M/s Arion Healthcare, Manimajra V. ACIT, Chandigarh

ITA 985/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8917 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 14-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: S SH B N MONGA ROHIT KAUR

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACOCUNTANT MEMBER ITA NO. 985/CHD/2016 ASSESSMENT YEAR: 2012-13 M/S ARION HEALTHCARE, VS. THE ACIT, CIRCLE 3(1), MANIMAJRA CHANDIGARH PAN NO. AALFA7634D (APPELLANT) (RESPONDENT) APPELLANT BY : S/ SH. B.N. MONGA, ROHIT KAUR RESPONDENT BY : SH. MANJIT SINGH DATE OF HEARING : 08.12.2016 DATE OF PRONOUNCEMENT : 16.12.2016 ORDER PER ANNAPURNA GUPTA, AM THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF LD. CIT(A)-1, CHANDIGARH DATED 19.7.2016 FOR ASSES SMENT YEAR 2012- 13. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE LEARNED CIT(A), IS NOT JUSTIFIED IN NOT AL LOWING THE 100% DEDUCTION BY NOT ACCEPTING THE YEAR OF 'SUBSTANTIAL EXPANSION' AS 'INITIAL YEAR' THUS NOT INTERPRETING THE PROVISIONS OF SECTION 80-IC IN ITS TRUE AND LIBERAL SPIRIT BEING AN INCENTIVE P ROVISION. 2. THAT THE LEARNED C1T(A), IS NOT JUSTIFIED IN MISCON STRUING THE PROVISIONS OF SECTION 80-IC OF THE INCOME-TAX ACT B Y NOT FOLLOWING OR DISTINGUISHING THE JUDGMENT OF HON'BLE DELHI TRI BUNAL IN THE 2 CASE OF TIRUPATI LPG INDUSTRIES LTD. NEW DELHI VS. DCIT, DEHRADUN. 3. THAT LEARNED CIT(A) IS UNJUSTIFIED BY NOT FOLLOWING THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT OF INDIA IN THE C ASE OF CIT VS. VEGETABLE PRODUCTS LTD., [1973] 88 ITR 192 (SC) THAT IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVIS ION ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST B E ADOPTED'. 4. THAT LEARNED ASSESSING OFFICER AND CIT(A) ARE UNJUS TIFIED BY NOT GIVING THE BENEFIT OF DOCTRINE OF 'PROMISSORY ESTOP PEL' ENSHRINED UNDER THE 'CONSTITUTION OF INDIA' AS WORTHY CIT, SH IMLA HAD MADE A CLEAR AND UNEQUIVOCAL PROMISE AND/OR ASSURAN CE OF 100% DEDUCTION FOR FURTHER 5YEARS AFTER 'SUBSTANTIAL EXP ANSION' IN THE CASE OF OTHER SIMILAR ASSESSEES AS THERE IS NO BAR FOR R EFIXING THE 'INITIAL YEAR' IN THE STATUE. 3 THE ONLY ISSUE RAISED IN THE PRESENT APPEAL RE LATES TO RESTRICTION OF DEDUCTION CLAIMED U/S 80IC @ 25% AS AGAINST 100% CLAIMED BY THE ASSESSEE ON ACCOUNT OF SUBSTANTIAL E XPANSION UNDERTAKEN BY IT. 4. BRIEF FACTS RELATING TO THE CASE ARE THAT INDUS TRIAL UNDERTAKING OF THE ASSESSEE WAS INSTALLED AND COMME NCED PRODUCTION ON 20.12.2005. THE ASSESSEE WAS ELIGIBLE FOR AND CLAIMED 100% DEDUCTION ON ITS PROFITS U/S 80IC OF T HE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') FOR FIRST FIVE ASSES SMENT YEARS BETWEEN 2006-07 TO 2010-11. IN THE IMPUGNED ASSESSM ENT YEAR I.E. 7 TH YEAR FROM COMMENCING PRODUCTION, THE ASSESSEE AGAI N CLAIMED DEDUCTION U/S 80IC @ 100% OF ITS ELIGIBLE P ROFITS CLAIMING THAT SUBSTANTIAL EXPANSION OF ITS EXISTING PLANT AND 3 MACHINERY WAS UNDERTAKEN DURING THE YEAR. THE ASSES SEE RELIED UPON THE JUDGEMENT OF THE ITAT DELHI BENCH IN THE C ASE OF TIRUPATI LPG INDUSTRIES LTD VS. DCIT [45 TAXMANN.C OM 326] TO INTERPRET THE TERM SUBSTANTIAL EXPANSION AND INI TIAL ASSESSMENT YEAR. THE ASSESSING OFFICER AFTER ELABORATELY DIS CUSSING THE ISSUE, RESTRICTED THE CLAIM OF DEDUCTION TO THE EXT ENT OF 25% OF THE ELIGIBLE PROFIT PLACING RELIANCE ON THE DECISIO N OF ITAT, KOLKATA BENCH IN THE CASE OF M/S JOONKTOLLEE TEA & INDUSTRIES LTD VS. DCIT AND FURTHER DISTINGUISHED THE JUDGEMEN T IN THE CASE OF TIRUPATI LPG INDUSTRIES LTD. THE MATTER WAS CAR RIED IN APPEAL BEFORE THE LD. CIT(A) WHO, RELYING UPON THE JUDGEME NT OF THE ITAT, CHANDIGARH BENCH IN THE CASE M/S HYCRON ELECT RONICS VS. ITO IN ITA NO. 798/CHD/2012 AND OTHER RELATED CASES DATED 27.5.2015 , UPHELD THE ORDER OF THE ASSESSING OFFIC ER RESTRICTING THE CLAIM OF THE SUBSTANTIAL EXPANSION U/S 80IC TO 25% OF ITS ELIGIBLE PROFITS. THE RELEVANT FINDINGS OF THE CIT( A) AT PARA 6.2 OF THE ORDER ARE AS FOLLOWS:- 6.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT, THE ARGUMENTS OF THE ASSESSING OFFICER A ND THE JUDGEMENTS CITED BY THE APPELLANT. IN THE CASE OF HYCRON ELECTRONICS VS. ITO, BADDI (ITA NO. 798/CHD/2012 (HON'BLE ITAT, CHANDIGARH, A & B BENCH HAS DEALT, UPON THE ISSUE OF 'SUBSTA NTIAL EXPANSION' AND 'INITIAL ASSESSMENT YEAR' FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IC OF THE A CT . IN THE SAID CASE, THE HON'BLE TRIBUNAL HAS DISC USSED THE CASE OF TIRUPATI LPG INDUSTRIES LID. VS. DCIT WHILE DECIDING THE ISSUE AGAINST THE ASSCSSEE. THE FACTS OF THE CASE OF THE APPELLANT IS IDENTICAL TO THE CASE OF H YCRON 4 ELECTRONICS IN WHICH HON'BIE TRIBUNAL HAS DECIDED A S ''49. IN VIEW OF THE ABOVE DETAILED DISCUSSION WE H OLD THAT THE ASSESSES BEFORE US I.E. M/S HYCRON ELECTR ONICS IN ITA NO.798/CHD/2012 IS ENTITLED TO ONLY 25% OF DEDUCTION DURING THE PRESENT YEAR BECAUSE THE ASSES SES HAS ALREADY AVAILED THE PERIOD OF FULL DEDUCTION 10 0% IN THE EARLIER FIVE YEARS I E. FROM, ASSESSMENT YEARS 2004-05 TO 2008-09. IN THIS BACKGROUND, WE FIND NOTHING WR ONG WITH THE ORDER OF LD. CIT(A)AND WE UPHOLD THE SAME. ACCORDINGLY, ASSESSES'S APPEAL IS DISMISSED.' BV RESPECTFULLY FOLLOWING THE DECISION OF HON'BLC ITAT , CHANDIGARH IN THE CASE OF HYCRON ELECTRONICS, I T IS HELD THAT THE ASSESSING OFFICER HAS RIGHTLY RESTRICT ED THE CLAIM OF DEDUCTION U/S 80IC @ 25% IN THE RELEVANT ASSESSMENT YEAR. DISALLOWANCE OF CLAIM OF RS. 2,66,98,992/- IS THEREFORE UPHELD. GROUND OF APPEAL NO.2 IS DISMISSED. 5. DURING THE COURSE OF HEARING BEFORE US, IT WAS CONCEDED THAT THE ISSUE WAS SQUARELY COVERED AGAINST THE ASS ESSEE IN VIEW OF THE JUDGEMENT OF THE CHANDIGARH BENCH OF THE TRI BUNAL IN THE CASE OF M/S HYCRON ELECTRONICS VS. ITO IN ITA NO. 7 98/CHD/2012 AND OTHER RELATED CASES DATED 27.5.2015. 6. WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A). THE ISSUE REGARDING CLAIM OF 100% DEDUCTION U/S 80IC ON ACCOU NT OF SUBSTANTIAL EXPANSION UNDERTAKEN BY THE UNITS WHICH CAME INTO EXISTENCE AFTER THE PROVISION OF SECTION 80IC WAS B ROUGHT ON THE STATUTE HAS BEEN EXHAUSTIVELY AND ELABORATELY DEALT WITH BY THE CHANDIGARH BENCH OF THE ITAT IN M/S HYCRON ELECTRON ICS VS. ITO (SUPRA) WHEREIN IT HAS BEEN CATEGORICALLY HELD THAT SUCH UNDERTAKINGS (NEW UNDERTAKING) ARE NOT ELIGIBLE TO CLAIM 100% 5 DEDUCTION ON SUBSTANTIAL EXPANSION UNDERTAKEN BY TH EM AFTER HAVING CLAIMED THE SAME RATE OF DEDUCTION ,I.E 10 0%, ON ACCOUNT OF SETTING UP OF A NEW UNIT IN THE SPECIFIED AREA. THE HON'BLE BENCH HAS CATEGORICALLY HELD THAT THERE CAN BE ONLY ONE INITIAL ASSESSMENT YEAR FOR THE PURPOSE OF CLAIMING DEDUCTI ON U/S 80IC AND IN ANY CASE THE CLAIM OF DEDUCTION OF ELIGIBLE PROFITS TO THE EXTENT OF 100% CANNOT EXCEED THE PERIOD OF FIVE YE ARS IN THE CASE OF UNITS SET UP IN SPECIFIED AREAS IN THE STATE OF HIMACHAL PRADESH. . MOREOVER, THE DECISION OF THE DELHI BEN CH OF THE ITAT IN THE CASE OF TRIPUTI LPG INDUSTRIES LTD (SUP RA) HAS ALSO BEEN DEALT WITH IN THE SAID ORDER. SINCE THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THAT IN THE CASE OF M/S HYCRO N ELECTRONICS VS. ITO (SUPRA), WE CONCUR WITH THE FINDINGS OF THE LD. CIT(A) THAT THE DECISION RENDERED THEREIN WILL SQUARELY AP PLY TO THE PRESENT CASE ALSO. 7. IN VIEW OF THE SAME, WE UPHOLD THE ORDER OF LD. CIT(A) RESTRICTING THE CLAIM OF DEDUCTION U/S 80IC TO THE 25% OF THE ELIGIBLE PROFITS IN THE IMPUGNED YEAR. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE, THEREFORE, DISMISSED. 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16 TH DECEMBER, 2016 RKK 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR