2019 (2) TMI 1191 - AT - Income Tax

Allowance of deduction u/s 80IC - manufacture of specified item - claim of deduction in the subsequent assessment year comprising of block of years in which the assessee is entitled for deduction cannot be disturbed unless the claim for initial year is disturbed - HELD THAT - There is no dispute that the industrial unit was set up on 26.10.2006 and, therefore, the initial assessment year in which deduction u/s 80IC of the Act was claimed was assessment year 2007-08. Subsequently, the claim of deduction was also considered and allowed in assessment years 2008-09 and 2009-10. The assessment orders are placed in the paper book. In our considered opinion, the claim of deduction in the subsequent assessment year comprising of block of years in which the assessee is entitled for deduction cannot be disturbed unless the claim for initial year is disturbed. Our this view is fortified by the decision of the Hon'ble High Court of Delhi in the case of International Tractors Ltd 2017 (7) TMI 822 - DELHI HIGH COURT . Allowing the claim of deduction u/s 80IC of the Act, the first appellate authority has considered the Board Circular issued by the Government of India, Ministry of Finance, Department of Revenue in which the Board has considered the classification of aluminium foil laminated on both sides with plastic films would be under Chapter heading 7607 instead of Chapter heading 3920. - Decided against revenue

Summary

Issues:
- Allowance of deduction u/s 80IC of the Income-tax Act, 1961 by the ld. CIT(A)
- Classification of the product under Schedule 13 or Schedule 14
- Eligibility for deduction u/s 80IC for assessment years 2010-11 and 2012-13

Analysis:
1. Allowance of Deduction u/s 80IC:
- The appeals by the Revenue were against orders of the ld. CIT(A) allowing deduction u/s 80IC for assessment years 2010-11 and 2012-13.
- The Assessing Officer disallowed the deduction, stating the product did not qualify under the relevant schedule.
- The ld. CIT(A) allowed the deduction after considering evidence that the products fell under different tariff classifications as per government circulars.

2. Classification of Product:
- The Assessing Officer classified the product under Schedule 13, denying the deduction u/s 80IC.
- The ld. CIT(A) disagreed, citing circulars classifying similar products differently under different headings.
- The ld. CIT(A) directed the Assessing Officer to allow the deduction based on the correct classification under the Act.

3. Eligibility for Deduction:
- The Tribunal considered the eligibility for deduction u/s 80IC for a block of years, starting from the initial assessment year.
- Citing a High Court decision, the Tribunal held that unless the claim for the initial year was disturbed, subsequent claims for deduction in the block of years should not be disturbed.
- The Tribunal upheld the ld. CIT(A)'s decision to allow the deduction based on the correct classification of the product.

In conclusion, the ITAT Delhi dismissed the Revenue's appeals, upholding the ld. CIT(A)'s decision to allow the deduction u/s 80IC for the assessment years in question. The Tribunal emphasized the correct classification of the product under the Act and the continuity of eligibility for deduction in a block of years unless the initial claim was disturbed. The judgment highlighted the importance of considering relevant circulars and legal provisions in determining the eligibility for tax deductions.