ITO, WARD, PARWANOO vs. SH. SUDHISH SONI, PARWANOO

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ITA 507/CHANDI/2018Status: DisposedITAT Chandigarh02 July 2018AY 2014-155 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that there is no bar in Section 80IC denying deduction for substantial expansion of an existing unit. The assessee is entitled to the deduction, and the CIT(A) correctly followed the High Court's precedent.

What were the facts?

The assessee claimed deduction under Section 80IC for substantial expansion of their unit. The Assessing Officer denied this, stating the assessee had already availed the deduction at the unit's establishment. The CIT(A) deleted the additions, relying on a High Court judgment.

What were the issues?

Whether an assessee who has already availed deduction under Section 80IC at the time of establishment of a unit is eligible for deduction on account of substantial expansion of the same unit.

Which sections of the Income-tax Act were involved?

Section 80IC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHANDIGARH BENCHES, ‘A’ CHANDIGARH

Before: SHRI SANJAY GARG & Ms. ANNAPURNA GUPTA

For Respondent: CA &
Hearing: 02.07.2018Pronounced: 02.07.2018

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, ‘A’ CHANDIGARH

BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & Ms. ANNAPURNA GUPTA, ACCOUNTANT MEMBER

ITA No. 506/Chd/2018 Assessment Year: 2014-15

The ITO, Ward, Vs. M/s Jain Industrial Manufacturing Co., Parwanoo (HP) Near HRTC, Kali Mandir, Sector 1, Parwanoo, PAN No. AAFFJ5907N (Appellant) (Respondent) Appellant By : Sh Manoj Kumar Sr. DR Respondent By : Sh. Manoj Kumar, CA &

ITA No. 507/Chd/2018 Assessment Year: 2014-15

The ITO, Ward, Vs. Smt. Sudhish Soni, Parwanoo (HP) Prop M/s Sunrises Packaging, Valley View, Sector 1, Parwanoo PAN No. AUAPS3289F

Appellant By : Sh Manoj Kumar Sr. DR Respondent By : Sh. Surinder Babbar, CA Date of hearing : 02.07.2018 Date of Pronouncement : 02.07.2018

ORDER Per Bench:

The captioned appeals have been preferred by the Revenue against the separate orders of Commissioner of Income Tax (Appeals),

ITA No. 506 & 507/Chd/2018- Jain Industrial Manufacaturing Co & Sudish Soni, Parwanoo 2

Shimla [hereinafter referred to as ‘CIT(A)’] dated 19 & 20.02.2018

respectively. Since the common issue relating to the deduction claimed

u/s 80IC of the Act has been raised in both the appeals, therefore,

they were heard together and are being disposed of by this common order. ITA No.506/Chd/2018 is taken as lead case for the purpose of

narration of facts.

2.

The brief facts relating to the issue are that the assessee

claimed deduction u/s 80IC of the Act @100% on account of

substantial expansion of the Unit. The Assessing officer, however,

denied the claim observing that assessee once had availed the

deduction u/s 80IC at the time of establishment of unit and thus was

not entitled to 100% deduction subsequently on account of substantial

expansion. The Ld. CIT(A), however, deleted the additions so made

by the Assessing officer relying upon the judgement of the Hon'ble

H.P. High Court Shimla in the case of M/s Stove Kraft India Vs. CIT

(supra). The Revenue is, thus, in appeal before us agitating the above

action of the CIT(A).

3.

Further, it has been brought to our notice that the issue involved

in these appeals now is well settled which has already been adjudicated

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 has been pointed out that the Hon’ble High Court has 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 has been drawn to the

ITA No. 506 & 507/Chd/2018- Jain Industrial Manufacaturing Co & Sudish Soni, Parwanoo 3

relevant conclusions of the Hon’ble High Court in this regard at para 55

of the order which read 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)].”

4.

Ld. DR has fairly admitted that the issue is squarely covered by

the above decision of the Hon'ble jurisdictional High Court. He,

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.

ITA No. 506 & 507/Chd/2018- Jain Industrial Manufacaturing Co & Sudish Soni, Parwanoo 4

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 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, we find that the Ld. CIT(A) that

correctly followed the judgement of the Hon'ble H.P. High Court

Shimla in the case of M/s Stove Kraft India Vs. CIT (supra). We do not

find any infirmity in the order of CIT(A) and the same is, therefore, upheld. Our findings given above mutatis-mutandis applies to ITA No.507/Chd/2018 also.

In the result, both appeals of the Revenue are dismissed.

Order pronounced in the Open Court

Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 02.07.2018

ITA No. 506 & 507/Chd/2018- Jain Industrial Manufacaturing Co & Sudish Soni, Parwanoo 5

Rkk

Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR

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