2021 (10) TMI 516 - AT - Income Tax

Disallowance u/s 80IC - company stated to be engaged in the business of induction Heat Seal Cap liner material and Induction Wads - products manufactured by the assessee fall under schedule 13 (at serial No. 19) which is a negative list and, therefore, profitderived from the manufacture of these products is not eligible for deduction - AO denied the claim of deduction u/s 80IC of the Act for the reason that though the claim of assessee was allowed by CIT(A) in earlier years but the order of CIT(A) has been challenged by Revenue before ITAT and the decision was awaited therefore to keep the issue alive denied the claim of assessee - HELD THAT - As the industrial unit was set up on 26/10/2006, and the initial assessment year in which deduction under section 80 IC of the Act was claim, was assessment year 2007-08 from each year onwards such a claim was allowed to the assessee, and, therefore, tribunal returned a finding that the assessee is entitled to the deduction in section 80 IC of the Act and the classification of aluminium foil laminated on both sides with plastic films would be under Chapter Headings 7607 instead of Chapter Headings 3920. We find that the issues involved in this matter are directly and substantially covered in assessee's own case in earlier years 2019 (2) TMI 1191 - ITAT DELHI and while respectfully following the same we hold that the assessee is entitled to deduction under section 80 IC - Decided in favour of assessee.

Summary

Issues:
1. Allowance of deduction under section 80IC of the Income Tax Act.
2. Disallowance of deduction claimed by the assessee.
3. Appeal against the order of the Commissioner of Income Tax (Appeals).
4. Interpretation of relevant legal provisions.

Detailed Analysis:
1. The appeal before the Appellate Tribunal ITAT DELHI involved the allowance of deduction under section 80IC of the Income Tax Act for the Assessment Year 2015-16. The assessee, engaged in the business of induction Heat Seal Cap liner material and Induction Wads, had claimed a deduction of ?1,61,27,898/- under section 80IC of the Act in its return of income. The Assessing Officer (AO) denied the claim, citing pending challenges by Revenue before ITAT regarding similar claims in earlier years. The Commissioner of Income Tax (Appeals) allowed the deduction in favor of the assessee, leading to the Revenue's appeal before the ITAT.

2. The main issue revolved around the disallowance of the deduction claimed by the assessee under section 80IC of the Act. The AO had denied the claim based on pending challenges by Revenue in earlier years, despite the CIT(A) allowing the deduction for those years. The CIT(A) noted consistency in facts across the years and ruled in favor of the assessee. The ITAT, considering previous decisions in the assessee's case, upheld the allowance of the deduction for the current assessment year as well.

3. The Revenue's appeal challenged the order of the Commissioner of Income Tax (Appeals) regarding the deletion of the addition of ?1,61,27,898/- on account of disallowance under section 80IC of the Act. The Revenue contended that the CIT(A) erred in law and on the facts of the case by allowing the deduction. However, the ITAT, after considering the arguments of both parties and the precedents set in earlier years, dismissed the appeal and upheld the decision of the CIT(A).

4. The ITAT's decision was based on the interpretation of legal provisions, specifically section 80IC of the Income Tax Act. The Tribunal referred to previous orders in the assessee's case for different assessment years where similar issues were addressed, leading to the consistent allowance of the deduction. The ITAT emphasized the importance of factual consistency and adherence to previous judicial decisions in determining the eligibility for deductions under the relevant provisions of the Act.