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TMI Blog2018 (11) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof. The answer was given in the negative. The matter is no longer res integra. - decided in favour of revenue. - ITA No. 158 of 2018 (O&M) - - - Dated:- 26-9-2018 - MR AJAY KUMAR MITTAL AND MR AVNEESH JHINGAN, JJ. For The Appellant : Mr. Pankaj Jain, Senior Advocate with Mr. Sachin Bhardwaj, Advocate ORDER Ajay Kumar Mittal, J. 1. The appellant-assessee has filed the present appeal under Section 260A of the Income Tax Act, 1961 (in short, the Act ) against the order dated 12.10.2017, Annexure A.6, passed by the Income Tax Appellate Tribunal, Chandigarh Bench, A (in short, the Tribunal ) in ITA No.386/CHD/2017, for the assessment year 2013-14, claiming following substantial questions of law:- i) Whether under the facts and circumstances of the case, the impugned order is unreasonable, in holding that 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? ii) Whether under the facts and circumstances of the case, the Tribunal has erred in holding that benefit of deduction under Section 80IC @ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the extent of 100% for five assessment years beginning from assessment year 2010-11; placing reliance on the provisions of Section 80IC of the Act; Explanatory note to the Finance Act, 2003 and various orders passed by the Tribunal. Vide order dated 17.01.2017, Annexure A.4, the CIT(A) dismissed the appeal, by following the earlier order passed by the Tribunal dated 27.05.2015. Still not satisfied, the assessee filed an appeal before the Tribunal. Vide order dated 12.10.2017, Annexure A.6, the Tribunal dismissed the appeal. Hence the instant appeal by the appellant-assessee. 3. We have heard learned counsel for the appellant-assessee. 4. The matter is no longer res integra. The issue has already been decided against the assessee in a judgment passed on 06.09.2018 in ITA No. 332 of 2015 ( M/s Admac Formulations, H.No. 272, Sector-17, Panchkula Vs. Commissioner of Income Tax, Panchkula) wherein after considering the relevant statutory provision and the case law on the point, it has been recorded as under:- Section 80-IC was inserted by Finance Act, 2003 w.e.f. April 1, 2004. It makes special provisions in respect of certain undertakings or enterprises in certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstantial expansion prior to 01.04.2012, would also be entitled to benefit of deduction at different rates of percentage stipulated under Section 80-IC. ( c) Substantial expansion cannot be confined to one expansion. As long as requirement of Section 80- IC(8)(ix) is met, there can be number of multiple substantial expansions. ( d) Correspondingly, there can be more than one initial Assessment Years. ( e) Within the window period of 07.01.2003 to 01.04.2012, an undertaking or an enterprise can be entitled to deduction @ 100% for a period of more than five years. ( f) All this, of course, is subject to a cap of ten years. [Section 80-IC(6)] ( g) Units claiming deduction under Section 80-IC shall not be entitled to deduction under any other Section, contained in Chapter VI-A or Section 10A or 10B of the Act [Section 80-IB(5)]. 8. The view of the Himachal Pradesh High Court in Stovkraft India s case (supra) and other appeals was not approved by the Supreme Court. The Apex Court in Commissioner of Income Tax vs. M/s Classic Binding Industries, Civil Appeal No(s) 7208 of 2018 decided on 20.8.2018, dealing with the issue whether the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for which the deduction can be allowed to any undertaking or enterprise under this section, starting from the initial Assessment Year. Another significant feature under sub-section (3) is that the deduction allowable is 100% of such profits and gains from an undertaking or an enterprise for five Assessment Years commencing with the initial Assessment Year and thereafter the deduction is allowable at 25% (or 30% where the assessee is a company) of the profits and gains. Cumulative reading of these provisions brings out the following aspects: ( a) Those undertakings or enterprises fulfilling the conditions mentioned in sub-section (2) of Section 80-IC become entitled to deduction under this provision. ( b) This deduction is allowable from the initial Assessment Year. Initial Assessment Year is defined in Section 80- IB(14)(c) of the Act. ( c) The deduction is @ 100% of such profits and gains for first 5 Assessment Years and thereafter a deduction is permissible @ 25% (or 30% where the assessee is a company). ( d) Total period of deduction is 10 years, which means 100% deduction for first 5 years from the initial Assessment Year and 25% (or 30% where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (2) of Section 80-IC for the first time for the Assessment Year 2006-07. Thus, insofar as those cases are concerned, the initial Assessment Year under Section 80-IC started only from the Assessment Year 2006-07. In contrast, position here is altogether different. These assessees have availed deduction under Section 80-IC alone. Initially, they claimed the deduction on the ground that they had set up their units in the State of Himachal Pradesh and after availing the deduction @ 100% they want continuation of this rate of 100% for the next 5 years also under the same provision on the ground that they have made substantial expansion. As pointed out above, once the assessees had started claiming deduction under Section 80-IC and the initial Assessment Year has commenced within the aforesaid period of 10 years, there cannot be another initial Assessment Year thereby allowing 100% deduction for the next 5 years also when sub-section (3), in no uncertain terms, provides for deduction @ 25% only for the next 5 years. It may be asserted again that the assessees accept the legal position that they cannot claim deduction of more than 10 years in all under Section 80-IC. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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