M/S VIRGO INDUSTRIES,PANCHKULA vs. DCIT, CIRCLE, PANCHKULA

The ld. AR Mr. Manoj Kumar appearing on behalf of the assessee submitted that the fact of having carried out substantial expansion has been accepted by the AO in the order dated 31.01.2014 in 2011-12 assessment year. Accordingly, it was his prayer that in the facts of the present case, the issue of substantial expansion having already been decided by the jurisdictional High Court vide order dated 28.11.2017 in the case of M/s Stove Craft India Versus CIT-V and others in ITA 20 to 24/2015, the appeal may be allowed. The ld. Sr.DR relies upon the impugned order.

We have heard the rival submissions and perused the material on record. On perusal of the same, it is seen that the assessee is engaged in the manufacturing of laminated and pre-laminated boards at Kala Amb, Sirmour (HP). The assessee's claim of deduction u/s 80IC to the extent of 100% of eligible profits from the manufacturing activity was limited to 25% by the AO and the CIT(A) relying upon the decision of the ITAT dated 27.05.2015 in the case of Hycron Electronics V ITO in ITA 798/CHD/2012 confirmed the order The tax authorities taking into consideration the fact that the assessee started its business activity in July,2005 and the initial assessment year for claim of deduction u/s 80IC of the Act was 2006-07 assessment year rejecting the claim of deduction @ 100% of eligible profits on the ground that substantial expansion in 2010-11 financial year would not entitle the assessee to said deduction as it was the 9th year of production. 4. We note that post the judgement of the jurisdictional High dated 28.11.2017 in the case of M/s Stove Craft India Versus CIT-V and others in ITA 20 to 24/2015 the issue is no longer res-integra. 8Accordingly, the case is remitted back to the file of the AO with the direction to give necessary relief in accordance with law after giving the assessee a reasonable opportunity of being heard in terms of the decision of the jurisdictional High Court. 5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 04.04.2018.