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2016 (9) TMI 1578 - AT - Income TaxDeduction u/s 80I in respect of the profits from the new industrial undertaking - assessee claims that it had established new unit in assessment year 1991-92 on which it was entitled to the benefit u/s 80I - HELD THAT - Where the first year of deduction of claim of deduction u/s 80I by the assessee is assessment year 1991-92 and where the aforesaid deduction has been allowed to the assessee vide order passed under section 143(3) of the Act the question arises is whether the same could be disturbed in the absence of any change in facts. The answer to the same is No . The authorities below have no power to disturb the continuity of claim of deduction u/s 80I for the stipulated period provided under the Act where once such a claim has been allowed to the assessee in the initial assessment year since that is the year when all the conditions available under the section have to be fulfilled by the assessee and where the assessee fulfils the same it is entitled to claim the deduction unless there is any change in facts and circumstances. Thereafter from year to year till the stipulated period expires the assessee is entitled to claim the said deduction under section 80I. Grant of deduction disturbed in assessment year 1995-96 is deemed to have been allowed to the assessee since the time period for allowing the appeal effect has expired We hold that where the benefit of deduction was available for particular number of years unless the same is withdrawn in the first year it cannot be withdrawn for the subsequent years particularly when there is no change in the facts. Applying the ratio laid down in CIT Vs. Paul Brothers 1992 (10) TMI 5 - BOMBAY HIGH COURT M/s. Direct Information Pvt. Ltd. Vs. ITO 2011 (9) TMI 137 - BOMBAY HIGH COURT and subsequently in CIT Vs. Western Outdoor Interactive Pvt. Ltd. 2012 (8) TMI 709 - BOMBAY HIGH COURT we hold that the assessee is entitled to the deduction claimed under section 80I of the Act in assessment year 1992-93 wherein the first year of claim of deduction was assessment year 1991-92 and same has not been disturbed by any of the authorities till date. The Assessing Officer is thus directed to allow the said claim of assessee.
Issues Involved:
1. Validity of reopening of assessment under section 148. 2. Eligibility for deduction under section 80I of the Income Tax Act, 1961. 3. Establishment of a new industrial undertaking. 4. Continuity of deduction claims in subsequent years. Detailed Analysis: 1. Validity of Reopening of Assessment Under Section 148: The assessee challenged the reopening of the assessment under section 148, arguing that the notice was issued beyond four years from the end of the relevant assessment year and that all material facts had been duly submitted during the original assessment proceedings. The CIT(A) held the reopening to be valid, which the assessee contested, asserting that there was no failure on its part to furnish material facts. 2. Eligibility for Deduction Under Section 80I: The primary issue was whether the assessee was entitled to claim a deduction under section 80I for the assessment years in question. The assessee claimed the deduction starting from assessment year 1991-92, which was initially allowed. However, the Assessing Officer later denied the deduction for subsequent years, arguing that the assessee had not established a new industrial undertaking as required under section 80IA(2). 3. Establishment of a New Industrial Undertaking: The CIT(A) and the Assessing Officer contended that the assessee had not demonstrated the establishment of a new industrial undertaking in the assessment year 1991-92. They argued that there was no separate identity between the old unit and the new unit, citing commonality in manpower, electricity connection, premises, and machinery. The assessee, however, maintained that it had set up a new unit, acquired new plant and machinery, and commenced commercial production and sales of a new product in the relevant year. 4. Continuity of Deduction Claims in Subsequent Years: The Tribunal noted that once the deduction under section 80I was allowed in the first year (assessment year 1991-92), it should not be disturbed in subsequent years unless there was a change in facts. The Tribunal referred to the principle established by the Hon’ble Bombay High Court in CIT Vs. Paul Brothers and other cases, which held that the benefit of deduction, once extended for a particular number of years, could not be withdrawn in subsequent years if the facts remained unchanged. Conclusion: The Tribunal concluded that the assessee was entitled to the deduction under section 80I for the assessment years 1992-93 to 1994-95, 1996-97, and 1997-98. It emphasized that the deduction allowed in the first year (assessment year 1991-92) could not be disturbed in subsequent years in the absence of any change in facts. The Tribunal directed the Assessing Officer to allow the deduction claimed by the assessee for the relevant years, thereby allowing all the appeals of the assessee.
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