M/S AXPERT ENTERPRISE,PARWANOO vs. DCIT, CIRCLE, PARWANOO

The present appeal has been filed by the assessee assailing the correctness of the order dated 26.04.2017 of ld. CIT(Appeals) Shimla pertaining to 2012-13 assessment year on the following ground :

“The Id. CIT(A) is wrong in disallowing the benefit of substantial expansion u/s 80IC and confirming the deduction u/s 80IC only to the extent of 25% as against 100% by holding that benefit of substantial expansion is allowable only to the undertaking which were existing as on 07.01.2003.” 2. It was common stand of the parties before the Bench that the issue involved in the present appeal is covered in favour of the assessee by virtue of the order dated 28.11.2017 of the Hon’ble High Court in the case of M/s Stove Craft India Versus CIT-V and others in ITA 20 to 24/2015. Accordingly, it was a common prayer of the parties that the issue may be remanded to the AO with a direction to grant necessary relief in terms of the direction of the Hon’ble High Court considering the peculiar facts and circumstances of the present case also. 3. I have heard the rival submissions and perused the material on record. It is seen that the assessee in the facts of the present case derives income from the business of manufacturing of electronics weighing scales. The manufacturing activity is carried out at Plot No. 40 Sector 2 Gabriel Road, Parwanoo (HP). Admittedly 80IC deduction @ 100% of eligible profits for five years from 2005-06 to 2009-10 had been claimed and allowed to the assessee.

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The present year being the 9th year, the assessee had claimed deduction @ 100% on the ground that substantial expansion had been carried out in the financial year 2010-11 which has been restricted to 25% by the AO. It is seen that the jurisdictional High Court in the aforesaid decision considered the facts of the specific case before it in para 51 and considering the same came 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)] 3.1 Accordingly, in view of the above stated legal position, the issue is restored back to the AO with the direction to grant necessary relief in accordance with law. Needless to say that a reasonable opportunity of being heard shall be granted to the assessee before the passing of the order.

Order pronounced in the Open Court on 12th March 2018.

Sd/- (DIVA SINGH) JUDICIAL MEMBER ‘Poonam/Amit/Poonam’ Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR Asstt. Registrar ITAT,Chandigarh.