M/S RR LAMPS,KIRPALPUR vs. DCIT, CIRCLE, PARWANOO

That the order passed under section 250(6) of the Income Tax Act, 1961 by the learned Commissioner of Income Tax (Appeals), Shimla in Appeal No. IT/176/17-18/Sml dated 26.12.2018 is contrary to law and facts of the case. 2. That in the facts and circumstances of the case and in law, the Id. Commissioner of Income Tax (Appeals) gravelly erred in upholding the action of the Id. Assessing Officer who had restricted the claim of deduction under Section 80IC to 25% of the profits and gains of the eligible business instead of 100% of such profits claimed by appellant, which led to addition of Rs. 94,09,202/-. 3. That in the facts and circumstances of the case and in law, the Id. Commissioner of Income Tax (Appeals) gravelly erred in upholding the stand of the Id. Assessing Officer who had erred in misinterpreting the provisions of Section 80IC and in holding that the benefit of 100% deduction under Section 80IC of the Act for first five years in case of substantial expansion is available only to the units that existed and where operational as on 07.01.2003 and such benefit is not at all meant for the units that came into being on or after the introduction of the scheme of such deduction. 4. That in the facts and circumstances of the case the Ld Commissioner of Income Tax (Appeals) gravely erred in upholding that once an 'initial assessment year' is determined in case of an undertaking claiming benefit u/s 80IC of the Act, it cannot be changed even if such undertaking completes substantial expansion and again qualifies for deduction under the said section on the basis of 'qualifying expansion', rather than based on 'qualifying commencement'.

That the appellant craves to add, amend or alter any ground of appeal before or at the time of hearing of appeal, with the permission of the Hon'ble Income Tax Appellate Tribunal. 3. The only grievance of the assessee in this appeal relates to the deduction under section 80IC of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’), denied by the A.O. even when the assessee completed substantial expansion and claimed for deduction on the basis of such expansion.

During the course of hearing before us, it was brought to our notice that the issue involved in these appeals has already been adjudicated by the Hon’ble Himachal Pradesh High Court vide their order dt. 28 November 2017 in the group of cases with the lead case titled as M/s Stovekraft India vs. Commissioner of Income Tax, ITA No.20 of 2015, and it was pointed out that the Hon’ble High Court had decided the issue in favour of the assessee, holding that there is no bar in the said section denying the benefit of hundred percent deduction to new units undertaking substantial expansion. Our attention was drawn to the relevant conclusions of the Hon’ble High Court in this regard at para 55 of the order as under: “55.Thus, in view of the above discussion, these appeals are allowed and orders passed by the Assessment Officer as well as the Appellate Authority and the Tribunal, in the case of each one of the Assesses, are quashed and set aside, holding as under: (a) Such of those undertakings or enterprises which were established, became operational and functional prior to 7.1.2003 and have undertaken substantial expansion between 7.1.2003 upto 1.4.2012, should be entitled to benefit of Section 80-IC of the Act, for the period for which they were not entitled to the benefit of deduction under Section 80-IB. (b) Such of those units which have commenced production after 7.1.2003 and carried out substantial expansion prior to 1.4.2012, would also be entitled to benefit of deduction at different rates of percentage stipulated under Section 80- IC. (c) Substantial expansion cannot be confined to one expansion. As long as requirement of Section 80-IC(8)(ix) is met, there can be number of multiple substantial expansions. (d) Correspondingly, there can be more than one initial Assessment Years. (e) Within the window period of 7.1.2013 upto 1.4.2012, an undertaking or an enterprise can be entitled to deduction @ 100% for a period of more than five years. (f) All this, of course, is subject to a cap of ten years. [Section 80-IC(6)]. (g) Units claiming deduction under Section 80-IC shall not be entitled to deduction under any other Section, contained in Chapter VI-A or Section 10A or 10B of the Act [Section 80- IB(5)].” 4. However, Ld. DR fairly admitted that the issue is squarely covered by the above decision of the Hon'ble jurisdictional High Court. It was, however, submitted that the issue be restored to the file of the Assessing officer for verification as to whether the assessee has actually carried out the substantial expansion to be entitled to claim deduction u/s 80IC of the Act. 5. We do not agree to the above contention raised by the Revenue at this stage. A perusal of the order of the Assessing officer reveals that the Assessing officer has not disputed that the assessee unit has carried out substantial expansion as provided under clause (b) of sub section (2) read with clause (ix) of sub section (7) of section 80IC of the Act. Almost similar view has also been taken by the Hon'ble Himachal Pradesh High Court in the case of ‘M/s Stovekraft India vs. Commissioner of Income Tax’ (supra) in the following concluding para of the order:- “58. On facts, we may clarify that the Revenue has not disputed, (a) the units having carried out substantial expansion within the definition of the Section, (b) their entitlement and extent of deduction would be dependent upon interpretation of the relevant provisions.”

अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File