M/S. ADMAC FORMULATIONS vs. COMMISSIONER OF INCOME TAX,PKL

Facts

The judgment concerns eight review applications filed by assessees, including M/s Admac Formulations and M/s Pivot Fabrique H.P., against the Commissioner of Income Tax and Income Tax Officers. The applications seek review of a High Court order dated September 6, 2018, which had decided substantial questions of law regarding the admissibility of deduction under Section 80IC of the Income Tax Act, 1961, against the assessees and in favour of the Revenue. This earlier decision was based on the Supreme Court's ruling in Commissioner of Income Tax Vs. M/s Classic Binding Industries. The assessees now contend that the Supreme Court itself has subsequently reviewed and overruled its decision in M/s Classic Binding Industries in the case of Pr. Commissioner of Income Tax, Shimla Vs. M/s AARHAM Softronics.

Held

The High Court allowed the review applications. While acknowledging the Revenue's technical argument based on Order 47 CPC and the Supreme Court's decision in Shanti Devi, the Court found that the original judgment of September 6, 2018, was predicated on M/s Classic Binding Industries. However, the Supreme Court in M/s AARHAM Softronics specifically noted that M/s Classic Binding Industries had overlooked the definition of 'initial assessment year' under Section 80IC and consequently held that M/s Classic Binding Industries did not lay down the correct law. The High Court reasoned that accepting the Revenue's plea would lead to multiplicity of litigation. Therefore, in the interest of justice, the review applications were allowed. Consequently, the questions of law concerning the claim of 100% deduction under Section 80IC for the relevant assessment years were answered in favour of the Assessee and against the Revenue, aligning with the decision in M/s AARHAM Softronics. No issues were expressly left undecided.

Key Issues

1. Whether the Tribunal erred in law in holding that the benefit of 100% deduction under Section 80IC was not available to units set up after January 7, 2003, on undertaking substantial expansion from the year of completion of expansion? (Question of law) 2. Whether the Tribunal erred in law in holding that units set up after January 7, 2003, would not be entitled to the enlarged deduction under Section 80IC at 100% of profit, even on undertaking substantial expansion within the specified period? (Question of law) 3. Whether the Tribunal erred in law in disallowing the benefit of substantial expansion under Section 80IC to units that came into existence after January 7, 2003, by stating that the initial assessment year could not be refixed for such units? (Question of law) 4. Whether the Tribunal erred in law in not following the decisions of coordinate benches without referring the matter to a larger bench? (Question of law) 5. Whether the Tribunal was right in law and facts in holding that the definition of 'initial assessment year' does not allow a unit to claim 100% deduction under Section 80IC upon substantial expansion? (Question of law) 6. Whether the Tribunal's orders were perverse due to incorrect application of law? (Question of law) Assessee's Contention: The earlier judgment of the High Court, which was based on M/s Classic Binding Industries, should be reviewed because the Supreme Court in M/s AARHAM Softronics has held that M/s Classic Binding Industries was decided incorrectly, having omitted to consider the definition of 'initial assessment year' in Section 80IC. Revenue's Contention: Order 47 Rule 1 and 2 of the CPC, as clarified by the Supreme Court in Shanti Devi Vs. State of Haryana, bars review on the ground that a decision on a question of law, on which the judgment was based, has been reversed or modified by a superior court in another case.