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Facts
The Revenue appealed against the CIT(A)'s order allowing the assessee's claim for deduction under Section 80IE. The assessee claimed a deduction of ₹15,97,27,673/- for A.Y. 2012-13, based on substantial expansion in 19 undertakings. The Assessing Officer (AO) disallowed a portion of this claim, arguing that substantial expansion was not completed within the same financial year.
Held
The Tribunal held that Section 80IE does not mandate the completion of substantial expansion within the same financial year it is initiated. The deduction is allowed from the year the expansion is completed. The Tribunal also clarified that all plant and machinery, including those used for agricultural operations and administrative purposes, should be considered for substantial expansion in a composite business like tea cultivation and manufacturing.
Key Issues
Whether substantial expansion for the purpose of Section 80IE deduction needs to be completed within the same financial year and whether all plant and machinery in a composite business should be considered.
Sections Cited
80IE, 80IA, 143(3), 43(6), 43(3), 32A, 32AC
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
This is an appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals)-7, Kolkata, (hereinafter referred to as the “Ld. CIT(A)”] dated 0.011.2019 for the AY 2012-13.
At the outset, we note that there is delay of 639 days in filing the appeal by the Revenue for which the condonation petition has been moved by the Revenue dated 24.12.2021, wherein it has been stated that in order to file the appeal, the file has to go through various stages in the hierarchy for obtaining necessary approvals and hence, the delay of 639 days in filing the appeal. The revenue has explained the delay with cogent reasons. Considering the contents of the condonation and the arguments of the rival parties, we are quite
The only issue raised by the assessee is against the order of ld. CIT (A) allowing the claim of the assessee u/s 80IE of the Act of ₹5,82,61,479/-.
The facts in brief are that the assessee filed the return of income dated 28.09.2012, which was revised on 31.03.2014, wherein the total income was computed at ₹ nil after claiming deduction u/s 80IE of the Act to the tune of ₹15,97,27,673/-. The case of the assessee was selected for scrutiny and statutory and other notices were issued along with questionnaires and served upon the assessee. The ld. AO during the course of assessment proceedings observed that the assessee has claimed during the impugned assessment year, a deduction u/s 80IE of the Act of ₹15,97,27,683/- for which the assessee has submitted certificate from the auditors in form 10CEB. According to the ld. AO, the assessee has claimed deduction u/s 80IE of the Act, in respect of 16 undertakings. The ld. AO further noted that the assessee further claimed the deduction u/s 80IE of the Act for 3 more undertakings from A.Y. 2012-13. The ld. AO noted assessee’s claim u/s 80IE of the Act, for above 16 undertakings was made in A.Y. 2010-11 as initial assessment year. In the assessments framed u/s 143(3) of the Act for A.Y. 2010-11 and 2011-12, out of the 16 gardens, deduction u/s 80IE of the Act was allowed in respect of 8 gardens which achieved substantial expansion in one financial year. Thereafter, the ld. AO noted that the claim of deduction in respect of remaining 8 gardens were rejected as increase in plant and machinery was over a period of three years. The ld. AO identified the items of plant and machineries which were not for the purpose of production or
In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee by observing and holding as under:-
“7.2 I have considered the submission of the Ars of the appellant in the backdrop of the assessment order. The brief facts of the matter are that the AO had disallowed an amount of ₹5,82,61,479/- claimed by the appellant company u/s 80IE of the Act on the ground that there was no substantial expansion of the appellant’s value of capital investment in plant and machinery to the extent of 25% for the purpose of expansion of capacity/ modernization and diversification as against an increase by 33 ½% which was prescribed in NEIP, 1997. The matter is discussed by the AO from page 3 to page 8 of the assessment order. The AR of the appellant had laid stress on the point that the substantial expansion can be done in any year and the definition of ‘initial assessment year’ should be the year in which substantial expansion is made. The only requirement of the Act is substantial expansion should be any data between 01.04.2007 and 31.03.2017, which the appellant had complied. Nowehere, has it mandated that the substantial expansion once completed should be completed within same financial year. On an overall analysis of the matter, I find the case of the appellant has been squarely covered in its favour by the judgement of the jurisdictional Tribunal in the case of jay
The ld. DR vehemently submitted before us that the appeal of the assessee was wrongly allowed by the ld. CIT (A) on this issue by holding that the substantial expansion undertaken by the three units even if completed even beyond the financial year in which it was first undertaken, the deduction u/s 80(IE) is available. The ld. Authorized Representative vehemently submitted that the substantial expansion has been completed in the assessment year in which it is started and therefore, the ld. AO has taken a very correct view of the matter by rejecting the claim u/s 80IE of the Act in respect of three units namely;Namroop, Nahakutia and Lamabari.
After hearing the rival contentions and perusing the materials available on record, we find that the assessee has acquired North India plantation division from Tata Tea Ltd. during the F.Y. 2007-08 and undertook substantial expansion thereafter. The assessee claimed deduction u/s 80IE of the Act for the first time in the A.Y. 2010-11 in respect of 16 undertakings. The A.Y. 2012-13 is the third year of claim in respect of 16 undertakings and the amount of deduction involved was ₹10,50,77,120/-. The assessee claimed the deduction of
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 11.02.2025.