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

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ITA 1345/CHANDI/2017Status: DisposedITAT Chandigarh20 March 2018AY 2012-132 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the jurisdictional High Court's decision allows 100% deduction under Section 80IC even with substantial expansion. Therefore, the penalty imposed was not justified.

What were the facts?

The assessee claimed 100% deduction under Section 80IC for manufacturing profits. The AO restricted this deduction to 25% as it was the 7th year and rejected the claim of substantial expansion. Consequently, penalty proceedings were initiated under Section 271(1)(c).

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the assessee's claim for deduction under Section 80IC was disputed and later found to be allowable based on High Court precedent.

Which sections of the Income-tax Act were involved?

Section 80IC,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH ‘A’, CHANDIGARH

Before: MS. DIVA SINGH & MS. ANNAPURNA GUPTA

For Appellant: Shri Gulshan Raj, CIT-DR
For Respondent: Shri Manoj Kumar
Hearing: 15.01.2018Pronounced: 20.03.2018

PER DIVA SINGH,JM

The present appeal has been filed by the Revenue assailing the correctness of the order dated 15.07.2017 of CIT(A) Shimla (HP) pertaining to 2012-13 assessment year on the following ground : On the facts and in the circumstances, the Ld. CIT(A) has erred in deleting the penalty imposed u/s 271(l)(c) ignoring the fact that the assessee was not eligible for deduction @100% and escaped his income from tax willfully. 2. The ld. CIT-DR relies upon the penalty order. The authorized representative of the assessee, on the other hand, relies upon the impugned order. 2.1 The relevant facts of the case are that assessee firm engaged in manufacturing of electrical fans claimed 100% deduction of eligible profits u/s 80IC from the said manufacturing activity. The claim was restricted to 25% by the AO in the quantum proceedings as the year under consideration was considered to be 7th year and the claim of having carried out substantial expansion in 2012-13 assessment year i.e. the year under consideration for claiming 100% deduction of eligible profits was rejected by the AO. As a result of this, penalty proceedings were initiated and relying upon the fact that the claim of deduction u/s 80IC from 100% stood reduced to 25%. The AO held that the assessee was held liable to pay penalty @ 100% of the tax sought to be evaded u/s 271(1)(c) of the Act. The CIT(A) in appeal quashed the penalty relying upon the decision of the ITAT

ITA 1345/CHD/2017 A.Y. 2012-13 Page 2 of 2

in ITA No. 326/CHD/2015 in the case of M/s Hycron Electronics Vs ITO wherein relying upon the decision of the Apex Court in the case of CIT Vs Reliance Petroproducts 322 ITR 518 (S.C.) it was held that it could not be construed that the assessee furnished inaccurate particulars in the peculiar facts of the present case

3.

We find that in the light of the judgement of the jurisdictional High Court in 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 wherein it has been held that even in cases where substantial expansion has been carried out, deduction u/s 80IC cannot be restricted to 25%. Accordingly, in view of the stated position of law on the merits of the addition itself, we find no good reason to interfere with the conclusion arrived at in the impugned order. The departmental appeal, accordingly is dismissed.

5.

In the result, the appeal of the Revenue is dismissed. Order pronounced in the Open Court on 20th March,2018.

Sd/- Sd/- (ANNAPURNA GUPTA) (DIVA SINGH) ACCOUNTANT MEMBER 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.

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