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TMI Blog2019 (2) TMI 1366X X X X Extracts X X X X X X X X Extracts X X X X ..... egins to manufacture or to produce articles or things or commences operations or completes substantial expansion. Here the completion of substantial expansion has to be read with reference to the expression in the company of which this particular expression happens to be. We are of the considered opinion that completing the substantial expansion for the purpose of claiming benefit u/s 80IC for the first time shall be read in the context of the proviso as a whole and it shall mean that the completing of substantial expansion would be equivalent to the commencement of the operation. Undertaking of substantial expansion would be complete only when substantial expansion is capable of producing the desired results. We, therefore, find it difficult to agree with the interpretation given by the authorities below. Assessment order for the AY 2006-07 also contains a reference to this claiming of deduction u/s 80IC for the first time on account of substantial expansion in that year only. It,thus, goes without saying that it has been in the knowledge of the Revenue right from AY 2006-07 that though the assessee has been mentioning the date of substantial expansion as 31.3.2005, it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order held that Section 80IC does not say that the income must be derived from the manufacturing only, but it states that the profit and gains must be derived by the industrial undertaking and enterprise. Learned CIT(A) held that for newly established manufacturing units, the initial year for the purpose of 80IC would be the year in which they commence production whereas for the units undertaking other operations, it is the year of commencement of the operation and for the units undergoing substantial expansion, it is the year of substantial expansion. He, therefore, upheld the addition on account of restriction of the deduction u/s 80IC to 30%. Assessee is, therefore, before us in this appeal challenging the findings of the authorities below to treat the AY 2010-11 as the sixth year for the purpose of calculating the relief u/s 80IC by treating the initial assessment year as 2005-06 whereas record reveals that the initial assessment year was only 2006-07. Though the assessee challenged the disallowance of claim u/s 80IC in respect of duty drawback and miscellaneous income etc., at the time of argument, it was not pressed. 4. It is the argument of the learned AR that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee had claimed deduction u/s 80IC for the first time on account of substantial expansion in that year only. Basing on all these things, it is submitted on behalf of the assessee that there is consistency in the case of the assessee but whereas having accepted the initial assessment year for the purpose of benefits u/s 80IC of the Act as 2006-07 consistently for four years, for the first time the revenue had taken a contrary view in the AY 2010-11, which is untenable either on facts or on law. 6. Per contra, it is the submission on behalf of the revenue that the purposes of the information furnished to the Customs and Central Excise and the information furnished in Form 10CCB to the Income-tax Department are different. Commencement of operation is relevant for the purpose of determining the initial year under the Customs and Central Excise whereas the completion of the substantial expansion alone is relevant for the purposes of income-tax Act u/s 80IC. She, therefore, submitted that the assessee cannot rely on the information furnished to the Customs and Central Excise Department. 7. She further submitted that though the assessee mentioned the initial assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year to mean, Initial assessment year means the assessment year relevant to the previous year in which the undertaking or the enterprise begins to manufacture or produce articles or things, or commences operation or completes substantial expansion; whereas clause (ix) defines 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. 10. A plain reading of Section 80IC shows that any undertaking or enterprise which begins or begun to manufacture or produce any article or thing or which manufactures or produces any article or thing and undertakings substantial expansion during the specified period is entitled to claim deduction u/s 80IC(3)(ii). 11. Now coming to the application of Section 80IC to the facts of the present case, it is an admitted fact that the assessee consistently has been mentioning the initial assessment year in Form 10CCB of Column 9 for claiming deduction as AY 2006-07. The date of substantial expansion was mentioned as 31.3.2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. With this view of the matter, we are of the considered opinion that undertaking of substantial expansion would be complete only when substantial expansion is capable of producing the desired results. We, therefore, find it difficult to agree with the interpretation given by the authorities below. 15. The learned AO observed that from Form No.10CCB of this year and earlier years, it is found that the date of the substantial expansion was 31.3.2005 which indicates that the assessee has been consistently mentioning 31.3.2005 at Column No.25(d)(i) and the AY 2006-07 as the initial assessment year for claiming benefit u/s 80IC and at no point of time any objection seems to have been taken for this apparent discrepancy. There is consistency in the statement of assessee that because the undertaking of substantial expansion has become operational subsequent to 31.3.2005, the initial year for the purpose of claiming benefit u/s 80IC has been taken as 2006-07. Assessment order for the AY 2006-07 also contains a reference to this claiming of deduction u/s 80IC for the first time on account of substantial expansion in that year only. It,thus, goes without saying that it has been in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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