M/S ZENITH INTERNATIONAL,BADDI vs. DCIT, CIRCLE, PARWANOO

The present appeal has been filed by the assessee assailing the correctness of the order dated 27.04.2017 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(2)by holding that benefit of substantial expansion is allowable only to the undertaking which were existing as on 07.01.2003.” 2. At the time of hearing it was a common stand of the parties before the Bench that the issue is covered in favour of the assessee by virtue of the order dated 28.11.2017 of the Hon’ble High Court dated 28/11/2017 in the case of M/s Stove Craft India Versus CIT-V and others in ITA 20 to 24/2015. Accordingly, it was a prayer 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. 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 was engaged in the manufacturing of rubber compound and carrying on manufacturing activities from village Brahmin Valley, Nalagarh. Admittedly 80IC deductions were claimed @ 100% of eligible profits from 2008-09 assessment year onwards. On the basis of substantial expansion having been carried out in 2011-12 assessment year, the assessee claimed 80IC deduction @ 100%. The said claim was restricted to 25% by the AO which was affirmed in appealby the

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CIT(A). In the light of the decision of the Hon'ble High Court in the aforesaid decision, admittedly the said order cannot be upheld. A perusal of the aforesaid decision would show that after discussing the facts of the specific case in para 51, the issue was concluded by the Hon'ble High Court in the following manner :- 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)].

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