M/S ADMAC FORMULATIONS,PANCHKULA vs. ACIT, CIRCLE, PANCHKULA

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ITA 1472/CHANDI/2017Status: DisposedITAT Chandigarh02 May 2018AY 2013-143 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the issue was covered by the Himachal Pradesh High Court's decision in M/s Stovekraft India vs. CIT. The High Court ruled that there is no bar in Section 80IC denying 100% deduction for substantial expansion.

What were the facts?

The assessee claimed 100% deduction under Section 80IC for substantial expansion of its unit. The CIT(A) upheld the reduction of this deduction to 25%. The assessee appealed this decision.

What were the issues?

Whether an assessee undertaking substantial expansion is eligible for 100% deduction under Section 80IC, or if it is limited to 25%.

Which sections of the Income-tax Act were involved?

Section 80IC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH’B’, CHANDIGARH

Before: SMT. DIVA SINGH & SHRI B.R.R. KUMAR

For Respondent: Smt. Chanderkanta
Hearing: 05/02/2018Pronounced: 02/05/2018

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH’B’, CHANDIGARH

BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER

ITA Nos.1472 & 1473/Chd/2017 Assessment Year: 2013-14 & 2014-15

M/s Admac Formulations Vs. The Dy. CIT House No. 272, Sector 17 Panchkula Circle Panchkula

PAN No. AAAAA5219Q

(Appellant) (Respondent)

Assessee By : Sh. Tej Mohan Revenue By : Smt. Chanderkanta

Date of hearing : 05/02/2018 Date of Pronouncement : 02/05/2018

ORDER PER BENCH.

Both the above appeals have been filed by the Assessee against the separate order of the Ld. CIT(A), Panchkula dt. 30/08/2017

2.

Since the issues have been raised in both the above appeals are similar therefore they are being disposed off by a consolidate order for the sake of convenience.

3.

We shall take ITA No. 1472/Chd/2017 as a lead case in which assessee has raised the following grounds:

1.

That the Ld. CIT(A) has erred in law as well as on facts in upholding the reduction of deduction under section 80IC of the Act to 25% as against 100% claimed as the assessee has admittedly carried out substantial expansion which makes the unit eligible for deduction @ 100% and as such non allowance of deduction at 100% is illegl, arbitrary and unjustified. 2. That the Ld. CIT(A) has failed to construe the benevolent provisions as enacted in Chapter VI of the Act in a harmonious and liberal manner especially when there are decisions of various courts in favour of the assessee and as such upholding of the assessment order is arbitrary and unjustified.

4.

The sole issue raised in this appeal relates to the action of the CIT(A) in

disallowing the claim of deduction @ 100% us 80IC of the Income-tax Act, 1961

(in short 'the Act') on account of substantial expansion of the Unit.

5.

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 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.

(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)].”

6.

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

decision of the Hon'ble jurisdictional High Court.

7.

In view of the above discussion, the impugned order of the CIT(A) is set

aside and the AO is directed to grant to the assessees deduction 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) after due examination.

8.

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

Order pronounced in the open court.

Sd/- Sd/- (DIVA SINGH) (B.R.R.KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 02/05/2018 AG Copy to: The Appellant, The Respondent, The CIT, The CIT(A), The DR

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