2015 (7) TMI 1312 - AT - Income Tax

Deduction u/s 80IC - claim exceeding ten assessment years - Held that - Section 80IC sub section 6 reads as under - Notwithstanding anything contained in this Act, no deduction shall be allowed to any undertaking or enterprise under this section, where the total period of deduction inclusive of the period of deduction under this section, or under the second proviso to sub-section (4) of section 80-IB or under section 10C, as the case may be, exceeds ten assessment years. It is to be noticed that this sub section starts with non obstante clause which means that this section is applicable to all kinds of states wherever section 80IC is applicable. The period of deduction has been clearly restricted to period of ten years inclusive of the deduction claimed under section 80IB. Since assessee has already claimed deduction under section 80IB for ten years therefore assessee is not entitled for the deduction in the present year. - Decided against assessee.

Issues Involved:
1. Defectiveness of the CIT(A) Shimla's order in law and facts.
2. Justification of the CIT(A) Shimla in upholding the AO's addition by disallowing the deduction claimed under Section 80IC of the Income Tax Act, 1961.

Detailed Analysis:

1. Defectiveness of the CIT(A) Shimla's Order:
The appellant contended that the order of the CIT(A) Shimla was defective both in law and facts. However, the Tribunal did not find merit in this contention. The Tribunal's analysis focused on the interpretation of Section 80IC, particularly sub-section (6), and the legislative intent behind it. The Tribunal emphasized that the language of the statute must be given its plain meaning unless it results in absurdity or unintended consequences. The Tribunal referenced various judicial precedents to support this principle, including the Hon'ble Apex Court's observations in Orissa State Warehousing Corporation v. CIT, and other landmark cases.

2. Justification of the CIT(A) Shimla in Upholding the AO's Addition:
The primary issue was whether the CIT(A) Shimla was justified in upholding the AO's decision to disallow the deduction of Rs. 59,32,287/- claimed by the appellant under Section 80IC. The appellant argued that the deduction should be allowed because they had undertaken substantial expansion in the assessment year 2006-07 and started claiming deduction under Section 80IC(2)(a)(ii) from the initial assessment year 2006-07 onwards.

The Tribunal analyzed Section 80IC, particularly sub-section (6), which states: "Notwithstanding anything contained in this Act, no deduction shall be allowed to any undertaking or enterprise under this section, where the total period of deduction inclusive of the period of deduction under this section, or under the second proviso to sub-section (4) of section 80-IB or under section 10C, as the case may be, exceeds ten assessment years." The Tribunal noted that this sub-section starts with a "non obstante" clause, indicating its overriding effect over other provisions.

The Tribunal found that the appellant's unit had already claimed deduction under Section 80IB for ten years and was thus not entitled to further deduction under Section 80IC. The Tribunal referenced its detailed adjudication in the case of Hycron Electronics & Others (ITA No. 798/Chd/2012), where it was held that the deduction period is restricted to ten years, inclusive of any previous deductions under Section 80IB.

The Tribunal also discussed the principles of statutory interpretation, emphasizing that the language of the statute should be interpreted literally if it is clear and unambiguous. The Tribunal cited various judicial precedents, including the Hon'ble Supreme Court's decision in Keshavji Ravji and Co. v. CIT, to support this principle. The Tribunal concluded that the legislative intent behind Section 80IC was to provide a deduction for a maximum period of ten years, and any interpretation extending this period would render sub-section (6) otiose.

The Tribunal also addressed the appellant's argument that sub-section (6) was only applicable to units in North-Eastern states. The Tribunal rejected this argument, stating that the "non obstante" clause in sub-section (6) makes it applicable to all states where Section 80IC is applicable.

In conclusion, the Tribunal upheld the CIT(A) Shimla's order, confirming that the appellant was not entitled to the deduction under Section 80IC for the present assessment year as it had already claimed the maximum allowable deduction period under Section 80IB. The Tribunal dismissed the appeal of the appellant.

Result:
Both appeals of the assessee were dismissed.

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