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TMI Blog2015 (2) TMI 1104X X X X Extracts X X X X X X X X Extracts X X X X ..... sh. Needless to say that the ld.CIT would afford sufficient opportunity to the assessee. - Decided in favour of assessee for statistical purposes. - I.T.A. No.310/Ahd/2014 - - - Dated:- 27-2-2015 - SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER For the Petitioner : Shri Milin Mehta, AR For the Respondent : Shri T.P.Krishnakumar,CIT-DR ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER : This appeal by the Assessee is directed against the order of the Ld.Commissioner of Income Tax-IV, Ahmedabad ( CIT in short) dated 22/01/2014 pertaining to Assessment Year (AY) 2011-12. The Assessee has raised the following grounds of appeal:- All the grounds of appeal in this appeal are mutually exclusive and without prejudice to each other. 1. The learned Commissioner of Income Tax-IV, Ahmedabad ( the CIT ) erred in fact and in law in revising the assessment by invoking powers u/s.263 of the Income Tax Act, 1961 ( the Act ) despite the fact that the conditions stipulated for invoking such extra-ordinary jurisdiction were not satisfied. 2. The learned CIT erred in fact and in law in observing that the claim of deduction u/s.80IC @ 100% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that a detailed reply was given by the assessee in respect of deduction claimed u/s.80IC of the Act. He submitted that the reason for invoking the provisions of section 263 of the Act is embedded in para-3 of the order of the ld.CIT. He submitted that the ld.CIT observed that in respect of Baddi Unit first substantial expansion of the unit was carried out in previous year relevant to AY 2005-06 and assessee claimed deduction u/s.80IC of the Act for the said unit on the basis of the substantial expansion which took place in AY 2005-06. Further, the second substantial expansion is claimed in AY 2008-09. Hence, for Baddi Unit, initial Assessment Years have been considered from AYs 2005-06 2008-09 onwards as per 10CCB Report, for which deduction @ 100% is claimed. He submitted that the ld.CIT erroneously came to the conclusion that second substantial expansion is not permissible and, therefore the assessee is not entitled for claim of deduction u/s.80IC of the Act in respect of Baddi Unit @100%, but the assessee was entitled only for 30% of the profit derived from said Industrial Unit. He submitted that the ld.CIT erroneously held that the assessee s claim of deduction in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Bench) in ITA No.991/Delhi/2013 in the case of Tirupati LPG Industries Ltd. vs. DCIT Dehradun and ITA No.340/Ch./2010 in the case of DCIT vs. M/s.S.R.Paryavaran Engineers Pvt.Ltd., wherein it has been held that there is no prohibition or Bar into the Statute that the assessee cannot carry out substantial expansion after having carried out once. He submitted that it has been held that merely because there is a substantial expansion would not disentitle to the assessee for claiming initial assessment year on the basis of the second substantial expansion. He submitted that the only Bar prescribed by the Statute is that the assessee can claim deduction only for 10 years. He submitted that this is not the case where the assessee has by way of substantial expansion would be entitled for claim of deduction u/s.80IC of the Act for the period beyond 10 years. He submitted that ld.CIT has not doubted the genuineness of claim. It is also admitted position that the assessee has carried out substantial expansion relevant to AY 2008-09. It is also admitted position that deduction u/s.80IC is available for ten assessment years, beyond such period no deduction would be available. He submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IC of the Act. He submitted that the provisions do not envisage two initial assessment years. He further submitted that no option is available to the assessee to fix initial assessment year in accordance with his wish. He submitted that there is no ambiguity so far this proposition is concerned. He contended that law is well settled that if something is not provided under the Act, cannot be provided by way of liberal construction of the provision. He placed reliance on the judgement of Hon ble High Court of Karnataka rendered in the case of CIT vs. Infosys Technologies Ltd. reported at (2012) 17 taxmann.com 203 (Kar.) in support of contention that every conclusion and finding by the assessing authority should be supported by reasons, if the assessing authority failed in that, more so extending the relief to the assessee such order constitutes, an order not merely erroneous but also prejudicial to the interest of revenue. The ld.CIT-DR further relied on the judgement of Hon ble Bombay High Court rendered in the case of Indian Rayon Corpn.Ltd. vs. CIT reported at (1978) 231 ITR 26 (Bom) in support of contention that a statutory enactment must ordinarily be construed according to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orised by the Board in this behalf under section 120; (b) record [shall include and shall be deemed always to have included] all records relating to any proceeding under this Act available at the time of examination by the [Principal Commissioner or Commissioner]; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal [filed on or before or after the 1st day of June, 1988], the powers of the [Principal Commissioner or Commissioner] under this sub-section shall extend [and shall be deemed always to have extended] to such matters as had not been considered and decided in such appeal]. [(2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.] (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, [National Tax Tribunal] the High Court or the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t applying the principles of natural justice or without application of mind. The phrase prejudicial to the interests of the Revenue is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not (conferred) to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy Co. vs. S.P. Jain Anr. (1957) 31 ITR 872 (Cal) : TC 57R.129, the High Court of Karnataka in CIT vs. T. Narayana Pai (1975) 98 ITR 422 (Kar) : TC 57R.185, the High Court of Bombay in CIT vs. Gabriel India Ltd. (1993) 114 CTR (Bom) 81 : (1993) 203 ITR 108 (Bom) : TC 57R.213 and the High Court of Gujarat in CIT vs. Smt. Minalben S. Parikh (1995) 127 CTR (Guj) 333 : (1995) 215 ITR 81 (Guj) : TC 57R.312 treated loss of tax as prejudicial to the interest of the Revenue. Mr. Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Company vs. CIT (1987) 62 CTR (Mad) 152 : (1987) 163 ITR 129 (Mad) : TC 57R.303 interpreting prejudicial to the interests of the Revenue . The High Court held, In this context, it must be regarded as involving a conception of acts or orders which are subversive of the administ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim of the assessee, in pursuance of such inquiry, the assessee furnishes certain evidences and offer explanation qua the claim of deduction, expenditure, or exemption of income and the Assessing Officer form his opinion with regard to allowability of such claim. Unless such opinion is absurd and cannot be a possible view under law and facts, the CIT cannot revise such order. In the instant case, there is no dispute with regard to fact that the AO issued questionnaire to the assessee, seeking explanation in respect of allowability of deduction claimed under Chapter-VI of the Act. It is also not disputed that the assessee filed a detailed explanation qua the allowability of deduction u/s.80IC of the Act falling under Chapter VI of the Act. After considering the explanation of the assessee, the AO allowed the claim. This act of Assessing Officer was revised by the ld.CIT by invoking provisions of section 263 of the Act by way of the impugned order. Now, the issue arises for examination, whether the ld.CIT was justified in invoking the provisions of section 263 of the Act under the facts and circumstances of the present case. We find that the ld.CIT revised the order on the basis tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er whether the facts of the said case relied upon by assessee involved more than one substantial expansions and claim u/s.80IC of the Act @ 100% for extended period beyond 5 years. Further, the word used by ITAT is substantial expansion and not substantial expansions to imply more than one expansion being carried out to claim deduction @ 100% for the extended period beyond 5 years from the initial assessment year in which such substantial expansion was completed. Assessee has also relied upon the opinions of former High Court Judges Shri P.B. Majmudar and Shri D.A. Mehta in support of its claim for 100% deduction for the extended period beyond 5 years, however, on perusal of the same, it is seen that none of these opinions make reference to provisions of section 80IC(3)(iii) of the Act which is enabling section so for rate of deduction period of deduction specified in this section and hence are not relevant for deciding the matter in the present case. Therefore, the claim of the assessee on this count is also not tenable. 6.2. Before us, the ld.counsel for the assessee has placed reliance on the decision of the Coordinate Bench rendered in the case of Tirupati LG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod of 5 years commencing from such initial Assessment Year, and thereafter the % of deduction from profits come down. The term initial year has been defined, as a year in which substantial expansion is completed. There is nothing to suggest that there cannot be a second initial year if a second substantial expansion is completed. Even if an existing unit which is claiming 80 1C, undertakes first substantial expansion then also the year of completion of the substantial expansion will be the initial year . If the literal meaning of the term initial assessment year is to be taken, then there is no requirement of defining this term in the section. We have to go by the language of the section. 10.6. The CIT(A) denies the deduction on the ground that it would amount to evergreening of an incentive provision. Sub section (6) of S.80-IC reads as follows. 6) Notwithstanding anything contained in this Act, no deduction shall be allowed to any undertaking or enterprise under this section, where the total period of deduction inclusive of the period of deduction under this section, or under the second proviso to subsection (4) of section 80-IB or under section 10C, as the ca ..... 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