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Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’, CHANDIGARH
Before: SHRI SANJAY GARG & Ms. ANNAPURNA GUPTA
आदेश/ORDER
Per Bench:
The present appeals preferred by the Revenue are against the separate orders dated 28.2.2018 (for A.Y. 2010- 11) and dated 29.3.2008 (for A.Ys. 2011-12 to 2014-15) of Commissioner of Income Tax (Appeals)-2, Chandigarh [hereinafter referred to as ‘CIT(A)’]
Since identical issue is involved in all the assessment years, hence, these have been heard together and are being disposed off by this common order.
First, we shall deal with the appeal in ITA No. 854/Chd/2018 for assessment year 2010-11.
ITA No.854 to 858-Chd-2018 - 2 M/s Shree Naina Containers Inc. Chandigarh
At the outset, the Ld. DR has submitted that the only
issue involved in this appeal is as to whether the assessee is
entitled to deduction at the rate of 100% of the eligible
profits u/s 80IC of the Income-tax Act, 1961 (in short 'the
Act') for the first 5 years or 10 years in the case of
substantial expansion of unit. In other words, whether the
year in which the substantial expansion is carried out is to
be taken as initial assessment year for the purpose of grant
of deduction for 10 years u/s 80IC of the Act. He has
further submitted that the issue raised in this appeal has
been earlier adjudicated by the Hon'ble H.P. High Court
in the case of ‘M/s Stovekraft India Vs. CIT’ ITA No. 20 of
2015 dated 28.11.2017, wherein, the issue was decided in
favour of the assessee. However, the Department on the
issue of substantial expansion went in appeal before the
Hon'ble Supreme Court and the Hon'ble Supreme Court
decided the issue in favour of the Revenue by the decision
dated 20.8.2018 in the group of cases with the lead case
titled as ‘CIT Vs. M/s Classic Binding Industries, in Civil
Appeal No(s) 7208 of 2018 dated 20.08.2018.
The Ld. DR has further fairly admitted that the order
of the Hon'ble Supreme Court in M/s Classic Binding
Industries (supra) has been recalled in a Review Petition
filed by the Petitioners and proposition of law laid down
by the Hon'ble H.P. High Court in the case of ‘M/s
Stovekraft India Vs. CIT’ ITA No. 20 of 2017 dated
28.11.2017 has been reaffirmed recently by the Hon'ble
ITA No.854 to 858-Chd-2018 - 3 M/s Shree Naina Containers Inc. Chandigarh
Supreme Court in the group of cases with the lead case in
‘Pr. CIT Vs. M/s Aarham Softronics’ vide order dated
20.02.2019.
The Ld. AR of the assessee has relied upon the
detailed written submissions placed on record in this
behalf and submitted that the issue now stands covered
in favour of the assessee.
We have gone through the recent decision of the
Hon'ble Supreme Court in ‘Pr. CIT Vs. M/s Aarham
Softronics’ (supra), wherein, the Hon'ble Supreme Court
on deliberations, vide para 24 has concluded as under:-
“24. The aforesaid discussion leads us to the following conclusions:
(a) Judgment dated 20th August, 2018 in Classic Binding Industries case omitted to take note of the definition ‘initial assessment year’ contained in Section 80-IC itself and instead based its conclusion on the definition contained in Section 80- IB, which does not apply in these cases. The definitions of ‘initial assessment 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 difference. Therefore, we are of the opinion 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 Himachal 25 Pradesh of the nature mentioned in clause (ii) of sub-section (2) of Section 80-IC, would be entitled to deduction at the rate of 100% of the profits and gains for five assessment years commencing with the ‘initial assessment year’. For the next five years, the admissible deduction would be 25% (or 30% where the assessee is a company) of the profits and gains.
(c) However, in case substantial expansion is carried out as defined in clause (ix) of sub-section (8) of Section 80-IC by such an undertaking or enterprise, within the aforesaid period
ITA No.854 to 858-Chd-2018 - 4 M/s Shree Naina Containers Inc. Chandigarh
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 period of 10 years, as provided in sub-section (6). For example, if the expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five years. On the other hand, if substantial expansion is undertaken, say, in 8th year by an assessee such an assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes ‘initial assessment year’ once again. 26 However, this 100% deduction would be for remaining three years, i.e., 8th, 9th and 10th assessment years.
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 hereby allowed.”
In view of the above discussion and as per the recent
ruling of Hon'ble Supreme Court on the issue in the case
of ‘Pr. CIT Vs. M/s Aarham Softronics’ order dated
20.02.2019 (supra), the impugned order of the CIT(A) is
upheld. We do not find any merit in the appeal of the
Revenue and the same is accordingly dismissed.
ITA Nos. 855 to 858/Chd/2018–(A.Ys. 2011-12 to 2014-15)
Since the facts and issues involved in all the appeals of
the Revenue for aforesaid assessment years are identical,
therefore, our findings given above will apply mutatis-
mutandis to these assessment years also.
ITA No.854 to 858-Chd-2018 - 5 M/s Shree Naina Containers Inc. Chandigarh
In the result, all the appeals of the Revenue are dismissed.
Order pronounced in the Open Court immediately on completion of hearing.
Sd/- Sd/- (अ�नपूणा� गु�ता / ANNAPURNA GUPTA) (संजय गग� / SANJAY GARG) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member Dated : 12. 03.2019 “आर.के.”
आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. 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 आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar