2020 (6) TMI 427 - AT - Income Tax

Deduction u/s. 80IC - Claim for 8th Year from the initial assessment year - substantial expansion having been made in the Plant machinery within the specified period as provided in the Act and having fulfilled all the condition for claiming deduction @ 100% for further 5 years the appellant had claimed deduction U/s. 80IC for which Audit report in Form No 10CCB was also furnished - HELD THAT - Since the appeal of the assessee is covered by its own order by the judgment of the Tribunal in A.Y. 2013-14 and the ld. CIT(A) allowed the appeal of the assessee as accepted the claim of the appellant and has allowed Deduction @ 100% u/s 80IC Book profit u/s 115JC - set off of tax credit u/s 115JD for tax paid in earlier year on book profit - HELD THAT - We direct the Assessing Officer to compute the book profit u/s 115JC of the Act and allow the set off of tax credit u/s 115JD for taxes paid by the assessee in earlier years on book profit in accordance with law. Statistical purposes the additional grounds raised by the assessee is allowed. Order is being pronounced after 90 days of hearing - HELD THAT - Taking note of the extraordinary situation in the light of the Covid-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Co- ordinate Bench of the Mumbai Tribunal in the case of JSW Limited 2020 (5) TMI 359 - ITAT MUMBAI

Summary

Issues Involved:
1. Deduction under Section 80IC of the Income Tax Act, 1961.
2. Computation of Book Profit under Section 115JC and set off of tax credit under Section 115JD.

Issue-wise Detailed Analysis:

1. Deduction under Section 80IC of the Income Tax Act, 1961:
The primary issue revolves around the deduction under Section 80IC claimed by the assessee for the assessment year 2015-16. The assessee claimed a deduction of ?37,118,499 at 100% of the total income, citing substantial expansion in the plant and machinery. The Assessing Officer restricted this deduction to ?10,172,628, which is 25% of the claimed amount, interpreting that the assessee was only eligible for 25% deduction after the initial five years of 100% deduction.

The assessee argued that the substantial expansion, completed during the financial year 2011-2012, entitled them to another five years of 100% deduction starting from the assessment year 2012-2013. This interpretation was based on the definitions provided in Section 80IC(8)(v) and Section 80IC(8)(ix) of the Act. The assessee had previously succeeded in similar claims for the assessment years 2013-14 and 2014-15, where the ITAT Kolkata Bench allowed the deduction at 100%.

The Assessing Officer, however, did not accept this interpretation and allowed only 25% deduction, leading to an appeal by the assessee. The Commissioner of Income Tax (Appeal) upheld the Assessing Officer's decision, referencing the Supreme Court judgment in CIT vs. Classic Binding Industries, which held that after the initial five years of 100% deduction, the deduction should be reduced to 25% for the remaining five years.

Upon further appeal, the ITAT Kolkata noted that the issue was already settled in favor of the assessee for the previous assessment years (2013-14 and 2014-15) by the Tribunal. Consequently, the Tribunal allowed the deduction at 100% for the assessment year 2015-16 as well, following the precedent set in the earlier years.

2. Computation of Book Profit under Section 115JC and set off of tax credit under Section 115JD:
The second issue pertains to the computation of book profit under Section 115JC and the set-off of tax credit under Section 115JD. The assessee argued that the Assessing Officer failed to compute the book profit and allow the set-off of tax credit for taxes paid in earlier years, as mandated by these sections.

The Tribunal directed the Assessing Officer to compute the book profit under Section 115JC and allow the set-off of tax credit under Section 115JD in accordance with the law. This direction was issued to ensure compliance with the statutory provisions and to rectify the oversight by the Assessing Officer.

Conclusion:
The appeal of the assessee was partly allowed. The Tribunal upheld the claim for 100% deduction under Section 80IC for the assessment year 2015-16, aligning with the decisions from the previous years. Additionally, the Tribunal directed the Assessing Officer to compute the book profit under Section 115JC and allow the set-off of tax credit under Section 115JD, ensuring adherence to the statutory requirements.