ACIT, Chandigarh V. Shri Subhash Chand, Chandigarh

ITA 860/CHANDI/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1612 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 06-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Question of law
• Section: 131; 6; 2; 260A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BEN CH A, CHANDIGARH , . '.., # $, %& BEFORE: SH. SANJAY GARG, JM & DR. B.R.R. KUMAR, AM ITA NO. 860/CHD/2018 ASSESSMENT YEAR : 2014-15 ACIT CIRCLE 5(1), CHANDIGARH SHRI SUBHASH CHAND SCF 12, SCTOR 26 CHANDIGARH PAN NO: ABUPC8069N APPELLANT RESPONDENT !' ASSESSEE BY : NONE #!' REVENUE BY : SHRI. MANJIT SINGH $ %! & DATE OF HEARING : 05/11/2018 '()*! & DATE OF PRONOUNCEMENT : 27/11/2018 %'/ ORDER PER DR. B.R.R. KUMAR, A.M: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE LD. CIT(A)-2, CHANDIGARH DT. 29/03/2018. 2. IN THE PRESENT APPEAL REVENUE HAS RAISED THE FOL LOWING GROUNDS: (I) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) HAS NOT ERRED IN PARTLY ALLOWING THE APPE AL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE ? (II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS NOT ERRED IN LAW AND FACT IN DELETING THE ADDITION OF RS. 85,31,403/-(MADE ON ACCOUNT OF RESTRICTING THE CLAIM OF DEDUCTION U/S 8 0-IC OF THE INCOME TAX ACT, 1961 @ 25%) WITHOUT DISCUSSING THE MERITS OF THE IS SUE INVOLVED AND BY RELYING ON THE DECISION OF HONT>LE HIMACHAL PRADESH HIGH COURT IN THE CASE OF M/S STOVEKRAFT INDIA AND THE DECISION OF HON'BLE JURISD ICTIONAL TRIBUNAL IN THE CASE OF M/S/ EUROLINKS, WHEN THESE JUDGMENTS HAVE NOT BEEN ACCEPTED BY THE DEPARTMENT ON MERITS AND SLP HAS BEEN FILED IN SUCH CASES ? (III) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS NOT ERRED IN ALLOWING THE DEDUCTION U/S 80IC @ 100% TO THE ASSESSEE FOR 10 YEARS WITHOUT APPRECIATING AND IGNORING THE REAL INTENT A ND PURPOSE OF INSERTION OF SECTION OF 80IC AND THE CBDT CIRCULAR NO. 7 OF 2003 DATED 05.09.2003 AND CIRCULAR NO. 49 OF 2003 OF CENTRAL EXCISE DEPARTMENT AND THE SUBSIDY SCHEME ISSUED BY MINISTRY OF COMMERCE AND INDUSTRY, DIPP, GOI, WHICH ARE BINDING IN LAW ON AUTHORITIES AND ANYTHING WHICH IS LEGALLY RELEVANT, IS TO BE CONSIDERED FOR IMPLEMENTATION AS LAID DOWN BY SC IN 131 ITR 597(SC ). (IV) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS NOT ERRED IN ALLOWING THE DEDUCTION U/S 80IC @ 100% TO THE ASSESSEE FOR 10 YEARS WITHOUT APPRECIATING AND IGNORING THE FACT THAT A P ERUSAL OF THE PROVISO WOULD SHOW THAT BEFORE THE INTRODUCTION OF SECTION 80IC, THE DEDUCTION TO THE BACKWARD STATES WAS AVAILABLE IN TERMS OF SECTION 8 0IB (4), THE THIRD PROVISO MAKES CLEAR THAT AFTER 31.03.2004, THIS DEDUCTION WILL BE AVAILABLE ONLY UNDER SECTION 2 80IC, AND DEDUCTION WOULD BE @ 100% FOR THE FIRST F IVE YEARS THAT THERE AFTER @ 25%. (V) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE CIT(A) HAS NOT IGNORED THE EXPLICIT STATUTORY PROVISION OF THE SECOND PROVISO THAT CLARIFIES THAT IN THE CASE OF STATES OF NORTH-EASTERN REGIONS , THE DEDUCTION WOULD BE @100% WAS ALLOWABLE FOR 10 YEARS WHEREAS IN THE CAS E OF STATES OF HIMACHAL PRADESH, THE DEDUCTION WAS ALLOWABLE @ 100% FOR FIR ST FIVE YEARS AND 25% FOR THE NEXT FIVE YEARS. (VI) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) (BY RELYING ON THE JUDGMENTS IN THE CASE OF M/S STOVEKRAFT INDIA ( SUPRA), NIRMAL SINGH PROP. K.N. PAPER & PACKAGES (SUPRA), IN THE CASE OF M/S EUROLI NKS IN ITA NO. 1049/CHD/2017 ) HAS NOT ERRED IN HOLDING THAT THOSE UNDERTAKINGS OR ENTERPRISES WHICH COMMENCED PRODUCTION AFTER 07.01.2013 CAN CARRY OUT MULTIPLE 'SUBSTANTIAL EXPANSION' PRIOR TO 01.04.2012 AND THERE WILL BE IN ITIAL YEAR FOR EACH 'SUBSTANTIAL EXPANSION' AS LONG AS PROVISION OF SECTION 80IC(IX) ARE MET WITHOUT APPRECIATING THAT AS PER PROVISION OF SECTION 80IC(2)(II) OF THE INCOME TAX ACT AND AS EXPLAINED IN CBDT CIRCULAR NO. 7/2003, READ WITH CIRCULAR NO. 49/2003 ISSUED BY CENTRAL EXCISE DEPARTMENT THAT BENEFIT OF SUBSTANTIAL EXPAN SION WAS AVAILABLE ONLY TO UNITS THAT EXISTED AND WERE OPERATIONAL AS ON 07.01 .2003 AND SUBSTANTIAL EXPANSION COULD HAVE BEEN CARRIED OUT ONLY ON OR AF TER 07.01.2003 BY AN UNDERTAKING THAT EXISTED PRIOR TO 07.01.2003. (VII) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS NOT ERRED IN ALLOWING THE DEDUCTION U/S 80IC @ 100% TO THE AS SESSEE FOR 10 YEARS WITHOUT APPRECIATING AND IGNORING THE FACT THAT THE EXPRESS ION SUBSTANTIAL EXPANSION HAS BEEN USED IN BOTH SECTION 80IC(2)(A) AND 80IC(2)(B) HOWEVER 80IC(2)(A)(II) AND 80IC(2)(B)(II) IS APPLICABLE TO H.P. OR UTTRAKHAND AND 80IC(A)(III) AND 80IC(B)(III) ARE APPLICABLE TO THE NORTH EASTERN STATES WHEN COMPARE D WITH RATE OF DEDUCTION PROVIDED U/S 80IC(3)(II), THE RATE GIVEN IS 100% FO R FIVE YEARS, AND 25% FOR NEXT FIVE YEARS, WHEREAS UNDER SUB SECTION 3(I), THE RATE HAS BEEN GIVEN @ 100% FOR NE STATES AND SIKKIM FOR ALL 10 YEARS AND THE MEANING OF SUBSTANTIAL EXPANSION WILL BE RENDERED REDUNDANT. (VIII) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN HOLDING THAT AN UNDERTAK ING WHICH HAS CARRIED OUT SUBSTANTIAL EXPANSION IN ANY ASSESSMENT YEAR PRIOR TO 01.04.2012 CAN OPT FOR THAT ASSESSMENT YEAR AS INITIAL ASSESSMENT YEAR FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IC(3) OF THE INCOME TAX ACT WITHOUT APPRECIAT ING THE FACT THAT AN UNDERTAKING SET UP AFTER 07.01.2003 IS NOT ENTITLED TO BENEFIT OF 'SUBSTANTIAL EXPANSION' IN VIEW OF THE PROVISIONS OF SECTION 80I C(2)(A)(II) AND 80IC(2)(B)(II) AND AS CLARIFIED IN CBDT CIRCULAR NO. 7 OF 2003?' (IX) IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE S ET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WA S ENGAGED IN BUSINESS OF MANUFACTURING OF CORRUGATED BOXES IN THE NAME OF PROPRIETORSHIP CONCERN M/S. SHREE BHAGWATI INDUSTRIES AT BADDI. BE SIDES THIS, THE ASSESSEE IS ALSO A PARTNER IN THE FIRM NAMELY M/S. SHIMLA KINNAUR FRUIT AGENCY FROM WHICH HE RECEIVED REMUNERATION DURING T HE YEAR UNDER CONSIDERATION. THE ASSESSEE WAS CLAIMING 100% DEDUC TION OF RS. 1,14,12,659/- U/S 80IC OF THE I.T ACT. AS PER FORM 10CCB, THE DATE OF COMMENCEMENT OF OPERATION IS 10.07.2007 AND INITIAL ASSESSMENT YEAR 3 WAS 2008-09. DURING ASSESSMENT PROCEEDINGS AO NOTIC ED THAT A.Y 2014 - 15 WAS THE 7 TH YEAR OF CLAIMING DEDUCTION U/S 801C AND ASSESSEE H AD CLAIMED 100% DEDUCTION U/S 80IC FOR THIS YEAR ALSO. THE ASSESSEE HAD MADE SUBSTANTIAL EXPANSION IN F.Y- 2011-12, ON THE BASIS OF WHICH IT HAD CLAIMED 100% DEDUCTION DURING A.Y. 2010-11. THE ASS ESSEE WAS ASKED TO SHOW CAUSE AS TO WHY DEDUCTION U/S 80IC SHOULD NOT BE RESTRICTED TO 25%. THE ASSESSEE FURNISHED HIS REPLY BUT WAS NOT A CCEPTED BY AO. THE AO RELYING ON THE JUDGMENT OF HON'BLE IT AT, CHANDI GARH IN CASE OF HYCRON ELECTRONICS, BADDI, SOLAN VS. ITO, WARD-2, BADDI, R ESTRICTED THE CLAIM OF DEDUCTION TO 25% AGAINST 100% AS CLAIMED BY THE ASS ESSEE. 4. LD. CIT(A) DELETED THE ADDITION ON THE GROUNDS T HAT THE HONBLE HIGH COURT OF HIMACHAL PRADESH IN THE CASE OF M/S STOVEK RAFT INDIA (SUPRA) HAVE QUASHED AND SET-ASIDE THE ASSESSMENTS. FURTHER THE MATTER TRAVELLED UPTO THE HONBLE SUPREME COURT WHICH RULED AS UNDER THE CASE TITLED CIT VS CLASSIC BINDING INDUSTRIES (2018) 96 TAXMANN.COM 405 (SC): 12.DISSATISFIED WITH THE AFORESAID ORDER DATED 11T H AUGUST, 2016, ASSESSEE FILED APPEAL UNDER SECTION 260A OF THE ACT, 1961 BEFORE T HE HIGH COURT OF HIMACHAL PRADESH, SHIMLA RAISING THEREIN SUBSTANTIAL QUESTIO NS OF LAW. THE RESULT OF OTHER ASSESSEES WAS ALSO ON ALMOST SAME PATTERN, WHO FILE D THEIR RESPECTIVE APPEALS AS WELL. THE HIGH COURT HAS DECIDED THE ISSUE IN A COM POSITE JUDGMENT, IN FAVOUR OF ALL THESE ASSESSEES. THE HIGH COURT HELD THAT TH ERE IS NO RESTRICTION THAT UNDERTAKING OR ENTERPRISE ESTABLISHED AFTER 7TH JAN UARY, 2003 CANNOT CARRIED OUT 'SUBSTANTIAL EXPANSION' CANNOT BE CARRIED OUT MORE THAN ONCE AS LONG AS PERIOD OF ELIGIBILITY FOR CLAIMING DEDUCTION UNDER SECTION 80-IC OF THE ACT. THE HIGH COURT FURTHER HELD HAT SINCE THE LANGUAGE OF SECTI ON IS VERY CLEAR, RELIANCE CANNOT BE PLACED ON CIRCULAR NO. 7 OF 2003 ISSUED Y CBDT ON THIS ISSUE SUBSTANTIAL QUESTIONS OF LAW WERE ANSWERED IN FAVOU R OF ASSESSEE AND APPEALS WERE ALLOWED WITH DIRECTION THAT WITH RESPECT TO EACH OF THE ASSESSEES THE ASSESSING OFFICER SHALL CARRY OUT FRESH ASSESSMENT AND PASS APPROPRIATE ORDERS. 13. WITH THE AFORESAID FACTUAL BACKGROUND, WE NOW PROCEED TO ANSWER THE QUESTION OF LAW FORMULATED ABOVE. 14. A GIST OF THE LEGISLATIVE HISTORY AND PURPOSE BEHIND THE INSERTION OF SECTION 80-IA, 80-IB AND 80-IC HAS ALREADY BEEN MENTIONED A BOVE. WE HAVE TO KEEP IN MIND THAT THESE CASES ARE CONFINED TO SECTION 80-IC ALONE. AS MENTIONED ABOVE, SUB-SECTION (2) OF SECTION 80-IC PROVIDES FOR TAX B ENEFIT TO THOSE UNDERTAKINGS OR ENTERPRISES WHICH HAD SET UP THEIR MANUFACTURING UN ITS IN CERTAIN SPECIFIED AREAS INCLUDING STATE OF HIMACHAL PRADESH TO WHICH THIS C ASE IS BELONGED. 4 15. IT ALSO GIVES BENEFIT TO THESE UNDERTAKINGS AND ENT ERPRISES WHICH HAVE UNDERTAKEN SUBSTANTIAL EXPANSION DURING THE PERIODS MENTIONED THEREIN. AS THERE IS NO DISPUTE THAT ALL THESE ASSESSEES ARE CO VERED BY THE PROVISIONS OF SUB- SECTION (2), THAT ASPECT NEED NOT BE STATED IN DETA IL. WE, THUS, REPRODUCE THOSE PORTIONS OF THE PROVISION WHICH ARE RELEVANT FOR OU R DISCUSSION: 'S. 80-IC. SPECIAL PROVISIONS IN RESPECT OF CERTAIN UNDERTAKINGS OR ENTERPRISES IN CERTAIN SPECIAL CATEGORY STATES. (1) WHERE THE GR OSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SEC TION (2), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUC TION FROM SUCH PROFITS AND GAINS, AS SPECIFIED IN SUB-SECTION (3). ** ** ** (3) THE DEDUCTION REFERRED TO IN SUB-SECTION (1) SH ALL BE-(I) IN THE CASE OF ANY UNDERTAKING OR ENTERPRISE REFERRED TO IN SUB-CLAUSE S (I) AND (III) OF CLAUSE (A) OR SUB- CLAUSES (I) AND (III) OR CLAUSE (B), OF SUB-SECTION (2), ONE HUNDRED PER CENT, OF SUCH PROFITS AND GAINS FOR TEN ASSESSMENT YEARS COMMENCI NG WITH THE INITIAL ASSESSMENT YEARS; (II) IN THE CASE OF ANY UNDERTAKING OR ENTERPRISE R EFERRED TO IN SUB-CLAUSE (II) OF CLAUSE (A) OR SUB-CLAUSE (II) OF CLAUSE (B), OF SUB -SECTION (2), ONE HUNDRED PER CENT OF SUCH PROFITS AND GAINS FOR FIVE ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR AND THEREAFTER, TWENTY-FIVE PER CENT, (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS. (6) NOTWITHSTANDING ANYTHING CONTAINED IN THIS ACT, NO DEDUCTION SHALL BE ALLOWED TO ANY UNDERTAKING OR ENTERPRISE UNDER THIS SECTION , WHERE THE TOTAL PERIOD 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 IOC, AS THE CASE MAY BE, EXCEEDS TEN ASSESSMENT YEARS ' 16. THE ESSENCE OF SECTION 3 AS WELL AS SECTION 6 HAVE ALREADY BEEN REPRODUCED ABOVE. WHEREAS THE EXEMPTION IS PROVIDED @ 100% OF SUCH PROFITS AND GAINS FOR FIVE ASSESSMENT YEARS COMMENC ING WITH THE INITIAL ASSESSMENT YEARS AND, THEREAFTER, 25% (OR 30% WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS FOR NEXT FIVE YEA RS. THE DEDUCTION IS LIMITED TO A PERIOD OF 10 YEARS. 17. IN THIS BACKDROP, THE QUESTION IS AS TO WHETHER THE SE ASSESSEES, 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-SECTIO N (2) OF THE ACT, CAN START CLAIMING DEDUCTIONS @ 100% AGAIN FOR NEXT FIVE YEAR S AS THEY HAD UNDERTAKING 'SUBSTANTIAL EXPANSION' DURING THE PERIOD MENTIONED IN SUB-SECTION (2)? THE ANSWER HAS TO BE IN THE NEGATIVE FOR THE FOLLOWING THE REASONS: 18. WE ARE DEALING WITH THE DEDUCTIONS IN RESPECT OF PR OFITS AND GAINS UNDER SECTION 80-IC OF THE ACT. NO OTHER PROVISION IS INV OLVED. THIS SECTION MAKES SPECIAL PROVISIONS IN RESPECT OF CERTAIN UNDERTAKIN GS OR ENTERPRISES IN CERTAIN SPECIAL CATEGORY STATES. SECTION 80-IC WAS INSERTED BY THE FINANCE ACT, 2003 W.E.F. APRIL 1, 2004. AS PER THIS PROVISION, CERTAIN UNDER TAKINGS OR ENTERPRISES IN CERTAIN SPECIAL CATEGORY STATES ARE ALLOWED DEDUCTI ON FROM SUCH PROFITS AND GAINS, AS SPECIFIED IN SUB-SECTION (3) OF SECTI ON 80-IC. THE PROVISIONS OF SECTION 80-IC PROVIDED DEDUCTION TO MANUFACTURING U NITS SITUATED IN THE STATE OF SIKKIM, HIMACHAL PRADESH AND UTTARANCHAL A ND NORTH-EASTERN STATES. THE DEDUCTION WAS PROVIDED TO NEW UNITS ESTABLISHED IN THE AFORESAID STATES, AND ALSO TO EXISTING UNITS IN THOSE STATES IF SUBST ANTIAL EXPANSION WAS CARRIED OUT. THE DEDUCTION WAS AVAILABLE @ 100% FOR TEN ASS ESSMENT YEARS FOR THE UNITS LOCATED IN NORTH- EASTERN AND IN THE STATE OF SIKKI M AND FOR THE UNITS LOCATED IN HIMACHAL PRADESH, THE DEDUCTION WAS AVAILABLE @ 100% FOR FIVE YEARS AND @ 25% FOR NEXT FIVE YEARS . 19. IN THE INSTANT CASE, WE ARE CONCERNED WITH THE ASSE SSEES WHO HAD ESTABLISHED THEIR UNDERTAKINGS IN THE STATE OF HIMA CHAL PRADESH. SUB-SECTION 5 (3), AS NOTED ABOVE, MENTIONS THE PERIOD OF 10 YEAR S COMMENCING WITH THE INITIAL ASSESSMENT YEAR. SUB-SECTION (6) PUTS A CAP OF 10 YEARS, WHICH IS THE MAXIMUM PERIOD FOR WHICH THE DEDUCTION CAN BE ALLOW ED TO ANY UNDERTAKING OR ENTERPRISE UNDER THIS SECTION, STARTING FROM THE INITIAL ASSESSMENT YEAR. ANOTHER SIGNIFICANT FEATURE UNDER SUB-SECTION (3) I S THAT THE DEDUCTION ALLOWABLE IS 100% OF SUCH PROFITS AND GAINS FROM AN UNDERTAKI NG OR AN ENTERPRISE FOR FIVE ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESS MENT YEAR AND THEREAFTER THE DEDUCTION IS ALLOWABLE AT 25% (OR 30% WHERE THE ASS ESSEE IS A COMPANY) OF THE PROFITS AND GAINS. CUMULATIVE READING OF THESE PROV ISIONS BRINGS OUT THE FOLLOWING ASPECTS: (A) THOSE UNDERTAKINGS OR ENTERPRISES FULFILLING THE CO NDITIONS MENTIONED IN SUB- SECTION (2) OF SECTION 80-IC BECOME ENTITLED TO DED UCTION UNDER THIS PROVISION. (B) THIS DEDUCTION IS ALLOWABLE FROM THE INITIAL ASSESS MENT YEAR. 'INITIAL ASSESSMENT YEAR' IS DEFINED IN SECTION 80-IB(14)(C) OF THE ACT . (C) THE DEDUCTION IS @ 100% OF SUCH PROFITS AND GAINS F OR FIRST 5 ASSESSMENT YEARS AND THEREAFTER A DEDUCTION IS PERMISSIBLE @ 2 5% (OR 30% WHERE THE ASSESSEE IS A COMPANY). (D) TOTAL PERIOD OF DEDUCTION IS 10 YEARS, WHICH MEANS 100% DEDUCTION FOR FIRST 5 YEARS FROM THE INITIAL ASSESSMENT YEAR AND 25% (OR 30% WHERE THE ASSESSEE IS A COMPANY) FOR THE NEXT 5 YEARS. 20. WHEN WE KEEP IN MIND THE AFORESAID SCHEME AND SPIRI T BEHIND THIS PROVISION, SUCH A SITUATION CANNOT BE COUNTENANCED WHERE AN ASSESSEE IS ABLE TO SECURE DEDUCTION @ 100%O FOR THE ENTIRE PERIOD OF 1 0 YEARS. IF THAT IS ALLOWED IT WILL AMOUNT TO DOING VIOLENCE TO THE PROVISIONS OF SUB-S ECTION (3) READ WITH SUB- SECTION (6) OF SECTION 80-IC. A PRAGMATIC AND REASO NABLE INTERPRETATION OF SECTION 80-IC WOULD BE TO HOLD THAT ONCE THE INITIA L ASSESSMENT YEAR COMMENCES AND AN ASSESSEE, BY VIRTUE OF FULFILLING THE CONDITIONS LAID DOWN IN SUB SECTION (2) OF SECTION 80-IC, STARTS ENJOYING D EDUCTION, THERE CANNOT BE ANOTHER 'INITIAL ASSESSMENT YEAR' FOR THE PURPOSES OF SECTION 80-IC WITHIN THE AFORESAID PERIOD OF 10 YEARS, ON THE BASIS THAT IT HAD CARRIED SUBSTANTIAL EXPANSION IN ITS UNIT. 21. WE ARE CONSCIOUS OF OUR RECENT JUDGMENT RENDERE D BY THIS VERY BENCH IN MAHABIR INDUSTRIES V. PRINCIPAL COMMISSIONER OF INC OME TAX (CIVIL APPEAL NOS. 4765-4766 OF 2018 DECIDED ON MAY 18, 2018). HOWEVER , A FINE DISTINCTION NEEDS TO BE NOTED BETWEEN THE TWO SETS OF CASES. IN MAHABIR INDUSTRIES, THE ASSESSEES HAD AVAILED THE INITIAL DEDUCTION UNDER A DIFFERENT PROVISION, NAMELY, SECTION 80-IA OF THE ACT, I.E. BY FULFILLING THE CONDITIONS MENTI ONED IN SUB-SECTION (4) OF SECTION 80-IA. THOSE CONDITIONS ARE ALTOGETHER DIFFERENT. D EDUCTION IN RESPECT OF PROFITS AND GAINS UNDER THE SAID PROVISION IS ADMISSIBLE WH EN THESE PROFITS AND GAINS ARE FROM INDUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTURE DEVELOPMENT ETC. EVEN THIS AVAILMENT STARTED AT A TIME WHEN SEC TION 80-IC WAS NOT EVEN ON THE STATUTE BOOK. AS MENTIONED ABOVE, SECTION 80-IC WAS INSERTED BY THE FINANCE ACT, 2003 WITH EFFECT FROM APRIL 01, 2004. THE ASSESSEES IN THOSE CASES HAD STARTED CLAIMING AND WERE ALLOWED DEDUCTIONS FR OM THE ASSESSMENT YEARS 1998-99 AND 1999-2000 UNDER SECTION 80-IA AND FROM THE ASSESSMENT YEAR 2000- 01 TO ASSESSMENT YEAR 2005-06 UNDER SECTION 80-IB O F THE ACT. THE DEDUCTION WAS, THUS, CLAIMED BY THE ASSESSEES IN THOSE APPEAL S UNDER THE NEW PROVISION I.E. SECTION 80-IC ON FULFILLING CONDITIONS CONTAIN ED IN SUB-SECTION (2) OF SECTION 80- IC FOR THE FIRST TIME FOR THE ASSESSMENT YEAR 2006- 07. THUS, INSOFAR AS THOSE CASES ARE CONCERNED, THE INITIAL ASSESSMENT YEAR UNDER SE CTION 80-IC STARTED ONLY FROM THE ASSESSMENT YEAR 2006-07. IN CONTRAST, POSI TION HERE IS ALTOGETHER DIFFERENT. THESE ASSESSEES HAVE AVAILED DEDUCTION U NDER SECTION 80-IC ALONE. INITIALLY, THEY CLAIMED THE DEDUCTION ON THE GROUND THAT THEY HAD SET UP THEIR UNITS IN THE STATE OF HIMACHAL PRADESH AND AFTER AV AILING THE DEDUCTION @ 100% THEY WANT CONTINUATION OF THIS RATE OF 100% FOR THE NEXT 5 YEARS ALSO UNDER THE SAME PROVISION ON THE GROUND THAT THEY HAVE MADE SUBSTAN TIAL EXPANSION. AS POINTED OUT ABOVE, ONCE THE ASSESSEES HAD STARTED CLAIMING DEDUCTION UNDER SECTION 80-IC AND THE INITIAL ASSESSMENT YEAR HAS COMMENCED WITHIN THE AFORESAID PERIOD OF 10 YEARS, THERE CANNOT BE ANOTHER INITIAL ASSESSMENT YEAR THEREBY ALLOWING 100% DEDUCTION FOR THE NEXT 5 YEARS ALSO W HEN SUB-SECTION (3), IN NO UNCERTAIN TERMS, PROVIDES FOR DEDUCTION @ 25% ONLY FOR THE NEXT 5 YEARS. IT MAY 6 BE ASSERTED AGAIN THAT THE ASSESSEES ACCEPT THE LEG AL POSITION THAT THEY CANNOT CLAIM DEDUCTION OF MORE THAN 10 YEARS IN ALL UNDER SECTION 80-IC. 22. IN VIEW OF THE AFORESAID DISCUSSION, WE HOLD TH AT AFTER AVAILING DEDUCTION FOR A PERIOD OF 5 YEARS @ 100% OF SUCH PROFITS AND GAINS FROM THE 'UNITS', THE ASSESSEES WOULD BE ENTITLED TO DEDUCTION FOR REMAINING 5 ASSE SSMENT YEARS. @ 25% (OR 30% WHERE THE ASSESSEE IS A COMPANY), AS THE CASE MAY B E, AND NOT @ 100%. THE QUESTION OF LAW IS, THUS, ANSWERED IN FAVOUR OF THE REVENUE THEREBY ALLOWING ALL THESE APPEALS. NO ORDER AS TO COSTS. 5. SINCE THE ISSUE INVOLVED HAS REACHED THE FINALIT Y, IN VIEW OF THE JUDGMENT OF HONBLE APEX COURT, RESPECTFULLY FOLLOWING THE S AME, WE HEREBY ALLOW THE APPEAL OF THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- . '.., # $, (SANJAY GARG ) ( DR. B.R.R. KUM AR, AM) / JUDICIAL MEMBER %& / ACCOUNTANT MEMBER (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE