M/s Shree Dhanwantri Herbles, Solan V. DCIT, Parwanoo

ITA 987/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6501 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2017
• 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: PUNEET GUPTA

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. 987/CHD/2016 ASSESSMENT YEAR: 2012-13 M/S SHREE DHANWANTRI HERBALS VS. THE DCIT, CIRCLE, BADDI, DISTT. SOLAN H.P. PARWANOO, H.P. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. PUNEET GUPTA 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), SHIMLA DATED 29.7.2016 FOR ASSESSMENT Y EAR 2012-13. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT LD. CIT(A) IS WRONG IN DISALLOWING THE BENEFIT OF SUBSTANTIAL EXPANSION U/S 80IC(2) AND CONFIRMING THE DEDUCTION U/S 80IC ONLY TO THE EXTEN T OF 25% AS AGAINST 100% BY HOLDING THAT BENEFIT OF SUBSTANTIAL EXPANSION IS ALLOWABLE ONLY TO THE UNDERTAKING WHICH WERE EXISTING AS ON 07.01.2003. 2 2. IN VIEW OF ABOVE & SUCH OTHER GROUNDS, WHICH MAY BE TAKEN AT THE TIME OF HEARING, THE APPEAL MAY PLEASE BE ALLOWED AND JUSTICE RENDERED. 3. BRIEF FACTS RELATING TO THE CASE ARE THAT ASSESS EE FIRM DERIVES INCOME FROM MANUFACTURING AND SALE OF HERBAL MEDIC INES AND HAS A UNIT AT KISHANPURA, BADDI WHICH WAS ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. THE ASSESSEE HAD COMMENCED ITS OPE RATION IN THE SAID UNIT ON 25.07.2005 AND THE INITIAL ASSESSMENT YEAR FOR CLAIMING OF DEDUCTION U/S 80IC OF THE ACT WAS ASSES SMENT YEAR 2006-07. THE ASSESSEE HAD ALREADY CLAIMED DEDUCTION U/S 80IC OF THE ACT TO THE EXTENT OF 100% OF THE ELIGIBLE PROFI TS FOR 5 YEARS PERIOD FROM ASSESSMENT YEARS 2006-07 TO AY 2010-11. DURING THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE FIRM HAD AG AIN CLAIMED 100% DEDUCTION ON ITS ELIGIBLE PROFITS ON ACCOUNT O F SUBSTANTIAL EXPANSION UNDERTAKEN BY IT IN FINANCIAL YEAR 2010-1 1 PERTAINING TO ASSESSMENT YEAR 2011-12. THE ASSESSING OFFICER H ELD THAT SINCE THE ASSESSEE HAD CLAIMED 100% DEDUCTION U/S 80IC FO R THE FIRST FIVE YEARS, IT WAS ENTITLED TO CLAIM DEDUCTION U/S 80IC OF THE ACT ONLY @ 25% FROM THE SIXTH YEAR ONWARDS. AFTER DETAI LED DISCUSSION IN THE ASSESSMENT ORDER, THE ASSESSING O FFICER RESTRICTED THE CLAIM OF DEDUCTION U/S 80IC @ 25% A S AGAINST 100% CLAIMED BY THE ASSESSEE. 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(A) WHO, VIDE HIS ORDER DATED 29.7.2016, UPHELD THE ORDER OF THE ASSESSING OFFICER FOLLOWING THE DECISION OF ITAT CHANDIGARH B ENCH OF THE 3 TRIBUNAL IN THE CASE OF M/S HYCRON ELECTRONICS VS. ITO IN ITA NO. 798/CHD/2012 AND OTHER RELATED CASES, DATED 27. 5.2015. 5. AGGRIEVED BY THE SAME, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US. DURING THE COURSE OF ARGUMENTS, IT WAS F AIRLY CONCEDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT ISSUE IS C OVERED AGAINST THE ASSESSEE BY THE DECISION OF THE CHANDIGARH BENC H OF THE ITAT IN THE CASE OF M/S HYCRON ELECTRONICS VS. ITO (SUPR A). 6. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CI T(A) IN RESTRICTING THE CLAIM OF DEDUCTION U/S 80IC OF THE ACT TO 25% OF THE ELIGIBLE PROFITS. UNDOUBTEDLY THE ELIGIBLE UNI T OF THE ASSESSEE WAS SET UP AND COMMENCED PRODUCTION ON 25.07.2005,I .E AFTER SECTION 80IC WAS BROUGHT ON THE STATUTE VIDE FINANC E ACT,2003 W.E.F. 1.4.2004,AND HAD ALREADY CLAIMED AY 2006-07 AS ITS INITIAL ASSESSMENT YEAR, THUS CLAIMING 100% DEDUCT ION OF ITS PROFITS FOR THE FIRST FIVE YEARS BEGINNING THEREFRO M. IT IS ON ACCOUNT OF SUBSTANTIAL EXPANSION UNDERTAKEN BY IT I N AY 2011-12 THAT IT HAS TREATED THE SAME AS ITS INITIAL ASSESSM ENT YEAR AND CLAIMED DEDUCTION @ 100% OF ITS PROFITS IN THE IMPU GNED YEAR .WE FIND THAT THE ITAT, CHANDIGARH BENCH IN THE C ASE OF M/S HYCRON ELECTRONICS VS. ITO (SUPRA),HAS DEALT WITH A N IDENTICAL ISSUE AND AFTER ELABORATELY DISCUSSING THE PROVIS IONS OF SECTION 80 IC , HELD THAT THE BENEFIT OF DEDUCTION U/S 80 IC OF THE ACT @ 100% WAS AVAILABLE TO NEW UNITS, ONLY ON THE SETT ING UP OF THE UNIT AND NOT ON ACCOUNT OF SUBSTANTIAL EXPANSION UN DERTAKEN BY IT. IT WAS FURTHER HELD THAT THERE CAN BE ONLY ONE IN ITIAL ASSESSMENT 4 YEAR FOR CLAIMING 100% DEDUCTION OF PROFITS THEREF ROM ,FOR THE PURPOSE OF SECTION 80 IC OF THE ACT AND THAT IN AN Y CASE THE BENEFIT OF 100% DEDUCTION, FOR UNITS SET UP IN SPEC IFIED AREAS IN THE STATE OF HIMACHAL PRADESH, CANNOT BE CLAIMED BE YOND THE PERIOD OF 5 YEARS. IN VIEW OF THE SAME, WE UPHOLD THE ORDER OF THE LD. CIT(A) RESTRICTING THE DEDUCTION CLAIMED U /S 80IC OF THE ACT, TO THE EXTENT OF 25% OF THE ELIGIBLE PROFITS. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE D ISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16 TH DECEMBER, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR