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Income Tax Appellate Tribunal, DELHI BENCH ‘D’ : NEW DELHI
Before: SHRI R.K. PANDA & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
Appellant, ITO, Ward 11 (4), New Delhi (hereinafter referred to as the ‘Revenue’) by filing the present appeal sought to set aside the impugned order dated 27.11.2015 passed by the Commissioner of Income - tax (Appeals)-4, New Delhi qua the assessment year 2009-10 on the grounds inter alia that :- “1. Whether on facts & circumstances of the case Ld. CIT(A) grossly erred in quashing the assessment u/s 147 by ignoring the fact that Form No.10CCB for A.Y. 09-10 falsely states that date of commencement of operation by the undertaking is 30/03/2009 whereas the truth is that Form No. 10CCB for earlier A.Y. 08-09 states that date of commencement of operation by the undertaking was 29/11/2003.
2. The Id. CIT (A) has grossly erred in quashing the assessment u/s 147 by holding that there was no new material ignoring the fact that false information was given to the AO during assessment proceedings and also the fact that for earlier five Assessment Years the Assessee had already claimed deduction u/s 80-IC of the Act was neither known to the AO nor did the assessee disclose the same during assessment proceedings.
3. The Ld. CIT(A) erred in holding that deduction @ 100% can be allowed even beyond 5 years if the Assessee undertakes substantial expansion and also erred in holding that the initial assessment year can be re-fixed upon undertaking of substantial expansion ignoring the legal Provisions that initial assessment year can only be that Assessment Year in which the Assessee claims benefits of Section 80-IC for the first time.”
Briefly stated the facts necessary for adjudication of the issue at hand are : Assessee is into the business of manufacturing and selling of LPG Gas Cylinders and during the year under assessment, he has claimed deduction under section 80IC of the Income-tax Act, 1961 (for short ‘the Act’) of Rs.3,32,30,544/-. Assessing Officer (AO) noticed that the assessee has claimed 100% deduction during the year under assessment by treating Assessment Year 2009-10 as its initial assessment year but in AY 2008-09 the assessee had mentioned initial AY as 2004-05. AO proceeded to conclude that since deduction @ 100% of the profit and gains of the industrial undertaking is allowable for the first five years commencing with the initial assessment year and for the next five years, the assessee is entitled for deduction @ 25% (30 in case of company) and thereby disallowed the deduction of Rs.3,32,30,544/- and assessed the total income at Rs.3,46,10,371/-.
Assessee carried the matter by way of appeal before the ld. CIT (A) who has allowed the deduction claimed by the assessee by allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 5. Undisputedly, after framing the initial assessment u/s 143 (3), the AO reopened the assessment u/s 147 of the Act with regard to the deduction claimed u/s 80IC of the Act. It is also not in dispute that the reopening has been quashed as no material had come on record enabling the AO to reopen the assessment, hence treating the reopening as change of opinion, the assessment has been quashed by ld. CIT (A). The Revenue has failed to controvert the findings returned by the ld. CIT (A) that there was no new material on the basis of which assessment can be reopened. Ld. DR for the Revenue relied upon the order passed by the AO.
Even otherwise, assessee is entitled for deduction u/s 80IC on merits because in the preceding as well as succeeding years as well as in the original assessment u/s 143 (3), the deduction had been allowed. Moreso, issue in controversy is squarely covered in favour of the assessee by the decision rendered by Hon’ble Supreme Court in case of Pr. CIT vs. Aarham Softronics (2019)
102 taxmann.com 343 (SC). Operative part of the judgment is extracted for ready perusal as under :-
“24. The aforesaid discussion leads us to the following conclusions: (a) Judgment dated 20th August, 2018 in Classic Binding Industries case omitted to take note of the definition 'initial 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 sub-section (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-le 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.”
In view of what has been discussed above and in view of the law laid down by Hon’ble Supreme Court, we find no illegality or perversity in the impugned order passed by the ld. CIT (A), hence the appeal filed by the Revenue is hereby dismissed. Order pronounced in open court on this 10th day of October, 2019.