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TMI Blog2019 (3) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... d gains. Such deduction, however, would be for a total period of 10 years, as provided in sub-section (6). For example, if the expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five years. On the other hand, if substantial expansion is undertaken, say, in 8th year by an assessee such an assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes ‘initial assessment year’ once again. However, this 100% deduction would be for remaining three years, i.e. 8th, 9th and 10th Assessment Years. - decided against revenue. - I.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents namely copies of the assessment order, the impugned order and the decision of the Apex Court dated 20th February, 2019 in the case of Principal CIT Shimla M/s Aarham Softronics in Civil Appeal No. 1784/2019 etc. Relying on the same it was submitted that the point at issue is fully covered in favour of the assessee. The appeal was passed over and time was given to the Ld. Senior DR to study the claim of the assessee. In the second round, the Ld. DR considering the record i.e. the specific orders of the Assessing Officer, the CIT(A) and decision of the Apex Court submitted that the issue is fully covered by the aforesaid decision of the Apex Court and hence withdrew the application seeking time. 4. We have heard the submissions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stantial expansion during the period 7.01.2003 to 1.4.2012. A bare reading of the provisions of sub section (2) would reveal that the deduction under the aforesaid two categories are independent. In the first category, the deduction is given to the undertaking which had begun or began manufacturing or production of an article and thing during the specified period of 7.1.2003 to 1.4.2012. Thus, under the first category, the deduction is available to newly set-up units. In the second category, the deduction is allowed in case of expansion by the existing units which undertake substantial expansion during the specified period of 7.1.2003 to 1.4.2012. The term substantial expansion makes it clear that there is no restriction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire period of 10 years, it would be doing violence to the language of sub-section (6) of Section 80-IC. However, this observation came without noticing the definition of initial assessment year contained in the same very provision. 23. Having examined the matter in the aforesaid perspective, judgment in the case of Mahabir Industries v. Principal Commissioner of Income Tax2 would, in fact, help the assessee. The fine distinction pointed out in Classic Binding Industries elopes thereby. To recapitulate, in Mahabir Industries, it was held that if an assessee get 100% exemption under Section 80-1B of the Act for five years and thereafter carries out the substantial expansion because of which said assessee becomes entitled to exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains for five assessment years commencing with the initial assessment year . For the next five years, the admissible deduction would be 25% (or 30% where the assessee is a company) of the profits and gains. (c) However, in case substantial expansion is carried out as defined in clause (ix) of sub-section (8) of Section 80-IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become initial assessment year , and from that assessment year the assessee shall been entitled to 100% deductions of the profits and gains. (d) Such deduction, however, would be for a total period of 10 years, as provided in sub-section (6). For exampl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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