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2022 (6) TMI 645 - AT - Income TaxDeduction u/s 80IC - claim of deduction at 100% on account of substantial expansion undertaken by the assessee - HELD THAT - We find the Ld. CIT(A) while deciding the issue in favour of the assessee had relied on the decision of his predecessor in assessee s own case for the A.Y. 2011-12 2021 (7) TMI 183 - ITAT DEHRADUN and had followed the decision of Hon ble Himachal Pradesh High Court in the case of Stovekraft India vs., CIT 2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT . As decided in M/S. AARHAM SOFTRONICS 2019 (2) TMI 1285 - SUPREME COURT Assessee having set up a new industry of a kind mentioned in section 80-IC(2) and started availing exemption of 100 per cent tax under section 80-IC(3) (which is admissible for five years) could start claiming exemption at same rate of 100 per cent beyond period of five years if it carried out substantial expansion in its manufacturing unit in terms of section 80-IC(8)(ix) within period of ten years.- Decided against revenue.
Issues:
1. Claim of deduction under section 80IC of the Income Tax Act, 1961 at 100% for substantial expansion. 2. Interpretation of provisions regarding deduction under section 80IC for new units. 3. Authority to re-fix initial assessment year under section 80IC. Analysis: 1. The appeal by the Revenue challenged the Ld. CIT(A)'s order allowing the assessee's claim of deduction under section 80IC at 100% for substantial expansion, contrary to the Revenue's contention that only 30% deduction was admissible beyond the initial 5 years. The Revenue cited a Supreme Court judgment regarding the eligibility for 100% deduction for the first 5 years and 25% or 30% for the subsequent years. The A.O. disallowed the assessee's claim and restricted the deduction to 30% of profits, resulting in an addition to the assessee's income. The Ld. CIT(A) favored the assessee, citing a previous favorable decision and a High Court ruling, directing the A.O. to allow the deduction at 100%. The Tribunal upheld the Ld. CIT(A)'s decision, noting the absence of contrary binding decisions supporting the Revenue's contention and dismissing the appeal. 2. The interpretation of provisions under section 80IC for new units was crucial in this case. The A.O. noted the assessee's claim as a new unit eligible for deduction under section 80IC at 100% for the initial years and 30% for subsequent years. The A.O. rejected the assessee's argument for re-fixing the initial assessment year, emphasizing the legislative intent behind the deduction provisions. The Ld. CIT(A) and the Tribunal, however, supported the assessee's claim based on previous decisions and High Court rulings, allowing the deduction at 100% for the substantial expansion. 3. The issue of authority to re-fix the initial assessment year under section 80IC was raised by the Revenue, arguing against the assessee's claim for re-fixing the initial year due to substantial expansion. The A.O. and the Revenue contended that such re-fixing was not in line with the legislative provisions. However, the Ld. CIT(A) and the Tribunal supported the assessee's position based on precedent and upheld the claim for deduction at 100% for the expansion period. In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Ld. CIT(A)'s decision to allow the assessee's claim of deduction at 100% under section 80IC for substantial expansion, based on previous favorable decisions and High Court rulings. The judgment emphasized the eligibility for 100% deduction beyond the initial 5 years in cases of substantial expansion, in line with the legislative provisions and judicial interpretations.
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