2018 (7) TMI 1962 - AT - Income Tax

Deduction u/s 80IC - substantial expansion - manufactures and undertakes substantial expansion during the eligible period - HELD THAT - The issue raised in this appeal squarely covered by the decision of the Tribunal in the case of M/s Security Products Pvt. Ltd. vs. DCIT, Circle, Parwanoo 2018 (2) TMI 163 - ITAT CHANDIGARH wherein the Tribunal while relying upon the decision of the Hon'ble Himachal Pradesh High Court in the case of M/s Stovekraft India Vs. Commissioner of Income Tax, 2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT wherein held the Revenue has not disputed, (a) the units having carried out substantial expansion within the definition of the Section, (b) their entitlement and extent of deduction would be dependent upon interpretation of the relevant provisions. No justification at this stage to give the Assessing officer a second innings to re-examine undisputed facts. - Decided against revenue

Summary

Issues Involved:
1. Appeal against order of Commissioner of Income Tax (Appeal)-2, Ludhiana
2. Interpretation of provisions of section 80IC for deduction
3. Claiming 100% deduction under section 80IC for substantial expansion
4. Verification of substantial expansion by Assessing Officer

Analysis:

1. Appeal against order of Commissioner of Income Tax (Appeal)-2, Ludhiana:
The appellant challenged the order dated 24/10/2017 of the Commissioner of Income Tax (Appeal)-2, Ludhiana, alleging it to be based on incorrect appreciation of facts and law. The appellant contended that the order merely relied on the predecessor's decision for the Assessment Year 2013-14 without considering the provisions of section 80IC. Additionally, it was argued that the Commissioner erred in holding that section 80IC recognized only one initial assessment year.

2. Interpretation of provisions of section 80IC for deduction:
The appellant claimed that there are two limbs to claim deduction under section 80IC(2) of the Income Tax Act, 1961. The appellant argued that the unit satisfied the second limb by manufacturing and undertaking substantial expansion during the eligible period, thus should not have been denied the benefit of 100% deduction under section 80IC. The Tribunal referred to a relevant case law and concluded that the issue was covered in favor of the assessee.

3. Claiming 100% deduction under section 80IC for substantial expansion:
The Tribunal cited a case where the Hon'ble Himachal Pradesh High Court held that units undertaking substantial expansion between specific periods are entitled to the benefit of section 80IC. It was clarified that substantial expansion is not limited to one expansion, and there can be multiple substantial expansions as long as the requirements of the section are met. The Tribunal directed the Assessing Officer to grant the appellant a deduction of 100% of its eligible profits based on the ruling of the jurisdictional High Court.

4. Verification of substantial expansion by Assessing Officer:
The Revenue suggested restoring the issue to the Assessing Officer for verification of substantial expansion. However, the Tribunal disagreed, stating that the Assessing Officer did not dispute the substantial expansion carried out by the appellant unit. Referring to the decision of the Hon'ble Himachal Pradesh High Court, the Tribunal emphasized that there was no need for further examination of undisputed facts. Consequently, the Tribunal set aside the order of the Commissioner of Income Tax (Appeal)-2, Ludhiana, and directed the Assessing Officer to grant the appellant the deduction of 100% of its eligible profits.

In conclusion, the Tribunal allowed the appeal of the assessee, as the issue was found to be squarely covered by the relevant decision, and no distinguishing case law or fact was presented by the Revenue during the proceedings.