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2015 (2) TMI 1104 - AT - Income TaxValidity of invoking the provisions of section 263 - entitlement for claim of deduction u/s.80IC - Held that - The assessee has placed reliance on the decision of the Coordinate Bench rendered in the case of Tirupati LG Industries Ltd., New Delhi vs. DCIT-Circle-2, Dehradun 2014 (1) TMI 1689 - ITAT DELHI wherein it has been held that there is no prohibition or Bar into the Statute that the assessee cannot carry out substantial expansion after having carried out once. The aforesaid decision of the Coordinate Bench was not submitted before the ld.CIT, therefore it would appropriate that the matter be restored to his file for decision afresh, taking into consideration the decision of the Coordinate Bench rendered in the case of Tirupati LPG Industries Ltd.(supra). Moreover, the Revenue has not placed any contrary binding precedent on record taking a contrary view than the view expressed by the Coordinate Bench of this Tribunal in the case of Tirupati LPG Industries Ltd.(supra). Therefore, the order of the ld.CIT is hereby set aside and the matter is restored back to his file for decision afresh. Needless to say that the ld.CIT would afford sufficient opportunity to the assessee. - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Validity of invoking the provisions of Section 263 of the Income Tax Act, 1961. 2. Examination of the claim of deduction under Section 80IC at 100% for the Baddi Unit. 3. Determination of the initial assessment year for the claim of deduction under Section 80IC. 4. Direction to allow deduction at 30% instead of 100% for the Baddi Unit. Issue-wise Detailed Analysis: 1. Validity of Invoking the Provisions of Section 263 of the Income Tax Act, 1961: The Assessee challenged the order of the Commissioner of Income Tax (CIT) which invoked the provisions of Section 263, arguing that the conditions for such extraordinary jurisdiction were not satisfied. The CIT revised the assessment order, stating it was erroneous and prejudicial to the interests of the revenue. The Tribunal examined the conditions under Section 263, emphasizing that both conditions (erroneous and prejudicial to revenue) must be satisfied for invoking Section 263. The Tribunal referred to the Supreme Court's decision in Malabar Industrial Co. Ltd. vs. CIT, which clarified that an order is erroneous if it involves an incorrect assumption of facts or incorrect application of law, and it is prejudicial if it results in a loss of tax revenue. The Tribunal found that the Assessing Officer (AO) had indeed examined the claim under Chapter VI-A, and the CIT's revision was based on a change of opinion, which is not permissible under Section 263. 2. Examination of the Claim of Deduction under Section 80IC at 100% for the Baddi Unit: The CIT observed that the AO allowed the deduction under Section 80IC at 100% without proper verification, despite the AO having recomputed the eligible profits. The CIT contended that the second substantial expansion in AY 2008-09 was not permissible, and thus, the Assessee was entitled to only 30% deduction. The Tribunal noted that the AO had issued a specific notice and received a detailed reply from the Assessee regarding the deduction claim. The Tribunal found that the AO had applied his mind to the eligibility and entitlement of the deduction, and the CIT's revision was merely a change of opinion. 3. Determination of the Initial Assessment Year for the Claim of Deduction under Section 80IC: The CIT held that the initial assessment year for the Baddi Unit should be AY 2005-06, not AY 2008-09, as claimed by the Assessee. The Assessee argued that there is no prohibition in the statute against carrying out substantial expansion more than once and claiming deduction based on the second substantial expansion. The Tribunal referred to decisions by the ITAT Delhi and ITAT Chandigarh, which supported the Assessee's view that multiple substantial expansions are permissible, and the initial assessment year can be based on the second substantial expansion. The Tribunal found that the CIT misconstrued the provisions and that the AO's acceptance of the Assessee's claim was a plausible view. 4. Direction to Allow Deduction at 30% Instead of 100% for the Baddi Unit: The CIT directed the AO to allow only 30% deduction, reducing the Assessee's claim by Rs. 43,84,86,456. The Tribunal found that the AO had already examined the eligibility for 100% deduction and that the CIT's direction was based on a misinterpretation of the law. The Tribunal emphasized that the Assessee's claim for 100% deduction was supported by precedents, and the CIT's order was set aside. Conclusion: The Tribunal allowed the Assessee's appeal for statistical purposes, setting aside the CIT's order and restoring the matter to the CIT for fresh consideration, taking into account the decisions of the Coordinate Benches. The Tribunal directed that the CIT afford sufficient opportunity to the Assessee and decide the matter afresh, ensuring that the principles of natural justice are followed.
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