DY. COMMISSIONER OF INCOME TAX, SUBHASH ROAD, DEHRADUN vs. ALF ENGINEERING COMPANY, SIDCUL, HARDWAR

ITA Nos.225, 226, 231 & 232/DDN/2026 ALF ENGINEERING COMPANY

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “DB” NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER ITA Nos.225, 226, 231 & 232/DDN/2026 Assessment Years: 2009-10 to 2012-13 DY. COMMISSIONER OF INCOME TAX, Vs. ALF ENGINEERING COMPANY, 13-A, Subhash Road, Dehradun, Plot No.227-231, IIE SIDCUL, Uttarakhand 248001. Sector-7, Hardwar 249403, Uttarakhand. PAN No. AAAFA2372B Appellant Respondent

Assessee by Shri Jitendra Singh, Adv. (VC) Revenue by Shri Mohan Lal Joshi, Sr. DR (VC)

Date of hearing: 25.06.2026 Pronouncement on 03.07.2026 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER: 1. This is a batch of four appeals all arising from orders dated 28.02.2026, passed by Ld. CIT(A)-NFAC, u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”). Since the issues in all these appeals are interconnected and common, hence, all these four cases are being disposed of through a single order.

1.1 For the sake of convenience, ITA No.225/DDN/2026 is being taken as the lead case (AY 2009-10).

ITA Nos.225, 226, 231 & 232/DDN/2026 ALF ENGINEERING COMPANY 1.2 In this case, (AY 2009-10) the Ld. AO has given a finding on page 3 (para 7) that the claim of the assessee for deduction u/s 80IC of the Act cannot be allowed since such claim was denied in AY 2007-08, being the initial year of claim of deduction u/s 80IC of the Act. The finding given by the Ld. AO is that the assessee has not fulfilled the conditions laid down in section 80IC(4)(i) & (ii) of the Act. It is seen that on page 4 of the Ld. AO’s order there is a finding that the assessee has not undertaken any substantial expansion during the year under consideration and thus, would fail the test laid down in section 80IC(8)(ix) of the Act. Thereafter, the Ld. AO has disallowed the claim of the assessee for deduction u/s 80IC of the Act.

1.3 The Ld. CIT(A), however, granted relief to the assessee with findings on pages 30 to 32 of the impugned order. Aggrieved with this action the Revenue has approached the ITAT with the following grounds:

“1. On facts and circumstances of the cine and in law, whether the Ld. CTT (A) has erred in in granting deduction under section 301C of the Income Tax Act. 1961 despite recording a categorical finding that the assessee did not fulfil the conditions prescribed under section 801C(4)(1) and 801C(4X) of the Income Tax Act, 1961, hereby rendering the relief inconsistent and contrary to the scheme of the Act. 2. On facts and circumstances of the case and in law, whether the Ld. CIT (A) is justified in in invoking the provisions of section 801C(K)(ix) of the Income Tax Act, 1961 relating to "substantial expansion to grant deduction, without appreciating that the said provision does not operate as an independent source of eligibility basis for claiming deduction under section 801C of the Income Tax Act, 1961.

ITA Nos.225, 226, 231 & 232/DDN/2026 ALF ENGINEERING COMPANY 3. On facts and circumstances of the care and in law, whether the Ld. CIT (A) has erred in treating the violation of section 801C(4)(ii) of the Income Tax Act, 1961 as rectifiable by subsequent expansion. whereas the condition relating to use of old machinery is to be satisfied at the time of formation and cannot be cured later. 4. That, the appellant craves leave to add or amend any other more ground of appeal as stated above as and when needs for doing so may arise. In case of a combined order or order in a group case, involving more than one assessee falling under jurisdiction of different CITs, the CIT shall communicate the stand taken on common issues to the jurisdiction over the case(s): NO.” 2. Before us the Ld. DR extensively read from the Ld. AO’s order and stated that instead of expansion to the tune of Rs.61,46,014/-, the assessee has made investment in plant and machinery only to the extent of Rs.58,75,128/-. It was pointed out that since this figure is less than the 50% quantum prescribed u/s 80IC(8)(ix) of the Act, hence, the assessee was not eligible for any deduction u/s 80IC of the Act.

2.1 Per contra, the Ld. AR relied on the finding given by the Ld. CIT(A) and identified the relevant portion of such findings.

“19. From the plain reading of the sub-section (2) of Section 80IC, it is clear that the substantial expansion may happen anytime between the period from 7th day of January 2003 and ending before the first day of April 2012 for the state of Uttaranchal. The Ld. AO in the Assessment order (passed u/s 143 r.w.s 254 dated. 31.12.2019 for the AY 2009-10) checked for the fulfilment of condition of substantial expansion only for the impugned AY 2009-10, which was not the right approach. 3

ITA Nos.225, 226, 231 & 232/DDN/2026 ALF ENGINEERING COMPANY From the submission of the appellant (produced above), it is learnt that the condition of 'substantial expansion', within the meaning as laid down in sub-section 8(ix) of section 80IC, is fulfilled in the AY 2008-09. Therefore, for the purpose of claim of deduction u/s 801C on account of fulfilment of condition of substantial expansion, the assessment year 2008-09 becomes the Initial Assessment Year. From thereon, 1.e. from the AY 2008-09, the appellant is eligible to claim deduction u/s 80IC, within the meaning of clause (ii) of sub-section (3) of section 801C. The clause (ii) of sub-section (3) of section 80IC is produced as under, for ready reference: 80IC(3): The deduction referred to in sub-section (1) shall be- (i) ………………… (ii) in the case of any undertaking or enterprise referred to in sub- clause (ii) of clause (a) or sub-clause (il) of clause (b), of sub-section (2), one hundred per cent of such profits and gains for five assessment years commencing with the initial assessment year and thereafter, twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains. 20. As per the clause (ii) of sub-section (3) of section 801C, the appellant is eligible for one hundred per cent deduction of such profits and gains, derived from business referred to in sub-section (2) of section 80IC, for five assessment years commencing with the initial assessment year, i.e. AY 2008-09 and thereafter, twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains. As per section 80IC(6) of the Act, such arrangement of deduction u/s 80IC shall be allowed upto ten assessment years commencing from the initial assessment year. 21. In view of the above, for the case under discussion, i.e. for the AY 2009-10, the appellant is eligible for 100% deduction of such profits and gains, derived from business referred to in sub-section (2) of section 80IC, on account of fulfilment of condition of substantial expansion.” We find that the ld. CIT(A) has correctly interpreted the provisions of section 80IC of the Act and their applicability in the present case. Accordingly, we do not wish to interfere in any way with the findings given in the impugned order.

ITA Nos.225, 226, 231 & 232/DDN/2026 ALF ENGINEERING COMPANY 3.1 Regarding the remaining three appeals, since the facts are the same, hence, it deserves to be held that the assessee must be allowed to claim deduction u/s 80IC of the Act, which must be allowed by the Ld. AO as per law.

Order pronounced in the open court on 03.07.2026

Sd/- Sd/- (ANUBHAV SHARMA) (SANJAY AWASTHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 03.07.2026 *Kavita Arora, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI