2021 (12) TMI 454 - AT - Income Tax

Deduction u/s 80IC - CIT(A) confirming the order of the AO who allowed the claim at 25% instead of 100% - HELD THAT - As relying on M/S. AARHAM SOFTRONICS 2019 (2) TMI 1285 - SUPREME COURT we direct the Assessing Officer to allow claim of deduction @ 100%. - Decided in favour of assessee.

Summary

Issues:
Claim of deduction u/s 80IC at 25% instead of 100%.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax [Appeals] regarding the deduction u/s 80IC of the Income-tax Act, 1961 at 25% instead of 100% for the Assessment Year 2015-16. The appellant, a proprietorship firm, had expanded its manufacturing unit and claimed 100% deduction in the past. However, the Assessing Officer restricted the deduction to 25% for the year under consideration as the appellant had exhausted the 100% claim. The appellant contended that substantial expansion was carried out in a previous year, making them eligible for 100% deduction. The appellant relied on the decision of the Hon'ble Supreme Court in the case of Arham Softronics.

The Tribunal examined the relevant provisions and the Supreme Court's decision in the Arham Softronics case. The Supreme Court clarified that for units set up between specific dates in Himachal Pradesh, the deduction could be 100% for the initial assessment years and 25% for the subsequent years. However, if substantial expansion is undertaken within the specified period, the year of expansion becomes the new initial assessment year, allowing for 100% deduction for the next 10 years. The Tribunal, in line with the Supreme Court's ruling, directed the Assessing Officer to allow the deduction at 100% for the appellant.

Therefore, based on the interpretation of the relevant provisions and the Supreme Court's decision, the Tribunal allowed the appeal of the assessee and directed the Assessing Officer to grant the deduction at 100% for the Assessment Year 2015-16.