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TMI Blog2019 (2) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to get 100% deduction treating the year under considering as initial assessment year on the premise of substantial expansion of business. A perusal of the impugned assessment order nowhere reveals that the Assessing Officer, not to speak of reliance on any decision of jurisdictional High Court, has not even addressed or examined or verified the claim of the assessee in terms of provisions of section 80IC of the Act. The ld. Pr. CIT, on correct appreciation of section 80IC, which is supported by various decisions relied in the impugned order as well by the decision of Hon’ble Supreme Court in the case of CIT vs. Classic Binding Industries (supra), being the law of land, was therefore justified to in revising the assessment being erroneous in so far as prejudicial to the interest of Revenue. - Decided against assessee. - ITA No. 2859/Del/2016 - - - Dated:- 7-2-2019 - Shri Amit Shukla, Judicial Member And Shri L.P. Sahu, Accountant Member For the Appellant : Sh. Ved Jain, Advocate And Sh. Ashish Goel, CA For the Respondent : Sh. A,K, Mishra, CIT/DR ORDER PER L.P. SAHU, A.M.: This is an appeal filed by the assessee challenged the impugned order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an addition of ₹ 8,65,873/- being the miscellaneous income not derived from undertaking as per provisions of section 80IC of the Act. 3. Resorting to the provisions of section 263, the Pr. CIT, Karnal examined the assessment records when it revealed that the Assessing Officer while passing assessment order u/s 143(3) allowed claim of 100% deduction of ₹ 9,05,24,050/- made u/s 80IC of the Act considering the year of substantial expansion made by assessee in December 2011 as initial year of business. As per Pr. CIT, the provisions of section 80IC provide for 100% and 30% deductions respectively for first five assessment years and next five years in respect of profit and gains from the undertaking. The ld. Pr. CIT found that actually the business unit was setup in Baddi (Himachal Pardesh) in 2004-05 and business activity was commenced in April, 2006 and accordingly, the initial assessment year of the business was 2007-08 for claiming deduction u/s. 80IC. The assessee claimed 100% deduction on profit of ₹ 9,05,24,050/- in AY 2012-13 by considering the impugned year as initial assessment year on the premise that substantial expansion was made in April 2009, whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the section 80IC regarding commencement of initial assessment year. The aforesaid issue has been finally decided by Hon ble Supreme Court in recent decision dated 20 August, 2018 in the case of CIT vs. Classic Binding Industries, 2018(8) TMI 1209 (SC), wherein it has been laid down as under : 16. The essence of Section 3 as well as Section 6 have already been reproduced above. Whereas the exemption is provided @ 100% of such profits and gains for five assessment years commencing with the initial assessment years and, thereafter, 25% (or 30% where the assessee is a company) of the profits and gains for next five years. The deduction is limited to a period of 10 years. 17. In this backdrop, the question is as to whether these assessees, who had availed deductions @ 100% for first five years on the ground that they had set up a manufacturing unit as prescribed under sub-section (2) of the Act, can start claiming deductions @ 100% again for next five years as they had undertaking substantial expansion during the period mentioned in subsection (2)? The answer has to be in the negative for the following the reasons: 18. We are dealing with the deductions in respect of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee is a company) for the next 5 years, 20. When we keep in mind the aforesaid scheme and spirit behind this provision, such a situation cannot be countenanced where an assessee is able to secure deduction @ 100% for the entire period of 10 years. If that is allowed it will amount to doing violence to the provisions of sub-section (3) read with sub-section (6) of Section 80-IC. A pragmatic and reasonable interpretation of Section 80-IC would be to hold that once the initial Assessment Year commences and an assessee, by virtue of fulfilling the conditions laid down in sub-section (2) of Section 80-IC, starts enjoying deduction, there cannot be another Initial Assessment Year for the purposes of Section 80-IC within the aforesaid period of 10 years, on the basis that it had carried substantial expansion in its unit. 21. We are conscious of our recent judgment rendered by this very Bench in Mahabir Industries v. Principal Commissioner of Income Tax (Civil Appeal Nos. 4765-4766 of 2018 decided on May 18, 2018) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a period of 5 years @ 100% of such profits and gains from the units , the assessees would be entitled to deduction for remaining 5 Assessment Years @ 25% (or 30% where the assessee is a company), as the case may be, and not @ 100%. The question of law is, thus, answered in favour of the Revenue thereby allowing all these appeals. The aforesaid decision of Hon ble Supreme Court unequivocally supports the findings reached by the ld. Pr. CIT that the assessee was not entitled to get 100% deduction treating the year under considering as initial assessment year on the premise of substantial expansion of business. 6. The ld. counsel for the assessee, however, submitted that the aforesaid decision of Hon ble Supreme Court was not available at the time of revision of assessment u/s. 263 of the Act and therefore, the above decision of Hon ble Supreme Court having been not available at the time of revision of assessment, the Pr. CIT had no jurisdiction to exercise its powers u/s. 263. Reliance is placed on the decision of Hon ble Supreme Court in the case of CIT vs. G.M. Mittal Stainless Steel (P) Ltd. (2003) 130 Taxman 67 (SC). We have gone through this decision of Hon ble Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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