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TMI Blog2015 (6) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... in the earlier provision only in case of North-Easter states, the deduction of 100% was allowable for 10 years whereas in the case of states of Himachal Pradesh, the deduction was allowable @ 100% for first five years and 25% for next five years. The careful reading of the form in a serial order would clearly show that the assessee is required to inform the location of the Industry and column (c) specifically ask the assessee to state whether business is a new business? Column (d) clearly ask the assessee whether existing business has undertaken substantial expansion, therefore, there are two categories of business and substantial expansion is possible only in case of existing business. In our opinion, the Ld. CIT(A) has correctly adjudicated this issue. In view of the above detailed discussion we hold that the assessee before us i.e. M/s Hycron Electronics is entitled to only 25% of deduction during the present year because the assessee has already availed the period of full deduction @ 100% in the earlier five years i.e. from assessment years 2004-05 to 2008-09. In this background, we find nothing wrong with the order of Ld. CIT(A) and we uphold the same. - Decided against ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll balance of all the partners should have been examined and if such examinations is made then the overall balances in the capital account would be credit balance. Thirdly in any case assessee has already disallowed the sum of ₹ 12,00,000/- on this account. Therefore in our opinion there is no justification for this disallowance and accordingly we set aside the order of Ld. CIT(A) and delete the same. - Decided in favour of assessee. Eligible for deduction u/s 80IC on account technological know-how services - Held that:- The A.O. has also agreed and considered the sum of ₹ 15,00,000/- as not eligible for deduction u/s 80IC on account technological know-how services as agreed by the appellant subject to no penal action. The appellant also agreed for the said addition as income from other sources before the A.O. Since the offer for deduction of ₹ 15,00,000/- from eligible profits u/s 80IC was itself agreed by the appellant subject to no penal provision which the A.O. also agreed, therefore I do not find any defect in the addition made by the A.O. - Decided against assessee. - ITA No. 798/Chd/2012 ('B' Bench), 374/Chd/2014 ('A' Bench), 866/867/868 & 869 Chd/2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... '. IV. Making a narrow interpretation of the provision of section 80-IC of the Income Tax Act, 1961 which was introduced as a welfare legislation for providing stimulus to the economy of industrially backward states such as Himachal Pradesh. 5. The brief facts of the case are that assessee firm was engaged in the business of manufacturing assembly and sub-assembly of electronic energy meters and allied products. The unit started commercial production from 17.1.2004. The assessee had claimed deduction u/s 80IC on the products of this unit @ 100% from assessment years 2004-05 to 2008-09. Subsequently, during financial year 2008-09, the assessee firm undertook substantial expansion by way of addition to plant and machinery by more than the prescribed limit, therefore, assessee again started claiming deduction u/s 80IC from assessment year 2009-10 (i.e; the year before us) @ 100%. 6. The Assessing Officer after examining the facts observed that assessee has fulfilled all the conditions for claiming deduction. However, he noted that since assessee has already claimed 100% deduction for first five years upto assessment year 2008-09 from the date of setting up of the unit, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eductionINCLUSIVE OF THE PERIOD OF DEDUCTION UNDER THIS SECTION of under the second proviso to sub-section (4) of section 80-IB or under section 10-C, as the case may be EXCEEDS 10 ASSESSMENT YEARS. Further 'initial assessment year' has been defined in the Act as INITIAL ASSESMENT YEAR means the assessment year relevant to the previous year in which the Undertaking or Enterprise begins to manufacture or produce articles or things or commences operation OR COMPLETES SUBSTANTIAL EXPANSION. As already stated, the assessee unit after claiming 100% deduction u/s 80IA/80IB of the I.T. Act for 5 assessment years came for substantial expansion in the assessment year 2009-10 which is the year under assessment. Thus this the first year of claiming 100% deduction for substantial expansion as per provisions of section 80 IC. The undertaking is thus entitled to claim 100% deduction u/s 80IC of the I.T. Act for the next 5 assessment years provided that the overall period of claim of deduction does not exceed 10 assessment years. As per provisions of section 80IC, 100% deduction is available for 5 assessment years commencing with THE INITIAL ASSESSMENT YEAR and thereafter 25% in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t five years and is not at all meant for the units that came into being on or after the introduction of the scheme i.e. 07.01.200. Keeping the above discussion in mind, the assessee 's claim of substantial expansion and on that basis, reckoning the Asst. Year 2009-10 to be the initial Asst. Year is denied. In view of this Asst. Year 2004-05, relating to the previous year in which the assessee firm had commenced its business operation / activity on the basis of setting up of its new industrial undertaking is held to be the initial Asst. Year and that of Asst. Year 2009-10 to be the sixth Asst. Year for claim of deduction u/s 80-IC of the Act at the rate of 25% of its business profits. The assessee firm shall not be allowed the benefit of 100% deduction on its profits for sixth year in succession i.e. for the Asst. Year 2009-2010. In the above background, for the present assessment year i.e. assessment year 2009-10, deduction u/s 80IC was allowed @ 25%. 9. On appeal before Ld. CIT(A) it was mainly submitted that combined reading of section (3)(ii) and definition of initial assessment year, it becomes amply clear that assessee was eligible for 100% deduction from assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IC. 13. The Ld. CIT(A) considered these submissions and observed that Section 80IC was enacted by the Finance Act, 2003 to give effect to a new and revamped Industrial policy notified by the Union Cabinet for the State of Sikkim, Himachal Pradesh, Uttaranchal and North-Eastern states. This incentive scheme provide for benefits under Income Tax Act and Central Excise, Capital Investment Subsidy and Transport subsidy etc. The benefit under Income Tax were provided in section 80IC to new units commencing manufacturing on or after 7 January of 2003 or to the existing units involving substantial expansion after that date eligible for such incentive. The Ld. CIT(A) thereafter referred to para No. 49 of Circular No. 7/2003 issued by the Board on 5.9.2003. According to her the plain reading of section 80IC along with circular made it abundantly clear that Special provision of Section 80IC were applicable to two kinds of undertaking or enterprises which are as under:- i) Any undertaking or enterprise which has begun or begins to manufacture of produce any article or thing, specified in the thirteenth Schedule /or has begun or begins to manufacture any article or thing specified in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under u/s 80IC. Since the pre-existing units cannot possibly crossover into the zone of new undertakings or enterprises, the new undertakings also obviously cannot be allowed to cross over into the zone meant for the old, pre-existing undertakings. The rules of the game have to be the same for all the participants or stakeholders. The use of the word OR in clause (a) and clause (b) of sub-section (2) to section 80IC also leaves no doubt about the fact that the provisions of section 80IC apply to two distinct types of undertakings or enterprises and they cannot replace each other. 4.4 The appellant's interpretation that deduction u/s 80IC shall be available @ 100% to the new undertaking or enterprises for the initial five years and then shall again be available @ 100% for another five years if the said undertakings or enterprises carry out substantial expansion has the effect of creating a great anomaly, because this interpretation will result in a disadvantageous situation for the pre-existing undertakings. While the newly established undertakings shall be in a position to avail to 100% deduction for a continuous period of 10 years if they carry out substantial expansion a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the legislative intent is clearly reflected from the bare reading of the section. The given expression of the statute is so clear that there is no need to add any word thereto so as to make out the object of the legislature. Therefore all the pleas taken by the appellant regarding the rule of liberal interpretation or regarding the harmonious construction of provisions are intended to give rise to unnecessary controversy. 18. On the basis of above analysis, the action of the Assessing Officer was upheld. 19. Before us Ld. Counsel for the assessee Shri Pavan Ved led the arguments because many other counsels were also present who were representing other group cases. Shri Rakesh Gupta who was representing many appeals particularly in ITA No. 866 to 869/Chd/2014, 895 to 897/Chd/2014, 185/Chd/2014 etc. also made some submissions. All other counsels present in the Court representing various cases adopted the arguments raised by Shri Pavan Ved and Shri Rakesh Gupta. Shri Pavan Ved had also filed written synopsis. Various contentions raised on behalf of the assessee can be summarized as under:- (a) The Assessing Officer has clearly admitted in para 2.1 of the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 'industrial unit' and not an 'existing industrial unit'. Thirdly, notification cannot override the section which provides the legislature intent. Fourthly, the notification was not issued u/s 119 of the Income Tax Act and, therefore, has not binding force. Fifthly, as per this notification the substantial expansion was related to increase in capacity by 25% which was contrary to the criteria laid down in section 80IC i.e. 50% increase in investment. (g) Form No. 10CCB clause (25)(ii)(c) is meant for new business and clause (d) is for existing business. There is no word in between clause (c) and (d) like 'or/and' which means even according to CBDT, both situations may exist in a particular case. (h) A reference was made to clause (v) of sub-section (8) of section 80IC which defines 'initial assessment' year and it was pointed out that initial assessment year was with reference to both manufacturer and substantial expansion because the word 'or' has been used between the two expression which clearly shows that it is a disjointed sentence and refers to both situations. (i) Reliance was also placed on the decision of Delhi Bench of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Himachal Pradesh, Uttranchal, North-eastern states and State of Sikkim was the scheme cleared by the Union Cabinet, therefore, it is important to consider all the material emanating from this scheme i.e. circulars issued by CBDT, circulars issued by the Central Excise Authorities as well as the subsidy scheme issued by Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, Govt. of India. The word 'existing unit' is not mentioned in section 80IC but this can be ascertained easily if the section is properly construed. In any case, the Circular No. 49/2003 issued by Central Excise Department as well as notification issued by Ministry of Commerce very clearly mention that existing unit would mean 'an industrial unit existing before 7.1.2003'. By considering the various materials, the notification of the Government becomes absolutely clear. ii) Subsection (2) of section 80IC which is an enabling provision for grant of deduction very clearly provides that deduction is available to the undertaking which either begun or begins to manufacture or produce an article or thing or undertake substantial expansion with reference to the State of Himac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate of Sikkim for whole of ten years. If the interpretation adopted by the assessee is correct then the meaning of substantial expansion would become redundant for the North-Eastern states and state of Sikkim because in those cases deduction had been straight away provided @ 100% for all the 10 years. It was submitted that any interpretation of a provision which would render some part of the section otiose is not permissible under any rule of interpretation. Even the expression used in section 80IC(3)(ii) thereafter would become redundant in the case of State of Himachal Pradesh. v) A reference was made to the definition of the 'initial assessment year' u/s 80IC(8)(v). It was pointed out that as per this section there could be only one initial assessment year for the purpose of section 80IC. This become very clear because the Legislature has used exclusionary word OR' before the words 'complete substantial expansion' therefore, initial assessment year would be the year in separate situation as under:- (a) the undertaking or enterprise begins to manufacture or produce articles of things [relevant for purpose of section 80IC(2)(a) or : (b) the undertaki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that assessee has raised the contention that condition on carrying out substantial expansion was during the widow period. However if this interpretation is accepted then the consequences would be that in the guise of expansion by investing a very small sum, the assessee would claim deduction of 100% for whole of the profits of such expanded undertaking which would mean that profit of older unit also gets benefit of 100% deduction which cannot be the intention of the legislature. x) While concluding his argument it has been submitted that there is no ambiguity in the provisions and the decision of Delhi Bench of the Tribunal in the case of Triputi LPG Industries Limited Vs. DCIT (supra) was per inquerim because it has not considered all the provisions of the Act and has merely relied on the decision of Hon'ble Supreme Court in the case of Bajaj Tempo Ltd (supra). It was pointed out that Supreme Court in another case of M/s Novapan India Ltd v Collector of Central Excise and Customs, Appeal (Civil) 3356 of 1984 has clearly held that it is not possible to agree with the submissions that if there was conflict of decision, then benefit of such ambiguity should go to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arified that assessee had not claimed deduction after period of 10 years. If substantial expansion was carried out for the first time then assessee was entitled to benefit of 100% deduction excluding profits of existing units, therefore, the only inference should be that in case of subsequent expansion also 100% profit would be eligible. There cannot be a theory of segregation of profits into profits relatable to existing units and profits related of expanded units. Further, since substantial expansion has no relationship with capacity and it is related to investment, therefore, it was not practically possible to work out separately profits related to substantial expansion because though investment may be 50% but the same may lead to increase of capacity to say 10% or other percentage. c) Though there is no doubt that an existing unit claiming benefit us 80IB(4) would necessarily switch over the section 80IC w.e.f. 1.4.2004 by operation of law but the same would still be eligible for substantial expansion in the 5th year on the ground of being existing unit as on 1.4.2004. d) Even if there is no separate provision u/s 80IC to give deduction of substantial expansion still the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r unreasonableness of a provision of a statute except so far as it may h old it in interpreting what the Legislature has said. If the language of a statute be plain, admitting of only one meaning, the Legislature must be taken to have meant and intended what it has plainly expressed, and whatever it has in clear terms enacted must be enforced though it should not lead to absurd or mischievous results. If the language of this sub-section be not controlled by some of the other provisions of the statute. It must, since, its language is plain and unambiguous, be enforced and your Lordships' House sitting judicially is not concerned with the question whether the policy it embodies is wise or unwise, or whether it leads to consequences just or unjust, beneficial or mischievous. The oft-quoted observations of Rowlattt J. in the case of Cape Brandy Syndicate v. IRC [1921] 1 KB 64 ought also to be noticed at this juncture. The learned judge observed (page 71): . . . in a taxing statute one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anifestly absurd and unjust result which could never have been intended by the legislature, the court may modify the language used by the legislature or even do some violence to it, so as to achieve the obvious intention of the legislature and produce a rational construction. Luke v. IRC [1963] Hon'ble Apex Court 557; [1964] 54 ITR 692 (HL)followed. Speeches made by the members of the legislature on the floor of the House when the Bill is being debated are inadmissible for the purpose of interpreting the statutory provision but the speech made by the mover of the Bill explaining the reason for its introduction can certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation is enacted. This is an accord with the recent trend in juristic thought not only in western countries but also in India, that the interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible. The marginal note to a section cannot be referred to for the purpose of construing the section but it can certainly be relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at form another angel, a circular which is contrary to the statutory provisions has really no existence in law. The above shows that circulars are not binding on the Court but the Court has right to look at the Circular and ultimately meaning of a provision as interpreted by the Court would prevail in comparison to the interpretation given in the circular. Therefore, if Circular is contrary to a provision as interpreted by the Court then the opinion of the Court would prevail. This decision nowhere lays down that circulars cannot be considered for interpretation of a particular provision. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of interpreting the particular provision. 27. It will be useful to state another very well settled principle of interpretation i.e. whenever the particular provision is required to be interpreted, it should be interpreted after reading the whole provision and not the parts of a particular section. However, a provision has to be read in context of the overall scheme of the Act. It is also well settled that no provision can be interpreted in such a way which would render parts of the section otiose or meaningless. 28. Having considered the principles of interpretation above, let us consider the provision of section 80IC in the light of the above principles laid down by the Hon'ble Supreme Court. Section 80IC reads as under:- Section 80IC 80-IC (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (2), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains, as specified in sub-section(3). (2) This section applies to any unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24th day of December, 1997 and ending before the 1st day of April, 2007, in any of the North-Eastern States. (3) The deduction referred to in sub-section (1) shall be - (i) in the case of any undertaking or enterprise referred to in sub-clauses (i) and (iii) of clause (a) or sub-clauses (i) and (iii) of clause (b), of sub-section (2), one hundred per cent of such profits and gains for ten assessment years commencing with the initial assessment year; (ii) in the case of any undertaking or enterprise referred to in sub-clause (ii) of clause (a) or sub-clause (ii) of clause (b), of sub-section (2),one hundred per cent of such profit and gains for five assessment years commencing with the initial assessment year and thereafter twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains. (4) This section applies to any undertaking or enterprise which fulfils all the following conditions, namely:- (i) it is not formed by splitting up, or the reconstruction, of a business already in existence: Provided that this condition shall not apply in respect of an undertaking which is formed as a result of there-establishment, reconstruction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration or completes substantial expansion; (vi) Integrated Infrastructure Development Centre means such centres, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government (vii) North-Eastern States means the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura; (viii) Software Technology Park means any park set up in accordance with the Software Technology Park Scheme notified by the Government of India in the Ministry of Commerce and Industry; (ix) Substantial expansion means increase in the investment in the plant and machinery by at least fifty per cent of the book value of plant and machinery (before taking depreciation in any year), as on the first day of the previous year in which the substantial expansion is undertaken; (x) Theme Park means such parks, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government. 29. Sub section (1) of the above provision is a general provision and does not require any interpretation. Sub Section [2] is the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for deduction under this section. 30. At this stage, it can be said that section has some confusion and some effort is required to understand the correct intention of the Legislature by keeping various principles of interpretation. Therefore, various principles of interpretation needs to be looked into. This provision was brought into the statute indisputably in the light of the incentive package announced by the Union Cabinet. Through this incentive package not only income tax concession but excise concessions and some subsidies like transport subsidy and capital subsidy were also provided to various industries in the hilly stated comprising states of Himachal Pradesh, Uttaranchal, Sikkim and North-Eastern states to boost the economies of these hilly states. Circular No.7 was issued by the CBDT on 5.9.2003 in this respect and the Circular reads as under:- Circular No. 7/2003 dated 05.09.2003 49. New provisions allowing a ten years tax holiday in respect of certain undertakings in the States of Himachal Pradesh, Sikkim, Uttaranchal and North-Eastern States. 49.1 The Union Cabinet has announced a package of Fiscal and non-fiscal concessions for the special category S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the profits and gains of the undertaking or enterprise. 49.5 A new Thirteenth Schedule has been inserted in the Income-tax Act to specify the list of articles and things, which are ineligible for the purpose of deduction under section 80-IC. Further, a new Fourteenth Schedule has also been inserted, which specifies the list of articles and things, being thrust sector industries, which are eligible for the purposes of availing deduction under this section. Consequent to theses amendments, the provisions of section 10C and sub-section(4) of section 80-IB have been made inoperative in respect of the undertakings or enterprises in the State of Himachal Pradesh or in North-Eastern region including Sikkim, with effect from the 1st day of April, 2004. 49.6 These amendments will take effect from 1st April, 2004 and will, accordingly, apply in relation to the assessment year 2004-05 and subsequent years. 31. The circular makes it clear that section 80IC was inserted to give effect to the new package announced by the Union Cabinet. The Circular further clarifies that this section provides for deduction for a period of 10 years from the profits of new undertaking or enterprise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing existing unit, the intention of the Legislature become absolutely clear when sub section (2) is read alongwith sub-section (3) of section 80IC. As noted earlier, sub section (2) is enabling provision which provides for deduction in certain kind of undertakings, i.e. new unit set up or the existing units which carries out substantial expansion during the particular window period which are given in clauses (i), (ii) (iii) of sub section (2). The sub section (3) provides for rates of deduction. It is useful to note that clause (i) of sub section (3) provides for 100% deduction for a period of 10 assessment years in cases covered by sub clause (i) (iii) of clause (a) and sub clause (i) (iii) of clause (b). Now sub clause (i ) and (iii) of clause (a) of sub section (2) refers to the window period in case of State of Sikkim, North-Eastern States whereas sub clause (ii) refers to the window period in case of State of Himachal Pradesh and State of Uttaranchal. Similarly, sub clause (i) (iii) of clause (b) refers to window period in case of State of Sikkim and North-Easter States whereas sub clause (ii) refers to the window period in case of State of Himachal Pradesh and Uttaran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ously used for any purpose. Further the explanation to this Sub Section makes it clear that Explanation 1 2 of Sub Section (3) of Section 80IA are applicable in this respect. Explanation 2 of Sub Section (3) of Section 80 IA reads as under: Explanation 2- Where in the case of an [undertaking], any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this sub-section, the condition specified therein shall be deemed to have been complied with. From the above it becomes clear that if 20% of the Machinery from the old unit was used in the new unit then such unit would not be eligible for deduction under this Section that is section 80IC. Now for carrying out substantial expansion the investment in Plant Machinery is required to be made by atleast 50%. So if 50% fresh machinery is added to the new unit then it will violate Sub Section (4) of Section 80IC, therefore, interpretation canvassed on behalf of the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because of particular contention and we are not expressing any opinion on the merits of these appeals here). Therefore, the contention of the assessee that any number of expansions are allowed is not possible in view of the restriction given in section 80IC(6). 36. The above situation as pointed by the Revenue also becomes clear if the provision of section 80IC is compared to the provision of section 80IB(4). Relevant provision of Section 80IB (4) reads as under:- (4) The amount of deduction in the case of an industrial undertaking in an industrially backward State specified in the Eighth Schedule shall be hundred per cent of the profits and gains derived from such industrial undertaking for five assessment years beginning with the initial assessment year and thereafter twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains derived from such industrial undertaking: Provided that the total period of deduction does not exceed ten consecutive assessment years (or twelve consecutive assessment years where the assesee is a company-operative society) subject to fulfillment of the condition that it begins to manufacture or produce art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction inclusive of the period of deduction - - under section 80-IC, or - under the second proviso to section 80-IB(4) or - under section 10C as the case may be, exceeds 10 assessment years. 39. Lastly, it was contended that initial assessment year as defined in clause (v) of sub section (8) of section 80IC uses the expression 'or' therefore, it can be construed that it relates to both situations separately i.e. for new unit and substantial expanded unit. We find no force in this contention. The initial assessment year has been defined and the expression 'or' has been used in respect of new units by stating 'commences operation' or 'complete substantial expansion'. Here the expression 'or' is to be read as a mutually exclusive expression which refers to a particular situation by excluding the other situation. Therefore, initial assessment year would clearly commence either on commencement of operation or at completion of substantial expansion of existing unit. In any case the word 'initial' cannot be used twice by referring to series of events. This can be understood with a very simple example. Let us say a person ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 989] 1 SCC 345, in support of strict construction of a provision concerning exemptions. There is support of judicial opinion to the view that exemptions from taxation have a tendency to increase the burden on the other un-exempted class of tax payers and should be construed against the subject in case of ambiguity. It is an equally well known principle that a person who claims an exemption has to establish his case. Indeed, in the very case of Parle Exports (P) Ltd. relied upon by Shri Narasimhamurthy, it was observed. While interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. It must, however, be borne in mind that absurd results of construction should be avoided. The choice between a strict and a liberal construction arises only in case of doubt in regard to the intention of the legislature manifest on the statutory language. Indeed, the need to resort to any interpretative process arises only where the meaning is not manifest on the plain words of the statute. It the words are plain and clear and directly convey the meaning, there is not need for any interpretation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to show under which clause he was entitled to the deduction but assessee is simply asserting before us that there is no restriction for deduction in case of substantial expansion of new units. In our opinion, that is not enough because absence of restriction does not mean that particular deduction was allowable. 42. We also find force in the submissions of Ld. CIT-DR that if interpretation given by the assessee is to be accepted, the provision would become discriminatory for two classes of undertakings i.e. new units and old units. Because the old units would be entitled to 100% deduction on expansion for first five years and 25% thereafter whereas the new units would become entitled to deduction for 100% for first five years and again @ 100% on substantial expansion. Such discriminatory intention cannot be imputed to the Legislature. 43. Before us, reliance was also placed on the decision of Delhi Bench of the Tribunal in the case of Triputi LPG Industries Limited Vs. DCIT(supra). In this decision, the Bench has simply observed that main dispute is on the definition of 'initial assessment year'. The provisions of sub section (2) and sub section (3) as discu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expansion of manufacturing capacity so long it is not a case of restructuring of business already in existence. However, the question whether the assessee shall be entitled to deduction of 100% of its profit even after A.Y. 2014-15 i.e. for 2 more years beyond A.Y. 2014-15 is left open and not decided by the AAR. Therefore this decision is totally distinguishable and does not help the case of the assessee. 46. The last decision relied on was in the case of Sintex Industries Ltd v CIT (supra). In this case the deduction u/s 80IC was allowed by the Assessing Officer but later on a revisionary order was passed u/s 263 of the Act. The Bench mainly dealt with the provision of section 263 and in view of the decision of Hon'ble Supreme Court in the case of Malabar Industries Co Ltd v CIT 243 ITR 83 (SC) held that since view taken by the Assessing Officer is also possible view, therefore, assessment order was not erroneous. In fact the Bench referred to the decision of Delhi Bench in the case of Triputi LPG Industries Limited Vs. DCIT (supra) without considering the provision of section 80IC in detail for reaching the conclusion that it is one of the possible view. Since we have alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness and substantial expansion is possible only in case of existing business. In our opinion, the Ld. CIT(A) has correctly adjudicated this issue. 49. In view of the above detailed discussion we hold that the assessee before us i.e. M/s Hycron Electronics in ITA No. 798/Chd/2012 is entitled to only 25% of deduction during the present year because the assessee has already availed the period of full deduction @ 100% in the earlier five years i.e. from assessment years 2004-05 to 2008-09. In this background, we find nothing wrong with the order of Ld. CIT(A) and we uphold the same. Accordingly, assessee's appeal is dismissed. 50. In the result, appeal of the assessee is dismissed. ITA 374/Chd/2014 - assessment year 2010-11 51. In this appeal the assessee has raised the following grounds:- 1. Under the facts and circumstances of the case and in law, the order dated 27.01.2014 passed by the Ld. CIT(Appeals), Shimla u/s 250(6) of the Income Tax Act, 1961 is bad in law, illegal, without jurisdiction and void. 2. Under the facts and circumstances of the case and in law, Ld. CIT(Appeals), Shimla has erred in: I. Affirming the order of Ld. ITO, Baddi in restrictin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing details:- Particulars Amount(Rs.) Interest received on Margin Money 2,85,876/- Interest received on others 70,328/- Foreign Exchange Fluctuation 15,46,066/- Miscellaneous Income 73,542/- Sundry Credit balances written back 13/- Total 19,75,825/- 55. On this income the assessee has claimed deduction u/s 80IC. It was observed by Assessing Officer that this income has not been derived from the Industrial Undertaking and does not have first degree nexus with the manufacturing activity. Therefore, assessee was asked to justify the claim u/s 80IC of the Act against this income. In response it was stated that income was eligible for deduction u/s 80IC of the Act. The Assessing Officer referred to the decision of Hon'ble Supreme Court in the case of Pandian Chemicals Ltd Vs. CIT 262 ITR 278 (SC) and Liberty India Ltd v CIT 317 ITR 218 and disallowed the claim of deduction against other income. The ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) it was held that gain from Foreign Exchange Fluctuat ions was directly related to the business activity therefore assessee was entitled to deduction. However the details are not incorporated in the assessment order or in the impugned order, therefore, we set aside the order of Ld. CIT(A) and remit the matter back to the file of Assessing Officer with a direction that if the same relates to the business transact ion on Revenue account, then deduct ion may be allowed on this amount, otherwise the issue may be decided in accordance with law. As far as the issue regarding misc. income and sundry credit balance written back is concerned, this issue was not seriously pressed before us, therefore, action of the Ld. CIT(A) in respect of these two items are also confirmed. 62. In the result the appeal is partly allowed for statistical purposes. ITA No. 866/Chd/2014 (assessment year 2010-11) 63. In this appeal the assessee has raised various grounds. However, it was pointed out that only two disputes are involved namely : Issue No. 1 - Denial of 100% deduction on account of substantially expanded unit Issue No. 2- Denial of deduction under section 80IC on account of Forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following the decision of Godrej Boyce Manufacturing Co. Ltd v DCIT 328 ITR 81(Bombay), Therefore we find nothing wrong in the order of Ld. CIT(A) and confirm the same 74 In the result, appeal is partly allowed for statistical purposes. ITA No. 868/Chd/2014 (assessment year 2010-11) 75. In this appeal the assessee has raised only one issue regarding denial of deduction under section 80IC @100% for new unit which has been expanded. 76. Since this issue as well as contentions remain the same has been decided by us in case of M/s Hycron Electronics Vs. ITO, Himachal Pradesh in ITA No. 798/Chd/2012 in vide para no. 22-49. Following the same, we decide this issue against the assessee. 77. In the result appeal is dismissed. ITA No. 869/Chd/2014 (assessment year 2011-12) 78. In this appeal the assessee has raised only one issue regarding denial of deduction under section 80IC on expanded unit. 79. Since this issue as well as contentions remain the same has been decided by us in case of M/s Hycron Electronics Vs. ITO, Himachal Pradesh in ITA No. 798/Chd/2012 in vide para no. 22-49. Following the same, we decide this issue against the assessee. 80. In the result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 323 of 2009 has clearly held that if amount have been paid before the due date of filing of return then such dues are allowable. However, we further find that dates of deposits are not available on record therefore we set aside the order of Ld. CIT(A) and remit the matter back to the file of AO with a direction to verify that if amount have been paid before due date of filing of return then the same may be allowed otherwise the issue should be decided in accordance with the law. We may also like to point out that if ultimately disallowance is made on this account then the profit of the assessee would increase and assessee would be entitled to increased deduction under section 80IC as consequences. 90. In the result appeal of the assessee is partly allowed for statistical purposes. ITA No. 897/Chd/2014 91. In this appeal various grounds have been raised but only three disputes are involved namely: Issue No. 1: Denial of 100% deduction on account of substantially expanded unit Issue No. 2: Disallowance on account of late payment of ESI PF dues. Issue No. 3; Confirmation of addition for non charging interest from partners on their withdrawals. 92. Issue No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. On appeal before Ld. CIT(A) it was submitted that there was no clause in the partnership deed which required to charge interest on debit balance on the partners account. In fact there was no credit made to the partners account on their capital balance therefore the disallowance was not justified and reliance was placed on few tribunal decisions. 97. Ld. CIT did not agree with these submissions however she gave a direction that in view of the decision of Chandigarh bench of Tribunal in case of Mega Package in ITA No. 755/Chandi/2011 that if profit is enhanced because of any disallowance then the such enhanced profit would become eligible for deduction under section 80IC. 98. Before us Ld. Counsel for the assessee reiterated the submissions made before lower authority. 99. On the other hand Ld. DR supported the order of CIT(A). 100. After considering the rival submissions carefully we find force in the submission of Ld. Counsel for the assessee. Firstly there is no provision for charging of interest in the partnership deed and therefore assessee's firm was not bound to charge interest. Secondly since no interest have been allowed to the partners therefore overall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter on assessee offered to reduce the eligible profits for deduction under section 80IC by sum of ₹ 15,00,000/- and accordingly AO made addition of ₹ 15,00,000/-. 111. On appeal the Ld. CIT(A) confirmed the addition in view of the offer made by the assessee. 112. Before us Ld. Counsel for the assessee submitted that technology was provided in the initial years and already time of five years have been lapsed from the date of production and production has stabilized and therefore there was no justification of the addition. 113. On the other hand Ld. DR refered to the assessment order and pointed out that assessee has agreed for this addition. 114. After considering the rival submissions we find that Ld. CIT(A) has adjudicated this issue vide para 6.3 which is as under: 6.3 After consideration of the facts of the case and appellant's submission it is noted that appellant itself has offered the reduction of ₹ 15,00,000/- from eligible profits for deduction u/s 80IC on account of technical know-how services rendered by its partner. The A.O. has also agreed and considered the sum of ₹ 15,00,000/- as not eligible for deduction u/s 80IC on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of the assessee is dismissed. ITA No. 195/Chd/2014 123. In this appeal assessee has raised only one issue i.e; denial of deduction under section 80IC on account of substantial expanded unit. 124. Since this issue as well as contentions remains the same as has been decided by us in case of M/s Hycron Electronics Vs. ITO, Himachal Pradesh in ITA No. 798/Chd/2012 in vide para no. 22-49. Following the same, we decide this issue against the assessee. 125. In the result appeal of the assessee is dismissed. ITA No. 776/Chd/2014 126. In this appeal the assessee has raised various grounds. However, it was pointed out that only two disputes are involved namely : Issue No.1- Ground No. 1-Denial of 100% deduction on account of substantially expanded unit. Issue No. 2. Confirmation of disallowance amounting to ₹ 66,826/- for non payment of interest 127. Issue No. 1- Since this issue as well as contentions remain the same as has been decided by us in case of M/s Hycron Electronics Vs. ITO, Himachal Pradesh in ITA No. 798/Chd/2012 in vide para no. 22-49. Following the same, we decide this issue against the assessee. 128. Issue No. 2- The brief facts are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ESI contribution amounting to ₹ 2529/-. 135. Issue No. 1- Since the issue as well as contentions remain the same as has been decided by us in case of M/s Hycron Electronics Vs. ITO, Himachal Pradesh in ITA No. 798/Chd/2012 in vide para no. 22-49. Following the same, we decide this issue against the assessee. 136. Issue No. 2 3- Since the issue as well as contentions remain the same as has been decided by us in case of M/s Sansui Electronics Vs. ITO, Himachal Pradesh in ITA No. 896/Chd/2014 vide para no. 89. Therefore following this decision we set aside the order of Ld. CIT(A) and remit the matter back to the file of AO who is directed to follow the directions contained in para 89 of this order. 137. In the result appeal of the assessee is allowed for statistical purposes. ITA No. 780/Chd/2014 138. In this appeal assessee has raised only one issue i.e; denial of deduction under section 80IC on account of substantial expanded unit.. 139. Since this issue as well as contentions remains the same as has been decided by us in case of M/s Hycron Electronics Vs. ITO, Himachal Pradesh in ITA No. 798/Chd/2012 in vide para no. 22-49. Following the same, we decid ..... 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