ACIT, C-4(1), Chandigarh V. M/s Him Overseas, Chandigarh

MA 243/CHANDI/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4691 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 11-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• 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. 243/CHD/2018 IN ITA NO. 1261/CHD/2018 / ASSESSMENT YEAR : 2013-14 ACIT, CIRCLE-4(1), CHANDIGARH. VS M/S. HIM OVERSEAS, PLOT NO. 181/12, PHASE 1, CHANDIGARH. ./ PAN NO. : AABFH7617P / APPELLANT / RESPONDENT / REVENUE BY : SHRI MANJIT SINGH, SR.DR / ASSESSEE BY : SHRI VINEET KRISHAN, ADV ! ' / DATE OF HEARING : 26.02.2019 #$%& ' / DATE OF PRONOUNCEMENT : 18.03.2019 )+/ ORDER PER DIVA SINGH, JM BY THE PRESENT MISCELLANEOUS APPLICATION THE REVENUE PR AYS FOR RECTIFYING THE ORDER DATED 18.06.2017 IN ITA NO. 1261/CHD /2017. THE LD. SR.DR SUBMITTED THAT THE ITAT RELYING ON THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF M/S. STOVE CRAFT INDIA VS. CIT-V HA D REMANDED THE ISSUE TO THE AO. IN VIEW OF THE DECISION OF THE HONBLE A PEX COURT IN THE CASE OF CIT VS. CLASSIC BINDING INDUSTRIES, THE M.A. HAS BEE N FILED. THE LD. AR SUBMITTED THAT THE APPEAL OF THE ASSESSEE WAS ALLOWED FOR STATISTICAL PURPOSES DIRECTING A REMAND TO THE A.O IN TERMS OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S STOVE CRAFT I NDIA VS. CIT-V. HOWEVER, AFTER THE DECISION OF THE APEX COURT IN THE CAS E OF CIT VS. CLASSIC BINDING INDUSTRIES, THE HON'BLE APEX COURT IN THE RECENT DECISION DATED 20.02.2019 IN CA NOS. 1784 OF 2019 AND OTHERS IN THE CASE OF PR. CIT VS. M/S AARHAM SOFTRONICS HAS SET OUT THE CORRECT POSITION OF LAW BY RE- APPRECIATING THE VIEW TAKEN IN CIT VS. CLASSIC BINDING INDU STRIES. A PERUSAL OF THE SAME SHOWS THAT THE ISSUE HAS BEEN SETT LED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, RELYING ON THE SAME, IT WAS HIS PRA YER THAT THE DEPARTMENTAL MISCELLANEOUS APPLICATION MAY BE DISMISSED. M.A. 243/CHD/2018 IN ITA 1261/CHD/2018 PAGE 2 OF 3 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 SET AT REST BY THE HONBLE APEX COURT IN THE AFOREMENTIONED RECENT JUDGMEN T AND ORDER IN THE CASE OF PR. CIT VS. M/S AARHAM SOFTRONICS (SUPRA), WHE REIN THE FOLLOWING PARAS CUT SHORT THE CONTROVERSY : 22. IT WOULD BE PERTINENT TO POINT OUT THAT IN PARA 20 OF THE JUDGMENT IN CLASSIC BINDING INDUSTRIES, THIS COURT OBSERVED THAT IF DEDUCTION @ 100% FOR THE ENTIRE PERIOD OF 10 YEARS, IT WOULD BE DOING VIOLENCE TO THE LANGUAGE OF SUB-SECTION (6) OF SECTION 80-IC. H OWEVER, THIS OBSERVATION CAME WITHOUT NOTICING THE DEFINITION OF 'INITIAL ASSESSMENT 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. PRINC IPAL COMMISSIONER OF INCOME TAX2 WOULD, IN FACT, HELP THE ASSESSEE. T HE FINE DISTINCTION POINTED OUT IN CLASSIC BINDING INDUSTRIES ELOPES TH EREBY. TO RECAPITULATE, IN MAHABIR INDUSTRIES, IT WAS HELD TH AT IF AN ASSESSEE GET 100% EXEMPTION UNDER SECTION 80-IB OF THE ACT F OR FIVE YEARS AND THEREAFTER CARRIES OUT THE SUBSTANTIAL EXPANSION BE CAUSE OF WHICH SAID ASSESSEE BECOMES ENTITLED TO EXEMPTION UNDER T HE NEW PROVISION I.E. SECTION 80-IC OF THE ACT, THE ASSESSEE WOULD B E ENTITLED TO DEDUCTION @ 100% EVEN AFTER FIVE YEARS. THIS RULING WAS PREDICATED ON THE GROUND THAT THERE CAN BE TWO INITIAL ASSESSM ENT YEARS, ONE FOR THE PURPOSE OF SECTION 80-IB AND OTHER FOR THE PURP OSES OF SECTION 80- IC OF THE ACT. ONCE WE FIND THAT THERE CAN BE TWO I NITIAL ASSESSMENT YEARS, EVEN AS PER THE DEFINITION THEREOF IN SECTIO N 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 DEFINI TIONS OF 'INITIAL ASSESSMENT YEAR' IN THE TWO SECTIONS, VIZ. SECTIONS 80- IB AND 80-IC ARE MATERIALLY DIFFERENT. THE DEFINITI ON OF 'INITIAL ASSESSMENT YEAR' UNDER SECTION 80-IC HAS MADE ALL T HE DIFFERENCE. THEREFORE, WE ARE OF THE OPINION THAT T HE AFORESAID JUDGMENT DOES 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 STATE 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 FI VE ASSESSMENT 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 AFORE SAID PERIOD OF 10 YEARS, THE SAID PREVIOUS YEAR IN WHICH THE SU BSTANTIAL EXPANSION IS UNDERTAKEN WOULD BECOME 'INITIAL ASSES SMENT YEAR', AND FROM THAT ASSESSMENT YEAR THE ASSESSEE S HALL BEEN ENTITLED TO 100% DEDUCTIONS OF THE PROFITS AND GAIN S. M.A. 243/CHD/2018 IN ITA 1261/CHD/2018 PAGE 3 OF 3 (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 ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION FOR THE FIRST FIVE YEARS, DEDUCTION @ 25% OF THE PROFITS AND GAIN S FOR THE NEXT TWO YEARS AND @ 100% AGAIN FROM 8TH YEAR AS TH IS YEAR BECOMES 'INITIAL ASSESSMENT YEAR' ONCE AGAIN. HOWE VER, THIS 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 REVENUE. LIKEWISE, APPEALS FILED BY THE ASSESSEES ARE HEREBY ALLOWED. 3. ACCORDINGLY, IN THE ABSENCE OF ANY INFIRMITY IN THE ORDER PASSED WHICH CAN BE SAID TO BE RECTIFIABLE U/S 254(2) OF THE INCOME TAX ACT, 1961 AND CONSIDERING THE LEGAL POSITION AS RECENTLY STATED BY THE HONBLE APEX COURT THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS D ISMISSED. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING IT SELF. 4. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE R EVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 18.03. 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