ACIT, C-5(1), Chandigarh V. M/s Shree Naina Containers Inc., Chandigarh

ITA 858/CHANDI/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4105 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-03-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 06-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S PHANI KISHORE
• Section: 80IC

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH , , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NOS. 854 TO 858/CHD/2018 ! ' / ASSESSMENT YEARS : 2010-11 TO 2014-15 THE ACIT, CIRCLE 5 (1), CHANDIGARH # M/S SHREE NAINA CONTAINERS INC, SCF-8, SECTOR 27-D, CHANDIGARH $ ./ PAN NO. ABDFS5889B $% / APPELLANT &'$% / RESPONDENT ! ( ) * /ASSESSEE BY : SHRI RACHIT GOYAL, CA ) * / REVENUE BY : SHRI G.S. PHANI KISHORE, CIT DR + ) , /DATE OF HEARING : 12.03.2019 -./' ) , /DATE OF PRONOUNCEMENT : 12.03.2019 /ORDER PER BENCH: THE PRESENT APPEALS PREFERRED BY THE REVENUE ARE AGAINST THE SEPARATE ORDERS DATED 28.2.2018 (FOR A. Y. 2010- 11) AND DATED 29.3.2008 (FOR A.YS. 2011-12 TO 2014 -15) OF COMMISSIONER OF INCOME TAX (APPEALS)-2, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)] 2. SINCE IDENTICAL ISSUE IS INVOLVED IN ALL THE ASS ESSMENT YEARS, HENCE, THESE HAVE BEEN HEARD TOGETHER AND AR E BEING DISPOSED OFF BY THIS COMMON ORDER. 3. FIRST, WE SHALL DEAL WITH THE APPEAL IN ITA NO. 854/CHD/2018 FOR ASSESSMENT YEAR 2010-11. ITA NO.854 TO 858-CHD-2018 - M/S SHREE NAINA CONTAINERS INC. CHANDIGARH 2 4. AT THE OUTSET, THE LD. DR HAS SUBMITTED THAT THE ONLY ISSUE INVOLVED IN THIS APPEAL IS AS TO WHETHER THE ASSESSEE IS ENTITLED TO DEDUCTION AT THE RATE OF 100% OF THE EL IGIBLE PROFITS U/S 80IC OF THE INCOME-TAX ACT, 1961 (IN SH ORT 'THE ACT') FOR THE FIRST 5 YEARS OR 10 YEARS IN THE CASE OF SUBSTANTIAL EXPANSION OF UNIT. IN OTHER WORDS, WHE THER THE YEAR IN WHICH THE SUBSTANTIAL EXPANSION IS CARRIED OUT IS TO BE TAKEN AS INITIAL ASSESSMENT YEAR FOR THE PURPOSE OF GRANT OF DEDUCTION FOR 10 YEARS U/S 80IC OF THE ACT. HE H AS FURTHER SUBMITTED THAT THE ISSUE RAISED IN THIS APP EAL HAS BEEN EARLIER ADJUDICATED BY THE HON'BLE H.P. HIGH C OURT IN THE CASE OF M/S STOVEKRAFT INDIA VS. CIT ITA N O. 20 OF 2015 DATED 28.11.2017, WHEREIN, THE ISSUE WAS DECID ED IN FAVOUR OF THE ASSESSEE. HOWEVER, THE DEPARTMENT ON THE ISSUE OF SUBSTANTIAL EXPANSION WENT IN APPEAL BEFOR E THE HON'BLE SUPREME COURT AND THE HON'BLE SUPREME COURT DECIDED THE ISSUE IN FAVOUR OF THE REVENUE BY THE D ECISION DATED 20.8.2018 IN THE GROUP OF CASES WITH THE LEAD CASE TITLED AS CIT VS. M/S CLASSIC BINDING INDUSTRIES, IN CIVIL APPEAL NO(S) 7208 OF 2018 DATED 20.08.2018. THE LD. DR HAS FURTHER FAIRLY ADMITTED THAT THE ORD ER OF THE HON'BLE SUPREME COURT IN M/S CLASSIC BINDING INDUSTRIES (SUPRA) HAS BEEN RECALLED IN A REVIEW PE TITION FILED BY THE PETITIONERS AND PROPOSITION OF LAW LAI D DOWN BY THE HON'BLE H.P. HIGH COURT IN THE CASE OF M/S STOVEKRAFT INDIA VS. CIT ITA NO. 20 OF 2017 DATED 28.11.2017 HAS BEEN REAFFIRMED RECENTLY BY THE HON' BLE ITA NO.854 TO 858-CHD-2018 - M/S SHREE NAINA CONTAINERS INC. CHANDIGARH 3 SUPREME COURT IN THE GROUP OF CASES WITH THE LEAD C ASE IN PR. CIT VS. M/S AARHAM SOFTRONICS VIDE ORDER DATE D 20.02.2019. 5. THE LD. AR OF THE ASSESSEE HAS RELIED UPON THE DETAILED WRITTEN SUBMISSIONS PLACED ON RECORD IN TH IS BEHALF AND SUBMITTED THAT THE ISSUE NOW STANDS COVE RED IN FAVOUR OF THE ASSESSEE. 6. WE HAVE GONE THROUGH THE RECENT DECISION OF THE HON'BLE SUPREME COURT IN PR. CIT VS. M/S AARHAM SOFTRONICS (SUPRA), WHEREIN, THE HON'BLE SUPREME C OURT ON DELIBERATIONS, VIDE PARA 24 HAS CONCLUDED AS U NDER:- 24. THE AFORESAID DISCUSSION LEADS US TO THE FOLLOWI NG CONCLUSIONS: (A) JUDGMENT DATED 20TH AUGUST, 2018 IN CLASSIC BIND ING INDUSTRIES CASE OMITTED TO TAKE NOTE OF THE DEFINITIO N INITIAL ASSESSMENT YEAR CONTAINED IN SECTION 80-IC ITSELF AN D INSTEAD BASED ITS CONCLUSION ON THE DEFINITION CONTAINED IN SE CTION 80- IB, WHICH DOES NOT APPLY IN THESE CASES. THE DEFINITI ONS OF INITIAL ASSESSMENT YEAR IN THE TWO SECTIONS, VIZ. SECT IONS 80- IB AND 80-IC ARE MATERIALLY DIFFERENT. THE DEFINITION OF INITIAL ASSESSMENT YEAR UNDER SECTION 80-IC HAS MADE ALL THE DIFFERENCE. THEREFORE, WE ARE OF THE OPINION THAT TH E AFORESAID JUDGMENT DOES NOT LAY DOWN THE CORRECT LAW. (B) AN UNDERTAKING OR AN ENTERPRISE WHICH HAD SET UP A NEW UNIT BETWEEN 7TH JANUARY, 2003 AND 1ST APRIL, 2012 IN STATE OF HIMACHAL 25 PRADESH OF THE NATURE MENTIONED IN CLA USE (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 ASSESSMEN T YEAR. FOR THE NEXT FIVE YEARS, THE ADMISSIBLE DEDUCTIO N WOULD BE 25% (OR 30% WHERE THE ASSESSEE IS A COMPANY) OF T HE PROFITS AND GAINS. (C) HOWEVER, IN CASE SUBSTANTIAL EXPANSION IS CARRIED OU T AS DEFINED IN CLAUSE (IX) OF SUB-SECTION (8) OF SECTION 8 0-IC BY SUCH AN UNDERTAKING OR ENTERPRISE, WITHIN THE AFORESA ID PERIOD ITA NO.854 TO 858-CHD-2018 - M/S SHREE NAINA CONTAINERS INC. CHANDIGARH 4 OF 10 YEARS, THE SAID PREVIOUS YEAR IN WHICH THE SUBS TANTIAL EXPANSION IS UNDERTAKEN WOULD BECOME INITIAL ASSESSMEN T YEAR, AND FROM THAT ASSESSMENT YEAR THE ASSESSEE SHA LL BEEN ENTITLED TO 100% DEDUCTIONS OF THE PROFITS AND GAINS. (D) SUCH DEDUCTION, HOWEVER, WOULD BE FOR A TOTAL PERIOD OF 10 YEARS, AS PROVIDED IN SUB-SECTION (6). FOR EXAMPLE, IF T HE EXPANSION IS CARRIED OUT IMMEDIATELY, ON THE COMPLETION OF FIRST FIVE YEARS, THE ASSESSEE WOULD BE ENTITLED TO 100% DEDU CTION AGAIN FOR THE NEXT FIVE YEARS. ON THE OTHER HAND, IF SUBSTANTIAL EXPANSION IS UNDERTAKEN, SAY, IN 8TH YEAR BY AN ASSE SSEE SUCH AN ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION F OR THE FIRST FIVE YEARS, DEDUCTION @ 25% OF THE PROFITS AND GAINS FOR THE NEXT TWO YEARS AND @ 100% AGAIN FROM 8TH YEAR A S THIS YEAR BECOMES INITIAL ASSESSMENT YEAR ONCE AGAIN. 26 HOWEVER, THIS 100% DEDUCTION WOULD BE FOR REMAINING T HREE YEARS, I.E., 8TH, 9TH AND 10TH ASSESSMENT YEARS. 25. IN VIEW OF THE AFORESAID, WE AFFIRM THE JUDGMENT OF THE HIGH COURT ON THIS ISSUE AND DISMISS ALL THESE APPEALS OF THE REVENUE. LIKEWISE, APPEALS FILED BY THE ASSESSEES ARE H EREBY ALLOWED. 7. IN VIEW OF THE ABOVE DISCUSSION AND AS PER THE R ECENT RULING OF HON'BLE SUPREME COURT ON THE ISSUE IN TH E CASE OF PR. CIT VS. M/S AARHAM SOFTRONICS ORDER DATED 20.02.2019 (SUPRA), THE IMPUGNED ORDER OF THE CIT(A ) IS UPHELD. WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. ITA NOS. 855 TO 858/CHD/2018(A.YS. 2011-12 TO 2014 -15) 8. SINCE THE FACTS AND ISSUES INVOLVED IN ALL THE A PPEALS OF THE REVENUE FOR AFORESAID ASSESSMENT YEARS ARE IDEN TICAL, THEREFORE, OUR FINDINGS GIVEN ABOVE WILL APPLY MUTA TIS- MUTANDIS TO THESE ASSESSMENT YEARS ALSO. ITA NO.854 TO 858-CHD-2018 - M/S SHREE NAINA CONTAINERS INC. CHANDIGARH 5 IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT IMMEDIATELY ON COMPLETION OF HEARING. SD/- SD/- ( / ANNAPURNA GUPTA) ! '#/ ACCOUNTANT MEMBER ( '%& / SANJAY GARG) ' '#/ JUDICIAL MEMBER DATED : 12. 03.2019 .. 1 ) & 23 43' / COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. &'$% / THE RESPONDENT 3. 5 / CIT 4. 5 ( )/ THE CIT(A) 5. 36 & 7! , , 7! , 89:; / DR, ITAT, CHANDIGARH 6. : < + / GUARD FILE 1 / BY ORDER, = / ASSISTANT REGISTRAR