ACIT, C-4(1), Chandigarh V. M/s Friends Alloys, Chandigarh

MA 241/CHANDI/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4125 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 11-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: B K NOHRIA
• Section: 254(2)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A CHANDIGARH !, ' # , $ % & ' ( , )* # BEFORE: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM M.A. NO. 241 & 242/CHD/2018 IN ITA NO. 84 & 85/CHD/2018 / ASSESSMENT YEAR : 2011-2012 & 2014-15 ACIT, CIRCLE-4(1), CHANDIGARH. VS M/S FRIENDS ALLOYS, HOUSE NO. 2906/1, SECTOR 37-C, CHANDIGARH. ./ PAN NO. : AABFF1623P / APPELLANT / RESPONDENT / REVENUE BY : SHRI MANJIT SINGH, SR.DR / ASSESSEE BY : SHRI B.K. NOHRIA, CA ! ' / DATE OF HEARING : 26.02.2019 #$%& ' / DATE OF PRONOUNCEMENT : 13.03.2019 )+/ ORDER PER DIVA SINGH, JM BY THE PRESENT MISCELLANEOUS APPLICATIONS THE REVENUE MA KE A PRAYER FOR RECTIFYING THE CONSOLIDATED ORDER DATED 11.05.2 018 IN ITA NOS. 84 & 85/CHD/2018. ADDRESSING THE BACKGROUND THE LD. S R. DR SUBMITTED THAT THE APPEALS OF THE ASSESSEE WERE ALLOWED BY THE ITAT FOR STATISTICAL PURPOSES BY DIRECTING A REMAND IN TERMS OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S STOVE CRAFT I NDIA VS. CIT-V AND OTHERS IN ITA NO. 7234 DATED 20.08.2018. REFERRING TO THE PRESENT MISCELLANEOUS APPLICATIONS FILED IT WAS HIS SUBMISSION THAT THE MISCELLANEOUS APPLICATIONS HAVE BEEN FILED RELYING UPON THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS. CLASSIC BINDING INDU STRIES. THE LD. AR OPPOSING THE PRAYER SUBMITTED THAT THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS NOT MAINTAINABLE AS PER THE DECISION OF THE APEX COURT IN THE RECENT DECISION DATED 20.02.2019 IN CA NOS. 1 784 OF 2019 AND OTHERS IN THE CASE OF PR. CIT VS. M/S AARHAM SOFTRON ICS. THE ISSUE, IT WAS STATED, IS WELL SETTLED. 2. WE HAVE HEARD SUBMISSIONS AND PERUSED THE MATERIAL A VAILABLE ON RECORD, IT IS SEEN THAT THE POSITION OF LAW ON THE ISSUE IS FULLY SET AT REST M.A. 241 & 242/CHD/2018 IN ITA 84 & 85/CHD/2018 PAGE 2 OF 3 BY THE HONBLE APEX COURT IN THE CASE OF PR. CIT VS. M/ S AARHAM SOFTRONICS (SUPRA). FOR READY REFERENCE, WE REPRODUCE THE RELEVANT EXTRACT FROM THE SAID DECISION : 22. IT WOULD BE PERTINENT TO POINT OUT THAT IN PARA 20 OF THE JUDGMENT IN CLASSIC BINDING INDUSTRIES, THIS COURT OBSERVED THA T IF DEDUCTION @ 100% FOR THE ENTIRE PERIOD OF 10 YEARS, IT WOULD BE DOIN G VIOLENCE TO THE LANGUAGE OF SUB-SECTION (6) OF SECTION 80-IC. HOWEV ER, THIS OBSERVATION CAME WITHOUT NOTICING THE DEFINITION OF 'INITIAL AS SESSMENT YEAR' CONTAINED IN THE SAME VERY PROVISION. 23. HAVING EXAMINED THE MATTER IN THE AFORESAID PER SPECTIVE, JUDGMENT IN THE CASE OF MAHABIR INDUSTRIES V. PRINCIPAL COMM ISSIONER OF INCOME TAX2 WOULD, IN FACT, HELP THE ASSESSEE. THE FINE DI STINCTION POINTED OUT IN CLASSIC BINDING INDUSTRIES ELOPES THEREBY. TO RE CAPITULATE, IN MAHABIR INDUSTRIES, IT WAS HELD THAT IF AN ASSESSEE GET 100 % EXEMPTION UNDER SECTION 80-IB OF THE ACT FOR FIVE YEARS AND THEREAF TER CARRIES OUT THE SUBSTANTIAL EXPANSION BECAUSE OF WHICH SAID ASSESSE E BECOMES ENTITLED TO EXEMPTION UNDER THE NEW PROVISION I.E. SECTION 8 0-IC OF THE ACT, THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION @ 100% EVEN AFTER FIVE YEARS. THIS RULING WAS PREDICATED ON THE GROUND THAT THERE CAN BE TWO INITIAL ASSESSMENT YEARS, ONE FOR THE PURPOSE OF SECTION 80 -IB AND OTHER FOR THE PURPOSES OF SECTION 80-IC OF THE ACT. ONCE WE FIND THAT THERE CAN BE TWO INITIAL ASSESSMENT YEARS, EVEN AS PER THE DEFINITIO N THEREOF IN SECTION 80-IC ITSELF, THE LEGAL POSITION COMES AT PAR WITH THE ONE WHICH WAS DISCUSSED IN MAHABIR INDUSTRIES. 24. THE AFORESAID DISCUSSION LEADS US TO THE FOLLOW ING CONCLUSIONS: (A) JUDGMENT DATED 20TH AUGUST, 2018 IN CLASSIC BIN DING INDUSTRIES CASE OMITTED TO TAKE NOTE OF THE DEFINIT ION 'INITIAL ASSESSMENT YEAR' CONTAINED IN SECTION 80-IC ITSELF AND INSTEAD BASED ITS CONCLUSION ON THE DEFINITION CONTAINED IN SECTION 80-IB, WHICH DOES NOT APPLY IN THESE CASES. THE DEFINITION S OF 'INITIAL ASSESSMENT YEAR' IN THE TWO SECTIONS, VIZ. SECTIONS 80-IB AND 80- IC ARE MATERIALLY DIFFERENT. THE DEFINITION OF 'INI TIAL ASSESSMENT YEAR' UNDER SECTION 80-IC HAS MADE ALL THE DIFFEREN CE. THEREFORE, WE ARE OF THE OPINION THAT THE AFORESAID JUDGMENT D OES NOT LAY DOWN THE CORRECT LAW. (B) AN UNDERTAKING OR AN ENTERPRISE WHICH HAD SET U P A NEW UNIT BETWEEN 7TH JANUARY, 2003 AND 1ST APRIL, 2012 IN ST ATE OF HIMACHAL 25 PRADESH OF THE NATURE MENTIONED IN CLAU SE (II) OF SUB- SECTION (2) OF SECTION 80-IC, WOULD BE ENTITLED TO DEDUCTION AT THE RATE OF 100% OF THE PROFITS AND GAINS FOR FIVE ASSE SSMENT YEARS COMMENCING WITH THE 'INITIAL ASSESSMENT YEAR'. FOR THE NEXT FIVE YEARS, THE ADMISSIBLE DEDUCTION WOULD BE 25% (OR 30 % WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS. (C) HOWEVER, IN CASE SUBSTANTIAL EXPANSION IS CARRI ED OUT AS DEFINED IN CLAUSE (IX) OF SUB-SECTION (8) OF SECTIO N 80-IC BY SUCH AN UNDERTAKING OR ENTERPRISE, WITHIN THE AFORESAID PERIOD OF 10 YEARS, THE SAID PREVIOUS YEAR IN WHICH THE SUBSTANT IAL EXPANSION IS UNDERTAKEN WOULD BECOME 'INITIAL ASSESSMENT YEAR ', AND FROM THAT ASSESSMENT YEAR THE ASSESSEE SHALL BEEN ENTITL ED TO 100% DEDUCTIONS OF THE PROFITS AND GAINS. (D) SUCH DEDUCTION, HOWEVER, WOULD BE FOR A TOTAL P ERIOD OF 10 YEARS, AS PROVIDED IN SUB-SECTION (6). FOR EXAMPLE, IF THE EXPANSION IS CARRIED OUT IMMEDIATELY, ON THE COMPLE TION OF FIRST FIVE YEARS, THE ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION AGAIN FOR THE NEXT FIVE YEARS. ON THE OTHER HAND, I F SUBSTANTIAL EXPANSION IS UNDERTAKEN, SAY, IN 8TH YEAR BY AN ASS ESSEE SUCH AN M.A. 241 & 242/CHD/2018 IN ITA 84 & 85/CHD/2018 PAGE 3 OF 3 ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION FOR TH E FIRST FIVE YEARS, DEDUCTION @ 25% OF THE PROFITS AND GAINS FOR THE NEXT TWO YEARS AND @ 100% AGAIN FROM 8TH YEAR AS THIS YEAR B ECOMES 'INITIAL ASSESSMENT YEAR' ONCE AGAIN. HOWEVER, THI S 100% DEDUCTION WOULD BE FOR REMAINING THREE YEARS, I.E., 8TH, 9TH AND 10TH ASSESSMENT YEARS. 25. IN VIEW OF THE AFORESAID, WE AFFIRM THE JUDGMEN T OF THE HIGH COURT ON THIS ISSUE AND DISMISS ALL THESE APPEALS OF THE REV ENUE. LIKEWISE, APPEALS FILED BY THE ASSESSEES ARE HEREBY ALLOWED. 3. ACCORDINGLY, IN VIEW OF THE ABOVE LEGAL POSITION IN THE ABSENCE OF ANY INFIRMITY IN THE ORDER PASSED WHICH CAN BE SAID TO BE RECT IFIABLE U/S 254(2) OF THE INCOME TAX ACT, 1961, WE FIND THAT THERE IS NO MERIT IN THE MISCELLANEOUS APPLICATIONS FILED BY THE REVENUE. ACCORDINGLY THESE ARE DISMISSED. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 4. IN THE RESULT, THE MISCELLANEOUS APPLICATIONS FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 13.03. 2019. SD/- SD/- ( $ % & ' ( ) ( ! ) (ANNAPURNA GUPTA) (DIVA S INGH) )* #/ ACCOUNTANT MEMBER ' #/ JUDICIAL MEMBER RAVI KUMAR, PS (HYDERABAD) /POONAM $( )* +* / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. , / CIT 4. , ( )/ THE CIT(A) 5. *-. / , ' / , 012.3 / DR, ITAT, CHANDIGARH 6 .2 4! / GUARD FILE $( / BY ORDER, 5 / ASSISTANT REGISTRAR