2019 (8) TMI 1200 - AT - Income Tax

Deduction claim raised u/s 80IE - initial assessment year - HELD THAT - The assessee s very unit s production of asbestos sheet has been held to be entitled for sec. 80IE deduction itself wherein initial assessment year stand taken as assessment year 2008-09. We are in assessment year 2014-15 wherein the assessee has already succeeded on the issue in assessment years 2012-13 and 2013-14. This clinching finding of the initial assessment year involved herein for the purpose of 80IE deduction to be assessment year 2008-09 has attained finality so far the tribunal is concerned. We therefore adopt judicial consistency in these peculiar facts and circumstance. The Revenue argument seeking to carve out an exception fails accordingly. Our agreement with the Revenue s argument regarding initial assessment year 2002-03 in facts of instant case, would lead to an anomaly wherein the asbestos unit s initial assessment year has been taken as 2008-09 in assessment years 2012-13 and 2014-15 whereas the Revenue seeks to adopt assessment year 2002-03. We go by consistency principle as per hon'ble apex court s landmark decision in Union of India vs. Azadi Bachao Andolan Anr. 2003 (10) TMI 5 - SUPREME COURT and direct the Assessing Officer to treat the assessee as entitled for sec. 80IE deduction in issue. We make it clear before parting that the Revenue s reliance on sec. 80IE(5) of the Act in seeking to restore the assessee s deduction claim carries no substance since the latter s relief nowhere exceeds ten assessment years time span since initial assessment year taken is 2008-09 only. The Revenue s arguments to this effect are declined. As during the course of hearing is that CIT(A) has directed the Assessing Officer to treat assessee as not entitled for the impugned deduction in corresponding subsequent assessment years as well.We feel that no further adjudication is required on this issue once we have held the assessee as entitled for sec.80IE in the impugned assessment year. The assessee s corresponding ground is allowed in foregoing terms therefore. Treatment to interest income from bank fixed deposits - HELD THAT - We find that this very issue regarding interest income derived from fixed deposit account as a pre-condition for letter of credit also stands decided in earlier co ordinate bench s order accepting the taxpayer s grievance having regard to hon'ble jurisdictional high court in case of CIT vs. Universal Pipes Pvt. Ltd. . 2012 (12) TMI 603 - GAUHATI HIGH COURT . We therefore delete the impugned disallowance by adopting judicial consistency herein as well.

Summary

Issues Involved:
1. Validity and legality of the CIT(A)'s order.
2. Determination of the initial assessment year for claiming deduction under section 80IE of the Income Tax Act.
3. Treatment of interest income from bank fixed deposits.

Issue-wise Detailed Analysis:

1. Validity and Legality of the CIT(A)'s Order:
The assessee challenged the CIT(A)'s order on multiple grounds, arguing that it was "bad in law, illegal, ab initio void" and passed without proper jurisdiction. The appellant contended that the CIT(A) failed to apply judicial discipline by disregarding the findings of the jurisdictional ITAT in the assessee's own case for the preceding assessment years. The tribunal noted that the CIT(A) had erred in not following the specific directions of the ITAT, which had already decided similar issues in favor of the assessee for earlier assessment years.

2. Determination of the Initial Assessment Year for Claiming Deduction under Section 80IE:
The core issue was whether the initial assessment year for claiming the deduction under section 80IE for the asbestos unit should be the assessment year 2002-03 or 2008-09. The CIT(A) treated the assessment year 2002-03 as the initial year, citing substantial expansion during the FY 2001-02. However, the tribunal referred to its earlier decisions, which had consistently held the initial assessment year to be 2008-09 due to substantial expansion in that year. The tribunal emphasized the principle of judicial consistency and rejected the Revenue's argument that the initial assessment year should be 2002-03. The tribunal also referenced the Supreme Court's decision in PCIT vs. Aarham Softronics, which supported the view that substantial expansion could create a new initial assessment year.

3. Treatment of Interest Income from Bank Fixed Deposits:
The assessee argued that the interest income of ?6,59,205/- earned from bank fixed deposits should be considered as part of the profits derived from the business and thus eligible for deduction under section 80IE. The tribunal noted that this issue had already been decided in favor of the assessee in earlier years by the coordinate bench, which had accepted the assessee's claim based on the jurisdictional high court's decision in CIT vs. Universal Pipes Pvt. Ltd. Consequently, the tribunal deleted the disallowance of the interest income, maintaining judicial consistency.

Conclusion:
The tribunal allowed the assessee's appeal, directing the Assessing Officer to treat the assessee as entitled to the deduction under section 80IE for the assessment year 2014-15, with the initial assessment year being 2008-09. The tribunal also deleted the disallowance of the interest income from bank fixed deposits, following earlier judicial precedents.