INCOME TAX OFFICER, WARD-3(1), HYDERABAD vs. REGENCY CERAMICS LIMITED, HYDERABAD

PDF · subscribers
ITA 1340/HYD/2024Status: DisposedITAT Hyderabad02 June 2025AY 2002-200331 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Revenue's contention regarding the interpretation of 'discontinuance' of business was not persuasive. The Tribunal adopted the dictionary meaning of 'discontinue' as an interruption, which can be temporary or permanent. They reasoned that interpreting 'discontinuance' as requiring permanent disruption with no intention to carry on would render the concession provided in the Proviso to Section 80IA(2)(i) r.w. Section 33B of the Act meaningless. The Tribunal found that the cyclone on 06/11/1996 caused extensive damage to the assessee's factory, leading to a complete stoppage of production from 06.11.1996 to 20.12.1996. This interruption fell within the circumstances envisaged in Section 33B. Therefore, the Tribunal upheld the CIT(A)'s view that the assessee was entitled to the deduction under Section 80IA r.w.s 33B. Grounds of appeal 1, 2, and 3 of the Revenue were dismissed.

What were the facts?

The Revenue filed appeals against the orders of the CIT(A) for Assessment Years 1998-99 to 2002-03. These orders arose from assessments under Section 143(3) r.w.s 254 of the Income Tax Act, 1961. The assessee, Regency Ceramics Limited, initially declared income and book profit. A revised return claimed 100% deduction under Section 80IA r.w.s 33B, reducing book profit to NIL. The Assessing Officer (AO) disallowed this claim. The matter went through multiple rounds of appeals, including remands by the Tribunal. The core dispute revolves around the assessee's claim for deduction under Section 80IA r.w.s 33B, which the AO consistently disallowed, and the CIT(A) eventually allowed, leading to the Revenue's present appeals.

What were the issues?

1. Whether the assessee is entitled to deduction under Section 80IA r.w.s 33B of the Income Tax Act, 1961, when there was no reconstructed or revived business unit as per Section 33B. (Mixed question of law and fact, concerning Section 80IA and Section 33B). - Assessee's contention: The assessee claimed deduction under Section 80IA r.w.s 33B, stating that the business was interrupted due to a cyclone on 06/11/1996, causing extensive damage, and production recommenced on 20/12/1996. They relied on a confirmation from Customs and Central Excise regarding production stoppage. - Revenue's contention: The Revenue argued that the damage was only 5-6% of assets and stock, not 'extensive' as required by Section 33B. They also contended that there was no discontinuation of business activities, only a temporary stoppage, and the company was undertaking steps to revive its business. They relied on CBDT Circular No. 5-P (LXXVI-63) of 1967, stating that discontinuance implies complete cessation, not just a cessation of some activities or units.

Which sections of the Income-tax Act were involved?

Section 80IA,Section 33B,Section 143(3),Section 254,Section 115JA,Section 80HHC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘B‘Bench, Hyderabad

Pronounced: 02/06/2025

आदेशकी प्रतततिति अग्रेतषत/ Copy of the order forwarded to:- 1. तिर्ााररती/The Assessee : Regency Ceramics Limited, 6-3-1090/A/7/IMS House Rajbhavan, Somajiguda, Hyderabad, Telangana-500082.

31 ITO, Ward 3(1), Hyderabad Vs. Regency Ceramics Ltd.

1337 to 1340/Hyd/2024 AY(s). 1998-99 to 2002-03

2.

राजस्व/ The Revenue Income Tax Officer, Ward-3(1), 7th Floor, Signature : Towers, Kodapur, Hyderabad, Telangana-500084.

More judgments on Section 80IA

All 1,796 judgments and leading authorities on Section 80IA →

Recent GST High Court judgments

Search GST case law →