2016 (12) TMI 1767 - AT - Income Tax

Benefit of substantial expansion u/s 80IC(2) denied - CIT(A) restricting deduction to 25% instead of 100% claimed by the appellant in the sixth year of operation of new industrial undertaking - HELD THAT - In the present case, it is noticed that the CIT(A) denied the claim of the assessee by following the decision of M/s Hycron Electronics (2015 (6) TMI 725 - ITAT CHANDIGARH) where in held as s entitled to only 25% of deduction during the present year because the assessee has already availed the period of full deduction @ 100% in the earlier five years The facts above are similar to the facts of the assessee s case. No valid ground to interfere with the findings given by the ld. CIT(A) and accordingly, do not see any merit in this appeal of the assessee. - Decided in favour of revenue

Summary

Issues:
- Disallowance of benefit of substantial expansion under section 80IC(2) and confirmation of deduction to the extent of 25% instead of 100%.

Analysis:
1. Background: The assessee filed an appeal against the order of the ld. CIT(A), challenging the disallowance of the benefit of substantial expansion under section 80IC(2) and the confirmation of deduction at 25% instead of 100%.

2. Facts: The assessee claimed a deduction of 100% under section 80IC for the year in question, citing substantial expansion during the financial year 2010-11. The AO, however, noted that the assessee started its business in 2005 and was eligible for 100% deduction for the first 5 years. The AO denied the claim for the 8th year, stating that substantial expansion benefits were only available to existing units operational before 07.01.2003.

3. AO's Decision: The AO rejected the assessee's claim based on the ITAT Chandigarh's previous decision, emphasizing that substantial expansion benefits were not meant for units established post-07.01.2003. Consequently, the AO allowed a deduction of only 25% of the eligible profits, leading to a taxable balance amount.

4. CIT(A)'s Decision: The ld. CIT(A) upheld the AO's decision, citing previous rulings and the ITAT Chandigarh's judgment in similar cases. The CIT(A) dismissed the appeal, emphasizing consistency with past decisions and legal precedents.

5. Appellate Tribunal's Decision: The appellate tribunal reviewed the submissions and upheld the CIT(A)'s decision, noting the similarity of facts with previous cases. The tribunal found no grounds to interfere with the CIT(A)'s findings, ultimately dismissing the assessee's appeal.

6. Conclusion: The appellate tribunal dismissed the appeal, affirming the denial of substantial expansion benefits and the allowance of a 25% deduction instead of 100% under section 80IC. The decision was based on established legal interpretations and consistent application of tax laws.

7. Final Verdict: The appeal by the assessee against the disallowance of substantial expansion benefits and the reduction of deduction to 25% was dismissed by the appellate tribunal, upholding the decisions of the lower authorities based on legal precedents and factual similarities with previous cases.