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2020 (5) TMI 117 - AT - Income TaxDeduction u/ 80IC - AR submitted that assessee has been claiming deduction under section 80-IC since A.Y. 2011-12 and the same has never been disallowed - principles of consistency - there was no CBDT notification notifying the industrial area as per the scheme framed - HELD THAT - Undertaking in respect of which deduction has been claimed u/s 80IC falls in the specified Industrial area as per Notification No. 177/2004 dated 28-06-2004 issued by the CBDT in accordance with the scheme framed and notified by the Central Government for the state of Uttaranchal. Apparently, the said notification was not brought to the notice of ld CIT(A) and in absence of the same, the ld CIT(A) has denied the deduction under section 80IC(2)(a)(ii). There is no dispute that the undertaking satisfies the other conditions specified therein. It is engaged in the assembly and manufacturing of LED Televisions and blaster of CFL bulbs and is thus not engaged in manufacturing or producing any article/ thing as specified in Thirteenth Schedule. As per the assessment order for A.Y 2013-14 passed u/s 143(3) dated 27.03.2016, the Assessing officer has recorded a finding that financial year 2012-13 is the third year after commencement of business and is eligible for deduction u/s 80IC - financial 2010-11 would be the first year of commencement of business and the undertaking had begun manufacturing before 01.04.2012 and thus, satisfied all the conditions. Revised audit report in Form 10CCB has been filed during the course of assessment proceedings which was not considered by the AO on account of a mistake on the part of the auditor where he has wrongly mentioned the date of issue of such report as in the original audit report, however, there is no dispute that the assessee substantially complies with all the conditions as prescribed for claim of deduction u/s 80IC of the Act and during the appellate proceedings, the ld CIT(A) has accepted the revised audit report which is not disputed by the Revenue. Only dispute which remains before the ld CIT(A) was that there was no CBDT notification notifying the industrial area as per the scheme framed by the Central Government which the assessee has now filed and the same has been examined. In light of the aforesaid discussion, we set-aside the order of the lower authorities and direct the Assessing officer to allow the deduction u/s 80IC of the Act. The matter is accordingly decided in favour of the assessee and against the Revenue.
Issues Involved:
1. Disallowance of deduction under Section 80-IC of the Income Tax Act, 1961. 2. Eligibility criteria and conditions for claiming deduction under Section 80-IC(2)(a) and 80-IC(2)(b). 3. Notification of industrial area by CBDT for eligibility under Section 80-IC. Detailed Analysis: 1. Disallowance of Deduction under Section 80-IC: The assessee filed an appeal against the order of the CIT(A)-II, Jaipur, which confirmed the disallowance of ?40,64,288/- claimed under Section 80-IC. The assessee had been claiming this deduction since A.Y. 2011-12, and it was allowed in previous assessments, including A.Y. 2013-14. The principle of consistency was emphasized, supported by multiple judicial pronouncements. 2. Eligibility Criteria and Conditions for Claiming Deduction under Section 80-IC(2)(a) and 80-IC(2)(b): Section 80-IC provides for deductions on profits derived from eligible businesses in specified states, including Uttaranchal. The eligibility under Section 80-IC(2)(a) requires: - The undertaking must not produce articles specified in the Thirteenth Schedule. - Manufacturing must begin between 07.01.2003 and 01.04.2012. - The undertaking must be in a notified area. For Section 80-IC(2)(b): - The undertaking must produce articles specified in the Fourteenth Schedule. - Manufacturing must begin within the same period. - The undertaking must be in Uttaranchal. The assessee's undertaking met these conditions under both clauses, as it was situated in a notified area and engaged in manufacturing TVs, DVDs, and LCDs, which fall under the Information and Communication Technology Industry in the Fourteenth Schedule. 3. Notification of Industrial Area by CBDT for Eligibility under Section 80-IC: The CIT(A) dismissed the appeal, stating no CBDT notification was on record for the industrial area where the unit was situated. However, the assessee provided Notification No. 177/2004, which included the Khasra numbers of the assessee's location. This notification, issued by CBDT, designated the industrial area for eligibility under Section 80-IC. Conclusion: The Tribunal noted that the undertaking was in the specified industrial area per Notification No. 177/2004 and satisfied all other conditions for deduction under Section 80-IC. The revised audit report in Form 10CCB, filed during assessment proceedings, was accepted. The Tribunal set aside the lower authorities' order and directed the Assessing Officer to allow the deduction under Section 80-IC. The appeal was decided in favor of the assessee. Order Pronounced: The appeal filed by the assessee was allowed, and the order was pronounced on 28/04/2020.
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