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Income Tax Appellate Tribunal, DIVISION BENCH ‘A’, CHANDIGARH
Before: SHRI SANJAY GARG & MS. ANNAPURNA GUPTA
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘A’, CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.500/Chd/2017 (Assessment Year : 2012-13) Sh.Arun Trehan, Vs. The Pr.CIT-II Plot No.3, Timber Market, Chandigarh. Sector 26, Chandigarh. PAN: AAOPT1096K (Appellant) (Respondent)
Appellant by : Shri Atul Mandhar, CA Respondent by : Shri Gulshan Raj,CIT DR Date of hearing : 27.03.2018 Date of Pronouncement : 15.06.2018
ORDER PER ANNAPURNA GUPTA, AM:
This appeal has been preferred by the assessee against
the order of learned Pr.Commissioner of Income Tax-2,
Chandigarh (hereinafter referred to as Ld. Pr.CIT) dated
17.1.2017 relating to assessment year 2012-13, passed u/s
263 of the Income Tax Act, 1961 (in short ‘the Act’).
In the present case, the order passed by the Assessing
Officer was found to be erroneous by the Ld.Pr.CIT, so as to
cause prejudice to the Revenue for the reason that the
assessee had claimed deduction u/s 80IC @ 100% of its
Profit after having claimed so in the initial five years since
commencement of manufacturing activity, on account of
substantial expansion undertaken which the Ld. Pr.CIT
found to be against the provisions of the Act. The Ld. Pr.CIT
in this regard relied upon the order passed by the I.T.A.T.
Chandigarh, in the case of Hycron Electronics, Baddi,
Solan Vs ITO, of ITA No. 798/CHD/2012 wherein it was
held that where the assessee had already availed full deduction @ 100% of its eligible profits in the initial five
years, it was thereafter entitled to deduction only @ 25%
of its profits and not @ 100%, even if the substantial
expansion had been undertaken by the assessee.
During the course of hearing before us, the Ld.
counsel for assessee pointed out that the position of law
in this regard vis-à-vis the claim of deduction u/s 80IC @
100% on account of substantial explanation undertaken even if full deduction has been claimed earlier had been
decided in favour of the assessee by the Hon'ble
Jurisdictional High Court in group of cases with the lead
case being M/s Stovekraft India Vs. CIT in ITA No.20 of 2015. Our attention was drawn to the finding of the
Hon'ble Jurisdictional High Court in the said case 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. The Ld. counsel for assessee stated that in view of the same, there was no error in the order of the Assessing Officer and, therefore, the order passed by the Ld. Pr.CIT u/s 263 of the Act needed to be set aside.
The Ld. DR, conceded that the issue in relation to which jurisdiction had been assumed by the Ld.Pr.CIT to revise the order in the present case had been subsequently decided in favour of the assessee as pointed out by the Ld. counsel for assessee.
In view of the above, we are in agreement with the Ld. counsel for assessee that there was no error in the order of the Assessing Officer allowing the assessee 100%
deduction of its profits u/s 80IC of the Act even after
having claimed 100% deduction of its profits for initial
five years, on account of substantial expansion
undertaken since the Hon'ble Jurisdictional High Court in
the case of M/s Stovekraft India (supra) has confirmed
this position of law. In view of the above, the order passed
by the Ld.Pr.CIT u/s 263 of the Act is set aside and the
appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court.
Sd// Sd/-
(SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 15th June, 2018 *Rati* Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR
Assistant Registrar, ITAT, Chandigarh