2019 (3) TMI 1554 - HC - Income Tax

Deduction u/s 80-IC - substantial expansion - scope of initial assessment year for availing the deduction under section 80-IC - exemption at the same rate of 100% beyond the period of five years on the ground that the assessee has now carried out substantial expansion in its manufacturing unit - HELD THAT - The parties very fairly point out that the above stated questions have been answered by titled as Pr. Commissioner of Income Tax, Shimla versus M/s Aarham Softronics 2019 (2) TMI 1285 - SUPREME COURT against the Revenue.

Summary

Issues:
1. Interpretation of initial assessment year for deduction under section 80-IC of the Income Tax Act.
2. Validity of substantial expansion for undertakings post-07.01.2003 under section 80-IC.

Issue 1 - Interpretation of Initial Assessment Year:
The High Court considered the appeal by the Revenue against the ITAT order regarding the deduction under section 80-IC of the Income Tax Act for Assessment Year 2013-2014. The primary issue was whether an assessee could claim deduction from more than one initial assessment year. The Revenue contended that the deduction could only be claimed once, either from the year of setting up the industrial undertaking or from the year of substantial expansion. However, the ITAT had allowed deductions from both initial assessment years. The Court noted that the Supreme Court had addressed similar questions in a previous case, ruling against the Revenue. Consequently, the Court found no substantial question of law in this regard.

Issue 2 - Validity of Substantial Expansion Post-07.01.2003:
The second issue revolved around the validity of substantial expansion for undertakings commencing production after 07.01.2003 under section 80-IC. The ITAT had allowed multiple substantial expansions before 01.04.2012 for such undertakings, contrary to the Revenue's position. The Revenue argued that as per Section 80-IC and CBDT Circular No. 7/2003, no substantial expansion was permissible. However, the Court referred to the Supreme Court's decision in a different case, which had already settled this issue against the Revenue. Consequently, the Court found no substantial question of law in this appeal regarding substantial expansion post-07.01.2003.

In conclusion, the High Court dismissed the appeal by the Revenue, as it found no substantial questions of law involved in the interpretation of the initial assessment year for deduction under section 80-IC and the validity of substantial expansion post-07.01.2003. The Court relied on the Supreme Court's authoritative pronouncements in similar cases to make its decision.