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2018 (11) TMI 443 - HC - Income TaxDeduction u/s 80IC - initial assessment year - whether units set up after 07.01.2003 would not be entitled to enlarged deduction under Section 80IC of the Act @ 100% of profit, even after undertaking substantial expansion within the specified period? - Held that - The matter is no longer res integra. The issue has already been decided against the assessee as relying on M/S ADMAC FORMULATIONS VERSUS COMMISSIONER OF INCOME TAX, PANCHKULA 2018 (10) TMI 1001 - PUNJAB AND HARYANA HIGH COURT wherein as relying on case of Commissioner of Income Tax vs. M/s Classic Binding Industries 2018 (8) TMI 1209 - SUPREME COURT OF INDIA dealing with the issue whether the assessee who had availed deductions at the rate of 100% for first five years on the ground that they had set up a manufacturing unit as prescribed under sub section (2) of Section 80IC of the Act can start claiming deduction at the rate of 100% again for the next five years as they had undertaken substantial expansion during the period mentioned in sub section (2) thereof. The answer was given in the negative. The matter is no longer res integra. - decided in favour of revenue.
Issues Involved:
1. Entitlement to enlarged deduction under Section 80IC of the Income Tax Act for units set up after 07.01.2003. 2. Availability of 100% profit deduction for units undertaking substantial expansion after 07.01.2003. 3. Refusal to re-fix the initial assessment year for units established after 07.01.2003. 4. Referral to a larger bench in case of differing opinions among co-ordinate benches. Detailed Analysis: 1. Entitlement to Enlarged Deduction Under Section 80IC: The appellant-assessee challenged the Tribunal's decision that units set up after 07.01.2003 are not entitled to the enlarged deduction under Section 80IC at 100% of profit, even after substantial expansion. The court referenced the Supreme Court's ruling in Commissioner of Income Tax vs. M/s Classic Binding Industries, which clarified that units cannot claim a second period of 100% deduction after substantial expansion if they have already availed it for the initial five years. The court emphasized that Section 80IC allows a maximum deduction period of ten years, with 100% deduction only for the first five years and 25% thereafter. 2. Availability of 100% Profit Deduction for Units Undertaking Substantial Expansion: The appellant argued that substantial expansion should entitle units to a fresh period of 100% deduction. However, the court upheld the Tribunal's view, supported by the Supreme Court's decision, that substantial expansion does not reset the initial assessment year nor extend the 100% deduction period beyond the first five years. 3. Refusal to Re-fix the Initial Assessment Year: The appellant contended that the initial assessment year should be re-fixed upon substantial expansion. The court, referencing the Supreme Court's interpretation, maintained that the initial assessment year remains fixed and cannot be reset by subsequent expansions. The total period of deduction is capped at ten years, with no provision for a new initial assessment year within this period. 4. Referral to a Larger Bench in Case of Differing Opinions: The appellant suggested that differing opinions among co-ordinate benches warranted referral to a larger bench. The court found no merit in this argument, noting that the issue had been conclusively settled by the Supreme Court in M/s Classic Binding Industries. The court dismissed the need for further referral, affirming the existing legal interpretation. Conclusion: The court concluded that the substantial questions of law raised by the appellant had been decisively addressed by higher judicial authorities. Consequently, the appeal was dismissed, affirming the Tribunal's decision and the legal principles established by the Supreme Court.
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