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2018 (10) TMI 1128 - HC - Income TaxClaim of deduction @100% u/s 80IC - provision of refixing initial assessment year - Held that - The issue has already been decided against the assessee in a judgment passed in M/s Admac Formulations Vs. Commissioner of Income Tax, Panchkula 2018 (10) TMI 1001 - PUNJAB AND HARYANA HIGH COURT while dealing with the issue whether the assessee who had availed deductions at the rate of 100% for first five years on the ground that they had set up a manufacturing unit as prescribed under sub section (2) of Section 80IC of the Act can start claiming deduction at the rate of 100% again for the next five years as they had undertaken substantial expansion during the period mentioned in sub section (2) thereof. The answer was given in the negative. - Decided against assessee.
Issues Involved:
1. Whether the assessee can re-fix the "initial assessment year" after substantial expansion for claiming 100% deduction under Section 80IC of the Income Tax Act, 1961. Detailed Analysis: Issue 1: Re-fixing the "Initial Assessment Year" after Substantial Expansion The appellant-revenue filed an appeal under Section 260A of the Income Tax Act, 1961 against the Tribunal's order, questioning whether the assessee can claim 100% deduction under Section 80IC after re-fixing its "initial assessment year" following substantial expansion. The core issue revolves around whether the assessee, having initially claimed 100% deduction for five years, can re-fix the "initial assessment year" to claim another 100% deduction for the subsequent five years due to substantial expansion. Facts and Proceedings: The assessee filed a return for the assessment year 2011-12, declaring an income of ?14,54,21,467, which was processed under Section 143(1). The Assessing Officer, invoking Sections 80IC(7) and 80IA(10), recomputed the deduction under Section 80IC, adding ?7,44,41,112 to the assessee's income. The CIT(A) deleted this addition, but the CIT issued a show cause notice under Section 263, leading to an order against the assessee, which was later quashed by the Tribunal. Judgment Analysis: The High Court referred to its earlier decision in ITA No. 332 of 2015 (M/s Admac Formulations Vs. Commissioner of Income Tax, Panchkula), which examined Section 80IC, allowing deductions for units in special category states. The Tribunal had previously ruled against the assessee, but the Himachal Pradesh High Court's decision in Stovkraft India supported the assessee's claim for multiple substantial expansions and corresponding initial assessment years. However, the Supreme Court in Commissioner of Income Tax vs. M/s Classic Binding Industries clarified that an assessee cannot claim another 100% deduction for the next five years after substantial expansion if they have already availed of the 100% deduction for the initial five years. The Court emphasized that Section 80IC allows a maximum deduction period of ten years, with 100% for the first five years and 25% (or 30% for companies) for the next five years. Conclusion: The High Court, aligning with the Supreme Court's judgment, held that the assessee cannot re-fix the initial assessment year to claim another 100% deduction after substantial expansion within the ten-year period. Consequently, the substantial question of law was answered against the assessee and in favor of the revenue, leading to the dismissal of the appeal.
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