M/s Theon Pharmaceuticals Ltd., Chandigarh V. ACIT, C-5(1), Chandigarh

MA 51/CHANDI/2019

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0205 (ITAT-CHANDIGARH)
• Duration Of Justice: 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 07-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH

Judgement Text

1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH , ! '# $% & ' ( )% , ! BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ,- . /MA NO.51/CHD/2019 IN . / ITA NO.1648/CHD/2017 / ASSESSMENT YEARS : 2013-14 ) M/S THEON PHARMACEUTICALS LTD.,SCF 90,SECTOR- 26,CHANDIGARH . THE A.C.I.T., CIRCLE -5(1), CHANDIGARH ./ PAN: AACCT2692J /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI ASHOK GOYAL, CA / REVENUE BY : SHRI MANJIT SINGH, SR. DR ! /DATE OF HEARING : 15.03.2019 ! /DATE OF PRONOUNCEMENT: 15.03.2019 /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER : THE PRESENT MISCELLANEOUS APPLICATION HAS BEEN FILE D BY THE APPLICANT FOR RECALLING OF THE ORDER OF THE TRIBUNAL DATED 30.08.2018 IN ITA NO.1648/CHD/2017, RELATING TO ASSESSMENT YEAR 2013-14, WHICH WAS DISMISSED EX-PAR TE ON MERITS. 2. IT WAS POINTED OUT THAT THE ISSUE INVOLVED IN TH E APPEAL RELATED TO DISALLOWANCE OF DEDUCTION U/S 80I C OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'ACT') 2 @ 100% OF THE ELIGIBLE PROFITS, ON SUBSTANTIAL EXPA NSION UNDERTAKEN BY THE ASSESSEE, WHEN EARLIER DEDUCTION @ 100% OF THE PROFITS HAD BEEN CLAIMED FOR THE STIPUL ATED PERIOD OF FIVE YEARS. THAT THE ITAT HAD DISMISSED THE APPEAL FOLLOWING THE DECISION OF THE HONBLE APEX C OURT IN THE CASE OF CIT VS CLASSIC BINDING INDUSTRIES CIVI L APPEAL NO.208 OF 2018 & OTHERS DATED 20 TH AUGUST 2018. 3. THE APPLICANT SUBMITTED THAT THE REASON FOR NOT ATTENDING THE HEARING ON 27.08.2018 WAS THAT THE NO TICE RECEIVED WAS MISPLACED AND AS SUCH THE ASSESSEE FOR GOT TO INFORM HIS COUNSEL ABOUT THE DATE FIXED.THAT EVEN OTHERWISE THE ISSUE INVOLVED IN THE APPEAL HAD BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY A SUBSEQUENT JUDGEMENT OF THE HONBLE APEX COURT IN THE CASE OF PR.CIT, SHIMLA VS. M/S AARHAM SOFTRONICS IN CIVIL A PPEAL NO.1784 OF 2019, DATED 20.02.2019, REVERSING ITS EA RLIER JUDGEMENT IN THE CASE OF CLASSIC BINDING(SUPRA).IT WAS CONTENDED THAT THE APPELLANT HAD NO INTENTION WHATS OEVER OF NOT REPRESENTING THE CASE AND WOULD NOT HAVE BEN EFITED BY THE SAME ALSO. IT WAS THEREFORE PLEADED THAT THE IMPUGNED APPEALS BE RECALLED FOR HEARING AFRESH. 4. THE LD. DR FAIRLY CONCEDED THAT THE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE SUBSEQUENT JUDGEMENT OF THE HONBLE APEX COURT. 5. WE HAVE GONE THROUGH THE ENTIRE FACTS OF THE CAS E. WE ARE CONVINCED THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT REASON FOR NOT APPEARING BEFORE THE TRIB UNAL ON THE APPOINTED DATE OF HEARING TO PROSECUTE THE APPE AL. 3 EVEN OTHERWISE, WE FIND, THAT THE ISSUE INVOLVED IN THE APPEAL, REGARDING CLAIM OF DEDUCTION U/S 80IC OF TH E ACT, @ 100% OF THE ELIGIBLE PROFITS ON SUBSTANTIAL EXPAN SION UNDERTAKEN, AFTER HAVING CLAIMED DEDUCTION @ 100% O F THE PROFITS FOR FIVE ELIGIBLE YEARS, WAS DECIDED AGAINS T THE ASSESSEE AS PER THE PREVAILING POSITION OF LAW IN V IEW OF THE APEX COURT DECISION IN CLASSIC BINDING (SUPRA). FURTHER WE HAVE NOTED THAT SUBSEQUENTLY THE HONBLE APEX COURT REVERSED THIS DECISION IN ITS JUDGEMENT RENDE RED IN THE CASE OF AARHAM SOFTRONICS (SUPRA). THE HON'BLE APEX COURT NOTED IN THE SAID DECISION, THAT IN ITS JUDG MENT IN THE CASE OF M/S CLASSIC BINDING INDUSTRIES (SUPRA) THE OBSERVATION MADE THAT ALLOWING DEDUCTION @ 100% FO R THE ENTIRE PERIOD OF TEN YEARS WOULD BE DOING VIOLENCE TO THE LANGUAGE OF SEC 80IC OF THE ACT, WAS MADE WITHOUT N OTICING THE DEFINITION OF INITIAL ASSESSMENT YEAR CONTAINED IN SECTION 80IC OF THE ACT. THE FINDING OF THE HON'BLE APEX CO URT AT PARA 22 OF ITS ORDER IS AS UNDER: 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 1 0 YEARS, IT WOULD BE DOING VIOLENCE TO THE LANGUAGE OF SUB-SECTION (6) OF SECTION 80-IC. HOWEVER, THIS OBSERVATION CAME WITHOUT NOTICING THE DEFINITION OF INITIAL ASSESSMENT YEAR CONT AINED IN THE SAME VERY PROVISION. 6. THE HON'BLE APEX COURT THEREAFTER CONCLUDED THAT THIS DECISION IN THE CASE OF M/S CLASSIC BINDING INDUSTR IES (SUPRA) DID NOT LAY DOWN THE CORRECT LAW AND THAT A NEWLY SET UP UNDERTAKING OR ENTERPRISE IN THE STATE OF HIMACH AL PRADESH WOULD BE ENTITLED TO DEDUCTION @ 100% OF TH E ACT ITS 4 PROFITS FOR THE FIRST FIVE YEARS AND EVEN THEREAFTE R IN THE CASE OF SUBSTANTIAL EXPANSION IS CARRIED OUT BY IT WITH THE PREVIOUS YEAR IN WHICH SUBSTANTIAL EXPANSION IS UND ERTAKEN BECOMING THE INITIAL ASSESSMENT YEAR. THAT IN ANY C ASE THE PERIOD OF DEDUCTION U/S 80IC OF THE ACT WOULD NOT E XCEED 10 YEARS. THE CONCLUSION OF THE HON'BLE APEX COURT AT PARA 24 OF ITS ORDER IS AS UNDER: 24. THE AFORESAID DISCUSSION LEADS US TO THE FOLLOWIN G CONCLUSIONS: (A) JUDGMENT DATED 20TH AUGUST, 2018 IN CLASSIC BINDINGINDUSTRIES CASE OMITTED TO TAKE NOTE OF THE DEFINITION INITIAL ASSESSMENT YEAR CONTAINED IN SECTION 80-IC ITS ELF AND INSTEAD BASED ITS CONCLUSION ON THE DEFINITION CONTA INED IN SECTION 80-IB, WHICH DOES NOT APPLY IN THESE CASES. THE DEFINITIONS OF INITIAL ASSESSMENT YEAR IN THE TWO SE CTIONS, VIZ. SECTIONS 80-IB AND 80-IC ARE MATERIALLY DIFFERENT. TH E DEFINITION OF INITIAL ASSESSMENT YEAR UNDER SECTION 80 -IC HAS MADE ALL THE DIFFERENCE. THEREFORE, WE ARE OF THE OPIN ION THAT THE AFORESAID JUDGMENT DOES NOT LAY DOWN THE CORRECT LAW. (B) AN UNDERTAKING OR AN ENTERPRISE WHICH HAD SET UP A NEW UNIT BETWEEN 7TH JANUARY, 2003 AND 1ST APRIL, 2012 IN STATE OF HIMACHALPRADESH OF THE NATURE MENTIONED IN CLAUSE (II) OF SUB-SECTION (2) OF SECTION 80-IC, WOULD BE ENTITLED TO D EDUCTION AT THE RATE OF 100% OF THE PROFITS AND GAINS FOR FI VE ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESSMEN T YEAR. FOR THE NEXT FIVE YEARS, THE ADMISSIBLE DEDUCTIO N WOULD BE 25% (OR 30% WHERE THE ASSESSEE IS A COMPANY) OF T HE PROFITS AND GAINS. (C) HOWEVER, IN CASE SUBSTANTIAL EXPANSION IS CARRIED OU T AS DEFINED IN CLAUSE (IX) OF SUB-SECTION (8) OF SECTION 8 0-IC BY SUCH AN UNDERTAKING OR ENTERPRISE, WITHIN THE AFORESA ID PERIOD OF 10 YEARS, THE SAID PREVIOUS YEAR IN WHICH THE SUBS TANTIAL EXPANSION IS UNDERTAKEN WOULD BECOME INITIAL ASSESSMEN T YEAR, AND FROM THAT ASSESSMENT YEAR THE ASSESSEE SHA LL BEEN ENTITLED TO 100% DEDUCTIONS OF THE PROFITS AND GAINS. (D) SUCH DEDUCTION, HOWEVER, WOULD BE FOR A TOTAL PERIOD OF 10 YEARS, AS PROVIDED IN SUB-SECTION (6). FOR EXAMPLE, IF T HE EXPANSION IS CARRIED OUT IMMEDIATELY, ON THE COMPLETION OF FIRST FIVE YEARS, THE ASSESSEE WOULD BE ENTITLED TO 100% DEDU CTION AGAIN FOR THE NEXT FIVEYEARS. ON THE OTHER HAND, IF SUBSTANTIAL EXPANSION IS UNDERTAKEN, SAY, IN 8TH YEAR BY AN ASSE SSEE SUCH AN ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION F OR THE 5 FIRST FIVE YEARS, DEDUCTION @ 25% OF THE PROFITS AND GAINS FOR THE NEXT TWO YEARS AND @ 100% AGAIN FROM 8 TH YEAR AS THIS YEAR BECOMES INITIAL ASSESSMENT YEAR ONCE AGAIN HOWE VER, THIS 100% DEDUCTION WOULD BE FOR REMAINING THREE YEAR S, I.E., 8TH, 9TH AND 10TH ASSESSMENT YEARS. 25. IN VIEW OF THE AFORESAID, WE AFFIRM THE JUDGMENT OF THE HIGH COURT ON THIS ISSUE AND DISMISS ALL THESE APPEALS OF THE REVENUE. LIKEWISE, APPEALS FILED BY THE ASSESSEES ARE H EREBY ALLOWED. 7. IN VIEW OF THE ABOVE, IT IS NOW SETTLED LAW THA T EVEN A NEW UNDERTAKING WHICH HAS CLAIMED DEDUCTION OF ITS ELIGIBLE PROFITS @ 100% THEREOF FOR THE FIRST FIVE YEARS IS ENTITLED TO CLAIM DEDUCTION @ 100% OF ITS PROFITS THEREAFTER ON ACCOUNT OF SUBSTANTIAL EXPANSION UNDERTAKEN BY IT AND THE D ECISION OF THE APEX COURT IN CLASSIC BINDING(SUPRA) STANDS OVERRULED. THIS IN ITSELF CONSTITUTES A MISTAKE APPARENT FROM RECORD. A BINDING DECISION IS ALWAYS RETROSPECTIVE AND THE DECISION OVERRULED WAS NEVER THE LAW OF THE LAND. W HEN A COURT DECIDES A MATTER IT ONLY INTERPRETS LAW AND A PPLIES IT TO THE FACTS OF THE CASE. IF THE INTERPRETATION OF LAW IS FOUND TO BE CONTRARY IN THE LIGHT OF JUDICIAL PRONOUNCEMENT RENDERED SUBSEQUENTLY, IT DISCLOSES A MISTAKE APPARENT FROM RECORD. 8. CONSIDERING THE ENTIRETY OF FACTS IN THE PRESENT CASE, WE ARE THEREFORE OF THE OPINION THAT THIS IS A FIT CASE FOR RECALLING THE ORDER FOR FRESH HEARING, WHICH WE HER EBY DO. THE APPEAL IS ACCORDINGLY RECALLED FOR HEARING. THE ORDER WAS PRONOUNCED IN OPEN COURT. 9. AT THE REQUEST OF BOTH THE COUNSELS WHO POINTED OUT THAT THE ISSUE IN THE IMPUGNED APPEAL WAS COVERED B Y THE 6 DECISION OF THE HON'BLE APEX COURT IN THE CASE OF P R.CIT, SHIMLA VS. M/S AARHAM SOFTRONICS IN CIVIL APPEAL NO .1784 OF 2019, DATED 20.02.2019, THE APPEAL WAS POSTED FO R HEARING TODAY ITSELF I.E. 15.03.2019. 10. IN THE RESULT, THE MISCELLANEOUS APPLICATION FI LED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.03.2019. SD/- SD/- & ' ( )% (SANJAY GARG) (ANNAPURNA GUPTA) ! / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER 0& /DATED: 15 TH MARCH, 2019 * % * ' () *) / COPY OF THE ORDER FORWARDED TO : / THE APPELLANT '+ / THE RESPONDENT , / CIT , ( )/ THE CIT(A) )-. ' / , ! / , 012.3 / DR, ITAT, CHANDIGARH .2 / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR