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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI C.N. PRASAD & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the assessee against the order dated 06.04.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2012-13.
The assessee raised the following grounds of appeal:
1. On the facts and circumstances of the case, and in Law, the Income Tax Officer 30(2)(4), Mumbai ('The AO.") erred in reducing the claim of deduction u/s 80-IC by Rs.1,90,64,754/- by restricting the claim to 25% of the total income, disregarding the substantial expansion made in Asst. Year 2011-12.
2. On the facts and circumstances of the case and in law the AO failed to appreciate that:
2 M/s. NPP Printing N Packaging a) The appellant has under taken substantial expansion during the Asst. year 2011-12 as per section 80-IC of the act. b) The appellant is eligible for 100% deduction of profits of the eligible units for five years from the date of substantial expansion and claimed accordingly. c) The section 80-IC does not differentiate between the units which has already claimed deduction 80-IC and others while giving the benefit on substantial expansion. d) The Assessee has claimed the deduction based on the Letter dated 3/12/2009 issued and circulated with all the assessing officers in the range by the then CIT of Shimla. e) The provision of Section 80-IC are incentive provision and shall be applied in a beneficial way even if is there ambiguity in the language of section as held by courts on various occasions. f) 332Thus the appellant therefore prays that 100% deduction u/s 80-IC claimed by the appellant for the Assessment year may please be allowed.
3. The appellant craves leave to produce additional evidence if any in support of its claim in the course of appeal hearing. The appellant craves leave to add to, alter, and / or amend the above grounds of appeal.
The issue raised in the ground no. 1 of the appeal is against the upholding the rejection of the claim under section 80-IC of the Act to the tune of Rs.1,90,64,754/- thereby restricting the claim to 25% of the total income whereas the issue taken up in the second ground of appeal is against the order of Ld. CIT(A) failing to appreciate the fact that substantial expansion during the assessment year 2011-12 was undertaken as per the provision of section 80-IC of the Act. Therefore, the order of Ld. CIT(A) is wrong as the claim of the assessee claim 100% deduction of profit of the eligible unit for five years runs from the date of substantial expansion which was wrongly restricted to 25% only.
At the outset, the Ld. A.R. brought to the notice of the Bench that the issue has been covered in favour of the assessee by the decision of the Hon’ble Himachal Pradesh High Court in the case of Stovekraft India & Ors. CIT & Ors. in ITA
3 M/s. NPP Printing N Packaging No.20 to 24, 31 to 37 of 2015 vide order dated November 28, 2017. The Ld. Counsel submitted that the assessee firm is engaged in the manufacturing of printed packaging material such as cartons, catch covers, leaflets and labels at its factory situated at Industrial Park, Baba Haripur Road, Vill- Damuwala, P.O. Brotiwala, Distt. – Solan, Himachal Pradesh. During the year the assessee has claimed deduction equal to 100% of the net profit u/s 80IC of Rs.2,54,19,672/- in the return filed on 28.09.12 on the ground that the assessee has undertaken substantial expansion on 25.10.10 i.e. in the F.Y. 2010-11 relevant to A.Y. 2011-12. However, the AO rejected the claim of the assessee and restricted the same to 25% on the ground that assessee has already been allowed deduction as per provisions of section 80IC of the Act which provide for benefit of deduction @ 100% during the initial five years. Thus the AO held that the action of the assessee would result in claiming the deduction @ 100% in 10 years and thereafter at 25% which is not as per the provision of law. However, the Ld. A.R. submitted that the issue has been set aside and decided in favour of the assessee by the Hon’ble Himachal Pradesh High Court by observing that there can be more than one initial assessment year and undertaking can be entitled to reduction @ 100% for a period of more than 5 years provided the unit is established in the State of Himachal Pradesh after 7.1.2003 and undertakes substantial expansion before 1.4.2012.
Per contra, the Ld. D.R., on the other hand, relied on the order of the Ld. CIT(A). The Ld. D.R. prayed before the Bench
4 M/s. NPP Printing N Packaging that the issue be restored to the file of the AO so that he gets an opportunity to decide the same after considering the decision of Hon’ble Himachal Pradesh High Court as at the time of assessment proceeding the judgment of the Hon’ble High Court was not available.
We have heard the rival submissions of both the parties and perused the relevant material on record. The undisputed facts are that the assessee has set up the new unit in the State of Himachal Pradesh which is located at Industrial Park, Baba Haripur Road, Vill- Damuwala, P.O. Brotiwala, Distt. – Solan, Himachal Pradesh and the date of commencement of operation by the assessee was 18.10.06 and initially the assessment year from which the deduction claimed by the assessee was A.Y. 2007-8. During the financial year 2010-11 the assessee undertook substantial expansion and claimed the profit during the year to the tune of Rs.2,54,19,672/- under section 80IC as 100% exempt. The AO rejected the claim of the assessee on the ground that assessee has already availed the deduction of 100% for the first five years and therefore the provision of section 80IC of the Act qua allowance of deduction @ 100% of the profit set up in notified backward area only for the first five years and thereafter @ 25%. The AO held that there cannot be two initial assessment years as has been provided in the section itself. The action of the AO was also upheld by the Ld. CIT(A). Now the Hon’ble High Court of Himachal Pradesh in the case of Stovekraft India & Ors. Vs CIT & Ors. (supra) has decided the issue. Moreover, we also find that the Hon’ble Apex Court in the case of 5 M/s. NPP Printing N Packaging Mahavir Industries vs. Pr. CIT in ITA No.4767 of 2018 has decided this particular issue. Therefore, after considering the facts of the case we feel it necessary to restore the issue to the file of the AO to decide the issue after considering the decisions of Hon’ble High Court of Himachal Pradesh and of the Apex Court.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 28.05.2018.