVE CONSECUTIVE ASSESSMENT YEARS WHERE THE ASSESSEE IS A CO-OPERATI VE SOCIETY) SUBJECT TO FULFILMENT OF THE CONDITION THAT IT BEGI NS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR TO OPE RATE ITS COLD STORAGE PLANT OR PLANTS DURING THE PERIOD BEGI NNING ON THE 1ST DAY OF APRIL, 1993 AND ENDING ON THE 31ST D AY OF MARCH, 2004 : PROVIDED FURTHER THAT IN THE CASE OF SUCH INDUSTRIES IN THE NORTH-EASTERN REGION, AS MAY BE NOTIFIED BY THE CEN TRAL GOVERNMENT, THE AMOUNT OF DEDUCTION SHALL BE HUNDRE D PER CENT OF PROFITS AND GAINS FOR A PERIOD OF TEN ASSES SMENT YEARS, AND THE TOTAL PERIOD OF DEDUCTION SHALL IN SUCH A C ASE NOT EXCEED TEN ASSESSMENT YEARS : PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SUB-SECTION SHALL BE ALLOWED FOR THE ASSESSMENT YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2004 OR ANY SUBSEQUENT YEAR TO ANY UNDERTAKI NG OR ENTERPRISE REFERRED TO IN SUB-SECTION (2) OF SECTIO N 80-IC: 8. THE LD. COUNSEL INVITED OUR ATTENTION TO THE ABO VE REPRODUCED PROVISIONS OF SECTION 80IB(4) OF THE ACT AND SUBMIT TED THAT THE SECOND 8 PROVISO TO SECTION 80IB(4) IS APPLICABLE TO THE UNI TS IN NORTH-EASTERN REGION THAT ALSO TO THE SPECIFIC INDUSTRIES AS MAY BE NOTIFIED AND EVEN THAT NOTIFICATION WAS ISSUED VIDE NO. 11022 DATED 4.8.19 99. HE, THEREFORE, HAS SUBMITTED THAT THE ASSESSEES 2 ND UNIT WAS NOT COVERED UNDER THE SECOND PROVISO TO SECTION 80IB(4) OF THE ACT. REFERRING TO THE ABOVE REPRODUCED PROVISIONS OF SECTION 80IC(6), HE HAS SUBMITTED TH AT IN CALCULATING THE TOTAL PERIOD OF 10 YEARS OF DEDUCTION, THE DEDUCTIO N CLAIMED OVER U/S 80IC (6) OR SECOND PROVISO TO SUB SECTION (4) TO SECTIO N 80IB OR U/S 10C IS TO BE TAKEN. HE HAS FURTHER SUBMITTED THAT THOUGH THE ASS ESSEE HAD CLAIMED DEDUCTION U/S 80IB OF THE ACT BEFORE STARTING CLAIM ING DEDUCTION U/S 80IC OF THE ACT ON ACCOUNT OF SUBSTANTIAL EXPANSION CARR IED OUT IN THE ASSESSMENT YEAR 2007-08, AND IF THE ENTIRE PERIOD O F DEDUCTION CLAIMED BY THE ASSESSEE IS COUNTED, IT WILL BE THE 12 TH YEAR OF CLAIMING OF DEDUCTION, HOWEVER, THAT DOES NOT DISENTITLE THE ASSESSEE TO C LAIM DEDUCTION FOR 10 CONSEQUENT YEAS U/S 80IC OF THE ACT AS THE EXCLUSIO N OF THE DEDUCTION U/S 80IB OF THE ACT IS RESTRICTED TO THE UNITS FALLING UNDER THE PURVIEW AND SCOPE OF SECOND PROVISO TO SUB SECTION (4) OF SECTI ON 80IB AND NOT UNDER REST OF THE PROVISIONS OF SECTION 80IB (4). 9. WE HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE LD. AR. IT IS NOTICED THAT THE LD. COUNSEL FOR THE ASSESSEE HAS T RIED TO EXPLAIN THAT EARLIER THE ASSESSEE WAS CLAIMING DEDUCTION U/S 80I B OF THE ACT AND NOT U/S 80IC OF THE ACT FROM ASSESSMENT YEAR 2003-04 ONWARD S, BUT THE ABOVE FACTS ARE NOT COMING OUT EITHER FROM THE ASSESSMENT ORDER OR FROM THE ORDER OF THE CIT(A). THE CLAIM OF THE ASSESSEE IN RESPECT OF UNIT II HAS BEEN DISALLOWED OBSERVING THAT IT WAS 12 TH YEAR OF CLAIM OF DEDUCTION U/S 80IC OF THE ACT. FURTHER, THIS NEW LEGAL GROUND RAISED B Y THE ASSESSEE HAS NOT 9 BEEN EXAMINED BY THE LOWER AUTHORITIES. EVEN THE A CTUAL FACTS ARE NOT CLEAR BEFORE US. IN VIEW OF THIS, WE DEEM IT FIT TO RES TORE THE MATTER ON THE LIMITED ASPECT OF ADJUDICATION ON THE ADDITIONAL GR OUND TAKEN BY THE ASSESSEE, TO THE FILE OF THE ASSESSING OFFICER. HOW EVER, THE DENIAL OF DEDUCTION BY THE CIT(A) WHILE RELYING UPON THE DEC ISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S HYCRON ELE CTRONICS VS. ITO (SUPRA) IS UPHELD BEING COVERED BY THE ABOVE DECISI ON OF THE TRIBUNAL. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TR EATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON 16.11.2017 SD/- SD/- (DR. B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 16.11.2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR