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Income Tax Appellate Tribunal, DIVISION BENCH’B’, CHANDIGARH
Before: SMT. DIVA SINGH & SHRI B.R.R. KUMAR
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 No.1641/Chd/2017 Assessment Year: 2014-15
M/s Aarham Softronics Vs. The ITO Plot No. 30, Indl. Area Baddi Solan, Baddi
PAN No. AALFA1356L
& ITA No.1681/Chd/2017 Assessment Year: 2013-14
M/s Aarham Softronics Vs. The ITO Plot No. 30, Indl. Area Baddi Solan, Baddi
(Appellant) (Respondent)
Assessee By : Sh. Vineet Krishan Revenue By : Ms. L.P Sandhu
Date of hearing : 20/03/2018 Date of Pronouncement : 22/03/2018
ORDER PER BENCH.
Both the above appeals have been filed by the Assessee against the separate order of the Ld. CIT(A), Shimla dt. 27/09/2017 and 23/10/2017 respectively.
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.
We shall take ITA No. 1641/Chd/2017 as a lead case in which assessee has raised the following grounds:
That the order passed under section 250(6) by the Learned Commissioner of Income Tax (Appeals), Shimla (HP) in Appeal No. IT/160/16-17/Sml dated 27.09.2017 is contrary to law and facts of the case.
That in the facts and circumstances of the case and in law, the Id. Commissioner of Income Tax (Appeals) gravelly erred in upholding the action of the Id. Assessing Officer who had restricted the claim of deduction under Section 80IC to 25% of the profits and gains of the eligible business instead of 100% of such profits claimed by appellant, which led to addition of Rs.530243/-
That in the facts and circumstances of the case and in law, the Id. Commissioner of Income Tax (Appeals) gravelly erred in upholding the stand of the Id. Assessing Officer who had erred in misinterpreting the provisions of Section 80IC and in holding that the benefit of 100% deduction under Section 80IC of the Act for first five years in case of substantial expansion is available only to the units that existed and where operational as on 07.01.2003 and such benefit is not at all meant for the units that came into being on or after the introduction of the scheme of such deduction.
4.That in the facts and circumstances of the case the Ld CIT (A) gravely erred in upholding that once an 'initial assessment year' is determined in case of an undertaking claiming benefit u/s 80IC of the Act, it cannot be changed even if such undertaking completes substantial expansion and again qualifies for deduction under the said section on the basis of 'qualifying expansion'.
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.
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)].”
Ld. DR fairly admitted that the issue is squarely covered by the above
decision of the Hon'ble jurisdictional High Court.
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.
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 : 22/03/2018 AG Copy to: The Appellant, The Respondent, The CIT, The CIT(A), The DR