Rajeev Aggarwal, Baddi V. DCIT, Parwanoo

MA 89/CHANDI/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 6802 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 29-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA
• Assessee Lawyers: ARUN BHARDWAJ
• Section: 80IC; 254(2); 80IC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B CHANDIGARH !, ' # $ , $ % & ' ( ) , *+ # BEFORE: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM M.A. 89 /CHD/2019 IN I.T.A. NO. 229/CHD/2017 (ASSESSMENT YEAR-2012-13) RAJEEV AGGARWAL, PLOT NO. 191-B, HPSIDC, INDUSTRIAL AREA, BADDI. VS THE DCIT, CIRCLE, PARWANOO. PAN NO: AARPA0814H APPELLANT RESPONDENT I.T.A. NO. 229/CHD/2017 (ASSESSMENT YEAR-2012-13) RAJEEV AGGARWAL, PLOT NO. 191-B, HPSIDC, INDUSTRIAL AREA, BADDI. VS THE DCIT, CIRCLE, PARWANOO. PAN NO: AARPA0814H APPELLANT RESPONDENT ASSESSEE BY : SHRI ARUN BHARDWAJ, CA REVENUE BY : SHRI ASHOK KHANNA, ADDL. CIT ! '# DATE OF HEARING : 19.01.2021 $%&'()# D ATE OF PRONOUNCEMENT : 21.01.2021 HEARING CONDUCTED VIA WEBEX *,/ ORDER PER DIVA SINGH M.A. 89/CHD/2019 BY THE PRESENT MISCELLANEOUS APPLICATION U/S 254(2) OF THE INCOME TAX ACT,1962 IN ITA 229/CHD/2017 PERTAINING TO 2012- 2013 ASSESSMENT YEAR, THE ASSESSEE MAKES A PRAYER F OR RECALLING MA-89/CHD/2019 & ITA 229/CHD/2017 A.Y. 2012-13 PAGE 2 OF 6 THE ORDER OF THE ITAT DATED 04.10.2018 TO THE EXTEN T WHERE DEDUCTION U/S 80IC OF THE ACT WAS RESTRICTED TO FIV E YEARS THEREBY DENYING THE ASSESSEE'S CLAIM OF SUBSTANTIAL EXPANSI ON. 2. RELYING UPON THE APPLICATION, THE LD. AR SUBMITT ED THAT THE ASSESSEE'S CLAIM RESTRICTED BY THE AO STOOD CONFIRM ED BY THE ITAT RELYING UPON THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS M/S CLASSIC BINDING INDUSTRIES (2018) 96 TAXMANN.CO M 405 (S.C). RELYING UPON THE REVISED MISCELLANEOUS APPLICATION FILED, IT WAS HIS SUBMISSION THAT THE SAID VIEW OF THE APEX COURT STO OD RE- CONSIDERED BY THE APEX COURT IN ITS JUDGEMENT AND O RDER DATED 20.02.2019 IN THE CASE OF PCIT SHIMLA VS M/S AARHAM SOFTRONICS & OTHERS IN CIVIL APPEAL NO. 1784 OF 2019. ACCORDING LY, IT WAS HIS LIMITED PRAYER THAT THE ORDER OF THE ITAT MAY BE RE CALLED TO THE SAID EXTENT AS THE ORDER WAS NOT IN CONFORMITY WITH THE DECISION OF THE APEX COURT HENCE, CONSTITUTED A MISTAKE WHICH WAS R ECTIFIABLE. IT WAS ALSO HIS SUBMISSION THAT IN THE ASSESSMENT YEAR 2014-15, THE AO WHILE GIVING APPEAL EFFECT TO THE ORDER OF THE L D. COMMISSIONER (APPEALS) HAS VERIFIED THE FACTS. COPY OF THE SAID ORDER, IT WAS SUBMITTED, WAS AVAILABLE AT PAPER BOOK PAGE 134. 2.1 ACCORDINGLY, IN THE AFOREMENTIONED LEGAL POSITI ON AND THE POSITION OF FACTS, IT WAS HIS PRAYER THAT THE ORDER DATED 04.10.2018 MAY BE RECALLED TO THE SAID EXTENT. IT WAS ALSO HI S PRAYER THAT SINCE THE FACTS, CIRCUMSTANCES TO ARGUE THE MISCELL ANEOUS APPLICATION ARE IDENTICAL TO THE ARGUMENTS TO BE CO NSIDERED IN THE MA-89/CHD/2019 & ITA 229/CHD/2017 A.Y. 2012-13 PAGE 3 OF 6 APPEAL, ACCORDINGLY IN ORDER TO AVOID DUPLICATION O F THE TIME AND EFFORT, THE APPEAL MAY ALSO BE TAKEN UP TOGETHER AS NO FRESH ARGUMENTS WOULD BE NECESSITATED. 3. THE SR.DR MR. KHANNA CONSIDERING THE PRAYER OF T HE ASSESSEE IN THE LIGHT OF THE DECISION OF THE APEX COURT AND THE DECISIONS CITED, POSED NO OBJECTION TO THE RECALL OF THE ORDE R. ON A PERUSAL OF THE RELEVANT PAGES OF THE PAPER BOOK ATTACHED TO TH E REVISED APPLICATION, HE WAS ALSO IN AGREEMENT WITH THE SUBM ISSIONS OF THE LD. AR IN AS MUCH AS THAT FRESH HEARING MAY NOT BE NECESSARY AS THE VERY SAME FACTS AND ARGUMENTS ARE TO BE CONSIDE RED. SINCE THE POSITION OF LAW STANDS ADDRESSED BY THE APEX COURT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. CONSIDERING THE POSITION AS C ONSIDERED BY THE APEX COURT IN THE CASE OF ACIT VS SAURASHTRA KUTCH STOCK EXCHANGE LTD, 305 ITR 227, (SC); AND AS CONSIDERED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT (FULL BENCH) IN THE CAS E OF CIT VS SMT. ARUNA LUTHRA, 252 ITR 76, WE FIND ON CONSIDERING THE DECISION OF THE APEX COURT IN THE CASE OF PCIT SHIMLA VS M/S AARHAM SOFTRONICS & OTHERS IN CIVIL APPEAL NO. 1784 OF 2019 , THERE IS A MISTAKE IN THE AFORESAID ORDER OF THE ITAT WHICH IS RECTIFIABLE U/ S 254(2) OF THE ACT. ACCORDINGLY, IN TERMS OF THE PRAYER OF THE PA RTIES BEFORE THE BENCH AND CONSIDERING THE JUDICIAL POSITION THEREON , THE ISSUE AS CONSIDERED VIDE PARAS 5 TO 6 WHILE ADDRESSING GROUN D NO. 2 IS RECALLED AND AT THE INSTANCE OF THE PARTIES, THE AP PEAL IS TAKEN UP MA-89/CHD/2019 & ITA 229/CHD/2017 A.Y. 2012-13 PAGE 4 OF 6 FOR HEARING IMMEDIATELY THEREAFTER. THIS ORDER WAS PRONOUNCED IN THE COURT VIA WEBEX AT THE TIME OF HEARING ITSELF. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF THE ASSESSEE IS ALLOWED. ITA 229/CHD/2017 6. IN VIEW OF THE PRAYER OF THE PARTIES AND WITH TH EIR CONSENT, IT IS SEEN THAT IN ITA 229/CHD/2017 WHEREIN THE ASSESS EE HAS ASSAILED THE CORRECTNESS OF THE ORDER DATED 04.10.2 018, THE SOLE ISSUE WITH WHICH WE ARE CONCERNED IS ADDRESSED VIDE GROUND NO. 2 WHEREIN DEDUCTION U/S 80IC HAS BEEN RESTRICTED TO 2 5% AS OPPOSED TO THE CLAIM OF 100% OF THE ASSESSEES ELIGIBLE PRO FITS. THE AO RESTRICTED THE CLAIM DESPITE ASSESSEE'S CLAIM OF HA VING CARRIED OUT SUBSTANTIAL EXPANSION IN ASSESSMENT YEAR 2010-11 ON ACCOUNT OF THE FACT THAT DEDUCTION @ 100% STOOD ALREADY ALLOWE D FOR FIVE YEARS STARTING FROM 2006-07 TO 2010-11 ASSESSMENT YEAR. THE ASSESSEE CARRIED THE ISSUE BEFORE THE CIT(A) WHO DISMISSED T HE APPEAL RELYING ON THE DECISION OF THE ITAT IN THE CASE OF HYCRON ELECTRONICS V ITO IN ITA 798/CHD/2012 DATED 27.05.2 015. THE ASSESSEE CARRIED ITS APPEAL BEFORE THE ITAT AS BY T HEN, THERE WAS THE DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF M/S STOVE CRAFT INDIA VERSUS CIT-V AND OTHERS IN ITA 20 TO 24/2015 DATED 28.11.2017. HOWEVER, IN THE MEANTIME THE SAI D VIEW DID NOT FIND FAVOUR BY THE APEX COURT AS HELD IN THE CASE O F CIT VS M/S CLASSIC BINDING INDUSTRIES & ORS. FOLLOWING THE SAID DECISION, THE MA-89/CHD/2019 & ITA 229/CHD/2017 A.Y. 2012-13 PAGE 5 OF 6 ASSESSEE'S CASE STOOD DISMISSED. HOWEVER, THE VIEW TAKEN IN M/S CLASSIC BINDING INDUSTRIES & ORS (SUPRA) COME UP FOR RE-CONSIDERING AGAIN BEFORE THE HON'BLE APEX COURT IN THE CASE OF PCIT SHIMLA VS M/S AARHAM SOFTRONICS & OTHERS (SUPRA) WHEREIN THE COURT HELD AS UNDER : 22. IT WOULD BE PERTINENT TO POINT OUT THAT IN PAR A 20 OF THE JUDGMENT IN CLASSIC BINDING INDUSTRIES, THIS COURT OBSERVED THAT IF DED UCTION @ 100% FOR THE ENTIRE PERIOD OF 10 YEARS, IT WOULD BE DOING VIOLENCE TO THE LANGUAG E OF SUB-SECTION (6) OF SECTION 80-IC. HOWEVER, 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 PERSPECTIVE, JUDGMENT IN THE CASE OF MAHABIR INDUSTRIES V. PRINCIPAL COMMISSIONER OF INC OME TAX WOULD, IN FACT, HELP THE ASSESSEE. THE FINE DISTINCTION POINTED OUT IN CLASS IC BINDING INDUSTRIES ELOPES THEREBY. TO RECAPITULATE, IN MAHABIR INDUSTRIES, IT WAS HELD TH AT IF AN ASSESSEE GET 100% 2 CIVIL APPEAL NOS. 4765-4766 OF 2018 DECIDED ON MAY 18, 20 18 24 EXEMPTION UNDER SECTION 80- IB OF THE ACT FOR FIVE YEARS AND THEREAFTER CARRIES OUT THE SUBSTANTIAL EXPANSION BECAUSE OF WHICH SAID ASSESSEE BECOMES ENTITLED TO EXEMPTION U NDER THE NEW PROVISION I.E. SECTION 80-IC OF THE ACT, THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION @ 100% EVEN AFTER FIVE YEARS. THIS RULING WAS PREDICATED ON THE GROUND THA T THERE CAN BE TWO INITIAL ASSESSMENT YEARS, ONE FOR THE PURPOSE OF SECTION 80-IB AND OTH ER 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 DEFINITION THEREOF IN SECTION 80-IC ITSELF, THE LEG AL POSITION COMES AT PAR WITH THE ONE WHICH WAS DISCUSSED IN MAHABIR INDUSTRIES. 24. THE AFORESAID DISCUSSION LEADS US TO THE FOL LOWING CONCLUSIONS: (A) JUDGMENT DATED 20TH AUGUST, 2018 IN CLASSIC BIN DING INDUSTRIES CASE OMITTED TO TAKE NOTE OF THE DEFINITION INITIAL ASSESSMENT YEAR CO NTAINED IN SECTION 80-IC ITSELF AND INSTEAD BASED ITS CONCLUSION ON THE DEFINITION CONT AINED IN SECTION 80-IB, WHICH DOES NOT APPLY IN THESE CASES. THE DEFINITIONS OF INITIAL A SSESSMENT YEAR IN THE TWO SECTIONS, VIZ. SECTIONS 80-IB AND 80-IC ARE MATERIALLY DIFFERENT. THE DEFINITION OF INITIAL ASSESSMENT YEAR UNDER SECTION 80-IC HAS MADE ALL THE DIFFEREN CE. THEREFORE, WE ARE OF THE OPINION THAT THE AFORESAID JUDGMENT DOES NOT LAY DOWN THE C ORRECT 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 PR ADESH OF THE NATURE MENTIONED IN CLAUSE (II) OF SUB-SECTION (2) OF SECTION 80-IC, WO ULD BE ENTITLED TO DEDUCTION AT THE RATE OF 100% OF THE PROFITS AND GAINS FOR FIVE ASSESSMEN T YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR. FOR THE NEXT FIVE YEARS, THE ADMI SSIBLE 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 SECTION 80-IC BY SUCH AN UNDERTAKING OR ENTERPRISE, WITHIN THE AFORESAID PERIOD OF 10 YEARS, THE SAID PREVIOUS YEAR IN WHICH THE SUBSTANTIAL EXPANSION IS UNDERTAKEN WOULD BECOME INITIAL ASSESSMENT YEAR, AND FROM THAT ASSESSMENT YEAR THE ASSESSEE SHALL BEEN ENTITLED 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 CARRI ED OUT IMMEDIATELY, ON THE COMPLETION OF FIRST FIVE YEARS, THE ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION AGAIN FOR THE NEXT MA-89/CHD/2019 & ITA 229/CHD/2017 A.Y. 2012-13 PAGE 6 OF 6 FIVE YEARS. ON THE OTHER HAND, IF SUBSTANTIAL EXPAN SION IS UNDERTAKEN, SAY, IN 8TH YEAR BY AN ASSESSEE SUCH AN ASSESSEE WOULD BE ENTITLED TO 1 00% DEDUCTION FOR THE FIRST FIVE YEARS, DEDUCTION @ 25% OF THE PROFITS AND GAINS FOR THE NE XT TWO YEARS AND @ 100% AGAIN FROM 8TH YEAR AS THIS YEAR BECOMES INITIAL ASSESSM ENT YEAR ONCE AGAIN. 26 HOWEVER, THIS 100% DEDUCTION WOULD BE FOR REMAINING THREE YE ARS, 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. LIKEW ISE, APPEALS FILED BY THE ASSESSEES ARE HEREBY ALLOWED. 7. ACCORDINGLY, CONSIDERING THE LEGAL POSITION AS A VAILABLE, WE ALLOW THE APPEAL OF THE ASSESSEE DIRECTING THE AO T O GRANT NECESSARY RELIEF IN ACCORDANCE WITH LAW. SAID ORDE R WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 9. IN THE RESULT, MISCELLANEOUS APPLICATION OF THE ASSESSEE AND THE APPEAL OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JAN.,2021. SD/- SD/- ( % & ' ( ) ) ( ! ) (ANNAPURNA GUPTA) (DIVA SINGH) *+ #/ ACCOUNTANT MEMBER ' #/ JUDICIAL MEMBER POONAM % + ,- . -( / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ! / / CIT 4. ! / ( )/ THE CIT(A)5. - 01 2 , # 2) , 34516 / DR, ITAT, CHANDIGARH 6. 15 7' / GUARD FILE % + ! / BY ORDER, 8 / ASSISTANT REGISTRAR