ACIT., CIRCLE-6(1), HYDERABAD vs. DP CHOCOLATES, HYDERABAD

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ITA 1381/HYD/2024Status: DisposedITAT Hyderabad21 March 2025AY 2018-1914 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal, while principally agreeing with the CIT(A)'s view that the assessee could claim 100% deduction under Section 80IC upon undertaking 'substantial expansion' as per Section 80IC(8)(ix), found fault with the manner in which the CIT(A) summarily allowed the claim. The Tribunal noted that the CIT(A)'s order lacked verification regarding whether the assessee had satisfied the pre-conditions for claiming the modified/enhanced deduction under Section 80IC(2)(a)(ii). Specifically, there was no mention of whether the assessee had indeed carried out 'substantial expansion' as defined, nor had the CIT(A) verified other pre-conditions. While the assessee's claim for the preceding year being allowed by the AO supported the current claim, it did not justify dispensing with the verification of cumulative satisfaction of pre-conditions for the year under consideration. Therefore, the Tribunal restored the matter to the file of the CIT(A) for re-adjudication after verifying the cumulative satisfaction of the pre-conditions by the assessee for claiming the modified deduction.

What were the facts?

The Revenue filed an appeal against the order of the Commissioner of Income-Tax (Appeals) - National Faceless Appeal Centre (NFAC), Delhi, dated 28/10/2024. This order arose from the Assessing Officer's (AO) order under Section 143(3) dated 22/04/2021 for Assessment Year 2018-19. The assessee, DP Chocolates, engaged in manufacturing chocolates, had initially filed its return on 07/03/2019 declaring an income of Rs. 22,09,47,350/-. The AO selected the case for scrutiny. The assessee claimed a deduction of Rs. 6,96,41,501/- (25% of eligible profits) under Section 80IC(2)(a)(ii) for an eligible unit established in Himachal Pradesh. During assessment, the assessee contended that due to substantial expansion of its manufacturing capacity (from 12000 TPA to 20000 TPA) in FY 2014-15, it was eligible for 100% deduction under Section 80IC(8)(ix) read with a Supreme Court judgment. The AO, while finding the claim in order, disallowed it for not being raised via a revised return, citing the Supreme Court's decision in Goetze (India) Ltd.

What were the issues?

1. Whether the CIT(A) was correct in holding that a revised computation of total income is sufficient for claiming deduction under Section 80IC, and a revised return is not required? Assessee's Contentions: - The CIT(A)'s order allowing the appeal against the AO's order is legal and proper. - The CIT(A) rightly directed the AO to grant 100% deduction under Section 80IC, citing the Supreme Court judgment in PCIT, Shimla vs. Aarham Softronics and Board's Circular No. 14(XL-35). - The Department is estopped from appealing as they granted enhanced deduction for the preceding year on similar facts. - Substantial benefit of 100% deduction should not be denied for minor procedural infractions, as all material conditions were satisfied. - A liberal view should be adopted for Section 80IC, a beneficial provision, given substantial compliance. - The AO's reliance on Goetze (India) Ltd vs. CIT is misplaced as the assessee merely modified its claim, not made a fresh one. Revenue's Contentions: - The primary ground is whether the CIT(A) was right in holding that a revised computation of total income is sufficient for claiming deduction under Section 80IC, and a revised return is not required.

Which sections of the Income-tax Act were involved?

Section 80IC,Section 143(3),Section 143(2),Section 254,Section 80IC(2)(a)(ii),Section 80IC(8)(ix),Section 80IC(6),Section 80IC(3)

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Cases cited in this judgment(3)Show list

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

Heard together (2 matters)

ITA NO. 1381/HYD/2024
C.O. No. 7/Hyd/2025

Read from the judgment's own cause title. This page is filed under one of them.

आदेशकी �ितिलिप अ�ेिषत/ Copy of the order forwarded to:- 1. िनधा�रती/The Assessee : DP Chocolates, 8-3-945, Flat No.304, Pancom Business Centre, Ameerpet, Hyderabad,Telangana-500073. Asst. Commissioner of Income Tax, Circle-6(1), 6th 2. राज�/ The Revenue : Foor, B-Block, IT Towers, AC Guards, Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad िवभागीय�ितिनिध, आयकर अपीलीय अिधकरण, हैदराबाद / DR, ITAT, Hyderabad 4. 5. The Commissioner of Income Tax 6. गाड�फ़ाईल / Guard file

आदेशानुसार / BY ORDER

Sr. Private Secretary ITAT, Hyderabad

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