RAJ INDUSTRIES,LUDHIANA vs. DCIT, C-5, LUDHIANA

Per Sanjay Garg, Judicial Member:

The captioned appeal has been preferred by the assessee

against the order dated 24.10.2017 of the Commissioner of

Income Tax (Appeal)-2, Ludhiana [hereinafter referred to as

‘CIT(A)]. The assessee in this appeal has taken the following

grounds:-

“1) That the order dated 24/10/2017 passed by the Ld.

Commissioner of Income Tax (Appeals)-2 Ludhiana is bad in

law being based on incorrect appreciation of f acts and law.

2) That the order dated 24/10/2017 passed by the Ld.

Commissioner of Income Tax (Appeals)-2 Ludhiana merely based of order passed by his predecessor for the Ass. Year

2013-14, without looking into provisions of section 80IC.

3 That on the f acts and in the circumstances of the case,

the Ld. Commissioner of Income Tax (Appeals)-2 Ludhiana

erred on f acts and in law in holding that provisions of

section 80IC recognized only one initial assessment year.

the Ld. Commissioner of Income Tax (Appeals)-2 Ludhiana

has f ailed to appreciate that there are two limbs to claim

deduction u/s 80IC (2) of the Income Tax, Act 1961, and

the Appellant unit having satisfied the second limb, viz.,

“which manufactures and undertakes substantial

expansion during the eligible period”, could not have been

denied the benefit of 100% deduction u/s 80IC

or vary any ground of appeal before the appeal is heard

and f inally disposed off.”

submitted that the issue raised in this appeal squarely covered

by the decision of the Tribunal in the case of M/s Security

Products Pvt. Ltd. vs. DCIT, Circle, Parwanoo (ITA No.

1152/Chd/2017 Dated 19.12.2017) wherein the Tribunal while

relying upon the decision of the Hon'ble Himachal Pradesh

High Court in the case of M/s Stovekraft India Vs.

Commissioner of Income Tax, ITA No. 20 of 2015 has decided,

the issue in favour of the assessee. Relevant part of the order of the Tribunal in case of M/s Security Products Pvt. Ltd. vs.

DCIT(supra) is reproduced as under:-

“3. During the course of hearing before us, it was brought to our notice that the order of the ITAT in the case of Hycron Electronics (supra) had been decided in appeal by the Hon’ble Himachal Pradesh High Court vide their order dt. 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. 4 (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)].” 4. No one appeared on behalf of the assessee. However, Ld. DR fairly admitted that the issue is squarely covered by the above decision of the Hon'ble jurisdictional High Court. She, however, has submitted that the issue be restored to the file of the Assessing officer for verification as to whether the assessee has actually carried out the substantial expansion to be entitled to claim deduction u/s 80IC of the Act. 5. We do not agree to the above contention raised by the Revenue at this stage. A perusal of the order of the Assessing officer reveals that the Assessing officer has not disputed that the assessee unit has carried out substantial expansion as provided under clause (b) of sub section (2) read with clause (ix) of sub section (7) of section 80IC of the Act. Almost similar view has also been taken by the Hon'ble Himachal Pradesh High Court in the case of ‘M/s 5 Stovekraft India vs. Commissioner of Income Tax’ (supra) in the following concluding para of the order:- “58. On facts, we may clarify that the Revenue has not disputed, (a) the units having carried out substantial expansion within the definition of the Section, (b) their entitlement and extent of deduction would be dependent upon interpretation of the relevant provisions.”

We, therefore, do not find any justification at this stage to give the Assessing officer a second innings to re-examine undisputed facts. 6. In view of the above discussion, the order of the CIT(A) is set aside and the AO is directed to grant the assessee deduction of hundred percent of its eligible profits, as per the ruling of the jurisdictional High Court in this regard in the case of ‘M/s Stovekraft India vs. Commissioner of Income Tax’ (supra). 7. In the result, the appeal of the assessee, therefore, stands allowed.” 3. Since the issue is squarely covered by above decision of

the Tribunal and Ld. DR has not brought in any distinguishing

case law or fact, hence, following the decision of the

Tribunal(supra), the issue raised in this appeal is decided in

favour of the assessee.

In the result, the appeal of the assessee stands allowed.

Order pronounced in the Open Court

Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : 02.07.2018

Ganesh Kumar

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