M/S HIM OVERSEAS,CHANDIGARH vs. ACIT, C-4(1), CHANDIGARH

We have heard the submissions and perused the material available on record. It is seen that in the facts of the present case the assessee firm is engaged in the business of manufacturing of galvanised fence fittings, scaffolding and accessories etc. for export and domestic market. The main ingredients of raw materials used are described as Iron flats, bars, rods, rounds Zinc, aluminum, iron casting, forgings, nuts, bolts and consumables, packing materials. The assessee firm was found to have started its claim for deduction under section 80IC from 2005-06 assessment year since the claim of 100% deduction for eligible profits stood exhausted for 5 years. The assessing officer denied the claim of 100% deduction which is claimed on the grounds that substantial expansion had been carried out in 2009–10 financial year on the reasoning that the year under consideration was the 9th year and thus, relying upon the decision of the ITAT dated 27.05.2015in the case of Hycron Electronics V ITO in ITA 798/CHD/2012, the claim was restricted to 25%. The said conclusion was upheld by the CIT(A) in the ex-parte proceedings. However, since the issue is no longer res-integra as the jurisdictional High Court in the aforesaid decision considered the facts of the specific case in para 51 has come to the following conclusion:- 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 assessees, are quashed and set aside, holding as under: (a) Such of those undertakings or enterprises which were established, became operational and functional prior to 07/01/2003 and have undertaken substantial expansion between 07/01/2003 upto 01/04/2012, 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 07/01/2003 and carried out substantial expansion prior to 01/04/2012, 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 07/01/2013 upto 01/04/2012, 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)].

Accordingly, in view of the above, the issue is remanded to the AO 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. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 18/06/2018.