VIJAY GUPTA,NEW DELHI vs. ITO, WARD- 35(2), NEW DELHI

The aforesaid appeals have been filed by the assessee against impugned separate orders dated 27.11.2018, passed by the Ld. CIT(Appeals) 12 New Delhi for the quantum of assessment passed u/s 143(3) for the assessment year 2013-14; and order dated 20.8.2018 in relation to the penalty proceedings u/s 271(1)(C).

2. Before us Ld. Counsel for the assessee submitted that the only issue involved is with regard to disallowance of deduction u/s 80IC which has been restricted to 25% instead of 100% claimed by the assessee. He further pointed out that this precise issue has been decided by the Tribunal in assessee’s own case in subsequent assessment year 2014-15 in order dated 18.7.2019, wherein the Tribunal has followed the latest decision of the Hon’ble Supreme Court in the case of Pr. CIT vs M/s. Aarham Softronics in Civil Appeal No. 1784 of 2019. On the other hand Ld. DR strongly relied upon the order of the AO and Ld. CIT (A).

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 Pradesh of the nature mentioned in clause (ii) of subsection (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 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. However, this 100% deduction would be for remaining three years, i.e. 8th, 9th and 10th assessment years.” 4.2. In view of the foregoing, we find that the order of Hon’ble Supreme Court in the case of Pr. CIT vs M/s. Aarham Softronics (supra) being passed by a Larger Bench of the Hon’ble Supreme Court has stronger force as a precedent as compared to decision of Hon’ble Supreme Court in the case of CIT vs Classic Binding Industries (supra). Moreover, Hon’ble Supreme Court has, in order in the case Pr. CIT vs M/s. Aarham Softronics (supra) already considered order in the case of CIT vs Classic Binding Industries (supra) and has over-ruled the order in the case of CIT vs Classic Binding Industries (supra). Therefore, respectfully following the order of Hon’ble Supreme Court in the case of Pr. CIT vs M/s. Aarham Softronics (supra), we dismiss the grounds of appeal; and decide the issues in dispute in the present appeal before us in favour of the assessee. We reject the contention of the Ld. DR that order of Hon’ble Supreme Court does not lay down correct law in the case of Pr. CIT vs M/s. Aarham Softronics (supra). For this purpose, we take guidance from Article 141 of Constitution of India, under which the law declared by the Hon’ble Supreme Court shall be binding on all Courts within the territory of India. Further, we rely on judicial precedents in the cases of Union of India vs Kantilal Hemantram Pandya AIR 1995 Hon'ble Supreme Court 1349 [in which it was held that law laid down by the Hon’ble Supreme Court is binding on all courts and tribunals]; state of Orissa vs Dhaniram Lohar AIR 2004 Hon'ble Supreme Court 1794 [in which it was held that judicial discipline to abide by the Hon’ble Supreme Court cannot be forsaken, under any pretext by any authority or court]; Director of Settlements, A.P. v/s M.R.Apparao AIR 2002 Hon'ble Supreme Court 1598 [in which it was held that the decision of the Hon’ble Supreme Court cannot be assailed on the ground that certain aspects were not considered or the relevant provisions were not brought to the notice of the Court]; Palitana Sugar Mills (P.) Ltd. vs State of Gujarat (2004) 12 SCC 645 [in which it was held that the judgements of the Supreme Court are binding on all authorities under Article 142 of the Constitution and it is not open to any authority to ignore a binding judgement of the Supreme Court on the ground that the full facts had not been placed before it] and State of Punjab vs Devans Modern Breweries Ltd. (2004) 11 SCC 26 [in which it was held that binding precedents, which are authoritative in nature and are meant to be applied, should not be ignored on application of the doctrine of sub silentio or per incurian without assigning specific reasons therefor]. Accordingly, the order of CIT(A) is upheld and the present appeal filed by the Revenue is dismissed. ”