2017 (12) TMI 311 - HC - Income Tax

Deduction U/s 80 (1A) - whether the assessee should be a small scale undertaking on the last day of the previous year relevant to the initial/first assessment year and that the said requirement need not be satisfied in the subsequent assessments? - Held that - As decided in Commissioner of Income Tax Versus International Tractors Ltd. 2017 (7) TMI 822 - DELHI HIGH COURT that the Assessee here did not fulfil the eligibility condition for the initial AY i.e. 1997-98; and that notwithstanding that it may have fulfilled the eligibility conditions in the initial AY it nevertheless had to fulfil the such eligibility condition for every one of the ten consecutive AYs inclusive of the initial AY in order to be eligible for the deduction. - Decided in favour of assessee.

Summary

Issues involved:
1. Interpretation of deduction under Section 80-1A of the Income Tax Act, 1961.
2. Validity of the order made by the Tribunal with a retired member's signature.
3. Assessment of the eligibility condition for deduction under Section 80-1A for subsequent assessment years.

Issue 1: The judgment addresses the interpretation of the deduction under Section 80-1A of the Income Tax Act, 1961. The Court considered the ITAT's decision for other years, subject to appeals before the Court. The appeals were dismissed, and questions of law were answered against the Revenue. The Court analyzed the permissibility of the deduction under Section 80-1A extensively, referencing previous orders and appeals, ultimately ruling against the Revenue.

Issue 2: The Court deliberated on the validity of the Tribunal's order with a retired member's signature. The order in question was signed by a member who retired before its finalization. The Court examined the procedural changes in pronouncing judgments in open court and concluded that the signature of the remaining member post the retirement did not render the order invalid, as the change in rules was prospective.

Issue 3: The judgment further evaluated the eligibility condition for deduction under Section 80-1A for subsequent assessment years. The Court referred to previous cases and detailed the assessment process, emphasizing that the eligibility condition need not be fulfilled for every year if satisfied in the initial assessment year. The Court ruled against the Revenue's contentions, stating that the eligibility condition did not have to be met for each of the ten consecutive assessment years, inclusive of the initial year, to claim the deduction.

In conclusion, the Court dismissed the appeal, ruling in favor of the assessee based on the previous judgment's coverage of the merits of the appeal for the assessment year in question. The Court maintained that even if the Revenue succeeded upon remission, the ultimate result would remain the same due to the binding nature of the previous judgment. The decision highlighted the consistent interpretation of the deduction provision under Section 80-1A and upheld the assessee's position in the peculiar circumstances of the case.