HIGH VALLEY INDUSTRIES CORPORATION,NEW DELHI vs. DCIT, CIRCLE(NOWACIT, CENTRAL CIRCLE-7), PARWANOO

This appeal by assessee has been directed against the order of Ld. CIT(Appeals), Shimla dated 28/10/2016 for A.Y. 2013-14, challenging the order of the Ld. CIT(A) in confirming the action of the AO in allowing deduction u/s 80-IC to Rs. 61,09,281/- as against Rs. 2,44,37,125/-.

Briefly the facts of the case are that assessee firm filed its return of income declaring Nil income after claiming deduction u/s 80-IC amounting to Rs. 2,44,37,125/-. The assessee firm is engaged in the business of manufacturing of self adhesive tapes and trading of polymers/resins. The assessee started its manufacturing activity/operation on 16th August, 2005 and initial assessment year for claim of deduction u/s 80-IC of the Act was A.Y. 2006-07. The assessee 1

Ld. Counsel for assessee submitted that now the issue is decided by the Hon’ble Supreme High Court in the case of Pr. CIT Vs. Aarham Softronics reported in 412 ITR 623 (SC) in which it was held as under: Held accordingly, (i) that an undertaking or an enterprise which had set up a new unit between January 7, 2003 and April 1, 2012 in the State of Himachal Pradesh of the nature mentioned in section 80-IC(2)(ii) would be entitled to deduction at the rate of 100% of the profits and gains for the 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. (ii) That however, in a case where substantial expansion as defined in section 80-IC(8)(ix) is carried out by such an undertaking or enterprise, within the period of ten years, the assessment year corresponding to the previous year in which the substantial expansion is undertaken would become the “initial assessment year”, and from that assessment year the assessee shall be entitled to 100% deductions of the profits and gains. (iii) That such deduction, however, would be for a total period of ten years, as provided in section 80-IC(6). For example, if the expansion is carried out immediately, on the completion of the 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 the eighth year by an assessee such an assessee would be 2

Ld. DR also stated that now issue is decided in favour of the assessee. In view of the above, since the issue is now decided in favour of the assessee. Therefore, assessee would be entitled for deduction u/s 80-IC for 100%. We, accordingly, set aside the orders of the authorities below and direct the AO to grant deduction of the assessee u/s 80-IC at 100%.

In the result, the appeal of assessee is allowed.