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Income Tax Appellate Tribunal, DIVISION BENCH ‘A’, CHANDIGARH
Before: MS.DIVA SINGH & MS. ANNAPURNA GUPTA
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘A’, CHANDIGARH
BEFORE MS.DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.56/Chd/2018 (Assessment Year : 2010-11) Emmbros Autocomp Limited, Vs. The D.C.I.T., (Village Katha Baddi), SCO 27, Circle Parwanoo. 1st Floor Mansa Devi Complex, Sector 5, Swastick Vihar, Panchkula. PAN: AAACE3489Q (Appellant) (Respondent)
Appellant by : Shri N.K.Saini, Adv. Respondent by : Shri Ankur Alya, JCIT(DR) Date of hearing : 07.08.2018 Date of Pronouncement : 07.08.2018
ORDER PER ANNAPURNA GUPTA, A.M.:
The present appeal has been filed by the assessee
against the order of learned Commissioner of Income
Tax(Appeals), Shimla dated 23.11.2017 relating to
assessment year 2010-11.
Ground No.1 raised by the assessee reads as under:
“1. The learned CIT(A) has erred in law and facts in confirming the disallowance of claim of deduction under 80IC of IT Act Rs.15,31,241/- which was claimed @ 100% of the of such profits and gains of Embross Export unit and of Rs.21,87,486/- but allowed at 30% of such profits and ignoring the fact that substantial expansion was carried out in AY 2008-09 and deduction was admissible at 100% of the profits of this unit.” 3. The assessee in the above ground has challenged the
action of the CIT(Appeals) in restricting its claim of
deduction u/s 80IC of the Income-tax Act, 1961 (in short
'the Act') to 30% of the eligible profits, as against 100%
claimed by it on account of substantial expansion of its
eligible Unit
Brief facts relating to the case are that the assessee
company is engaged in manufacturing & sale of Auto
Spares and is also doing job work. The manufacturing
activities are being done from three units (Unit-ll, Unit-Ill
and Unit-Emmbros Exports) and job work from a separate
unit (Unit-ACE). With regards to Embross Export unit, the
assessing officer observed that the assessee had commenced
manufacturing activities in the same on 16.12 03,relating to
A.Y 2004-05,and being eligible to claim deduction u/s 80IC,
had already claimed the same to the extent of 100% of the
eligible profits for five years period starting from assessment
year 2004-05 to 2008-09. It was noticed that the assessee
firm had again claimed deduction u/s 80IC @100% in the
impugned assessment year, being the 7th year of production
,by claiming to have carried out substantial expansion in
assessment year 2008-09. The Assessing Officer, for
detailed reasons mentioned in the assessment order, held
that the assessee was eligible for deduction u/s 80IC only @
30% of its profits being Rs.6,56,2451- as against the claim
of 100% at Rs.21,87,486/ made by the assessee. Accordingly
the balance profits were added to the income of the assessee
and subjected to tax.
The matter was carried in appeal before the
Ld.CIT(Appeals) who upheld the order of the Assessing
Officer following the decision of Co-ordinate Bench in ITA
No.798/CHD/2012 in the case of Hycron Electronics Vs
ITO.
During the course of hearing before us, it was brought
to our notice that the issue involved in this appeal has
already been adjudicated by the Hon’ble Himachal Pradesh
High Court vide their order dated 28 November 2017 in the
group of cases with the lead case titled as M/s Stovekraft
India vs. Commissioner of Income Tax, ITA No.20 of 2015,
and it was pointed out that the Hon’ble High Court had
decided the issue in favour of the assessee, holding that
there is no bar in the said section denying the benefit of
hundred percent deduction to new units undertaking
substantial expansion. Our attention was drawn to the
relevant conclusions of the Hon’ble High Court in this regard
at para 55 of the order as under:
“55.Thus, in view of the above discussion, these appeals are allowed and orders passed by the Assessment Officer as well as the Appellate Authority and the Tribunal, in the case of each one of the Assesses, are quashed and set aside, holding as under: (a) Such of those undertakings or enterprises which were established, became operational and functional prior to 7.1.2003 and have undertaken substantial expansion between 7.1.2003 upto 1.4.2012, should be entitled to benefit of Section 80-IC of the Act, for the period for which they were not entitled to the benefit of deduction under Section 80-IB. (b) Such of those units which have commenced production after 7.1.2003 and carried out
substantial expansion prior to 1.4.2012, would also be entitled to benefit of deduction at different rates of percentage stipulated under Section 80-IC. (c) Substantial expansion cannot be confined to one expansion. As long as requirement of Section 80-IC(8)(ix) is met, there can be number of multiple substantial expansions. (d) Correspondingly, there can be more than one initial Assessment Years. (e) Within the window period of 7.1.2013 upto 1.4.2012, an undertaking or an enterprise can be entitled to deduction @ 100% for a period of more than five years. (f) All this, of course, is subject to a cap of ten years. [Section 80-IC(6)]. (g) Units claiming deduction under Section 80-IC shall not be entitled to deduction under any other Section, contained in Chapter VI-A or Section 10A or 10B of the Act [Section 80- IB(5)].” 7. Ld. DR has fairly admitted that the issue is squarely
covered by the above decision of the Hon'ble jurisdictional
High Court.
Accordingly, in view of the above, the issue is remanded
to the Assessing Officer to grant necessary relief in
accordance with law as per the ruling of the jurisdictional
High Court. Said order was pronounced in the Open Court
at the time of hearing itself. Needless to say that the
assessee shall be afforded a reasonable opportunity of being
heard.
The ground of appeal No.1 raised by the assessee
stands allowed for statistical purposes.
Ground Nos.2 and 3 raised by the assessee read as
under:
“2. The learned CIT (A) has erred in law and on facts in not considering loss of Rs.54,51,400/- in unit II separately, while calculating taxable income of the assessee as assessee inadvertently claimed deduction under section unit III unit export 80IC on and at Rs.1,19,61,435/- on the basis of consolidated net profit against the profit of unit III at Rs.1,50,14,896/- and of unit Exports at Rs.21,87,487/-. 3. The learned assessing officer has erred in law in not computing the profits of each unit separately for the purpose of computing taxable income of the company. Assessing officer may be directed to compute the income of each unit separately for the purpose of computing taxable income of the assessee.”
The above grounds were not pressed by the Ld. counsel
for assessee and are therefore dismissed as not pressed.
In the result, the appeal of the assessee is partly
allowed for statistical purposes.
Order pronounced in the open court.
Sd/- Sd/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 7th August, 2018 *Rati* Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR
Assistant Registrar, ITAT, Chandigarh