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TMI Blog2019 (3) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... profit has been diverted to this unit. It was further noted that there has been no investigation or specific exercise to show that the amount claimed as deduction u/s 80-IC was wrong. We find considerable cogency in the finding of the CIT(A) that there is no ground for disallowing claim for job work expenses for the eligibility u/s 80-IC as the same is allowable. Deduction under Section 80-IC - Substantial expansion - claiming the exemption at the same rate of 100% beyond the period of five years on the ground that the assessee has now carried out substantial expansion in its manufacturing unit - HELD THAT:- On a perusal of para 21 of the decision rendered in the case of CIT vs. Classic Binding Industries [2018 (8) TMI 1209 - SUPREME COURT OF INDIA] it is seen that the said position of law has not been varied. Accordingly upholding the order to the extent as far as position of law is concerned the issue is restored back to the file of AO with a direction to grant relief after verification of facts in accordance with law. Needless to say that the assessee shall be granted a reasonable opportunity of being heard. - ITA No.-2181/Del/2016 - - - Dated:- 8-3-2019 - Smt Diva Singh, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th details. It was submitted that the assessee was noted made the submissions on 22.12.2014 21.1.2015 vide written replies noticed. Inviting attention to the order of the CIT(A) it was submitted that the CIT(A) has granted relief holding that the AO has not brought any factual evidence of discrepancy on record and has made an addition on a conjectural basis without proving any falsity in the claim. The noticed that the issue was a subject matter of consideration before the ITAT over the years. Attention was invited to order dated 20th December, 2016 for the immediate preceding assessment year i.e 2011-12 assessment in ITA No. 2028/Del/2016 copy of which has been filed and made available at pages 24 to 29. It was submitted that the specific issue was discussed. Similarly attention was invited to order dated 17th March, 2018 copy available at page 50 to 56 for 2011-12 assessment year wherein identical claim was repulsed by the ITAT. Similarly, in 2008-09; 2009-10 and 2010-11 assessment years the ITAT orders dated 15.2.2013, 19.7.2013 and 9.8.2016 in ITA No. 4569/Del/2011, ITA No. 2134/Del/2012, ITA No. 2369/Del/2014 respectively dismissed the departmental appeals on similar i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01 2 at pages 9-11 of JPB following decision of Hon'ble Tribunal for Assessment year 2005-06 iv) 2010-11 10,04,37,872 CIT(A) deleted the disallowance and upheld by the decision of Hon'ble Tribunal in ITA No. 23 69 / D /2 0 14 at pages 18-23 of JPB following decisions of Hon'ble Tribunal for Assessment years 2005-06 and 2009-10 v) 2011-12 7,44,41,172 CIT(A) deleted the disallowance and upheld by the decision of Hon'ble Tribunal in ITA No. 1194 / D 12 0 15 at pages 50-56 of JPB following decisions of Hon'ble Tribunal for Assessment year 2010-110 7.1 It is seen that the said issue came up for consideration for the first time before the ITAT in ITA No. 2369/Del/2014 wherein after detailed discussion in the order dated 9.8.2016 it is seen that the departmental appeal on similar issue was dismissed by the ITAT. We have seen that these specific paras and reasonings has been taken into consideration by the coordinate bench in ITA No. 1194/Del/2015 (copy filed in paper book pages 50 to 56 order dated 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been dismissed by the Tribunal vide order dated 9th August, 2016. The findings of the Tribunal in paras 7.1 to 9 are reproduced as under : 7.1 After going through the findings of the Ld. CIT(A), as aforesaid, we are of the view that the AO has reduced the deduction admissible u/s. 80 IC of the IT Act by ₹ 10,04,37,557/- on the ground that out of the 3 exempted and 3 non-exempted units owned by the assessee in different states the maximum N.P. rate for a taxable unit was 6.90% while that for an exempted unit the minimum NP rate was 13.4%. We further find that the AO held that all units derive income from the same business activity and therefore, the gap between the profits of the taxable units and non exempted units appears to be unrealistic. Reference has also been made to transactions made in respect of purchases and job work expenses made with related concerns or units of the assessee's firms. Taking all these factors into account the AO has stated that no evidence in 5 ITA.No.1194/Del./2015 M/s. Micro Turners Rohtak. respect of manufacturing, trading and P L a/c have been submitted during the assessment proceedings. However, the assessee has produced al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8. In the background of the aforesaid discussions and respectfully following the precedents of the Coordinate Bench in assessee s own case relevant for the assessment year 2005-06 and 2009-10, we are of the considered view that the Ld. CIT(A) has passed a well reasoned order which does not need any interference on our part, hence, we uphold the same. 9. In the result, the appeal of the Revenue is dismissed. 7 ITA.No.1194/Del./2015 M/s. Micro Turners Rohtak. 5. The Ld. D.R. also stated that the issue is covered in favour of the assessee by the order of the ITAT above. 6. Considering the facts of the case in the light of the Order of the Tribunal dated 9th August, 2016 (supra), we are of the view that the issue is covered in favour of the assessee by the order of the Tribunal. The Departmental Appeal has no merit and the same is accordingly dismissed. 7.2 In the facts as they stand we see that the issue raised in ground No. 1 stands covered in favour of the aassesee consistently on same set of facts and circumstances over the years. Accordingly in the absence of any infirmity on facts and law we find no good reason to interfere with the impugned order. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 BO-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. 9. Ld. CIT(DR) on the other hand as noted had submitted that in accordance with the decision of law as appreciated by the Apex Court in the case of Mahabir Industries vs Pr. CIT and Clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new business already claiming deduction u/s 80IB since AY 2003- 04 and refixed its initial AY for claiming deduction at higher rate which is not permissible as per law and the legislative intent. Thus, the deduction claimed by the assessee is restricted to 25% (Rs. 12,95,35,776 @25% = ₹ 3,23,83,944/-) and accordingly addition of ₹ 9,71,51,832/- (=12,95,35,776 - ₹ 3,23,83,944/-) is being made to the total income. 10.2. On perusal of the impugned order it is seen that the Ld. CIT(A) after carrying out a lengthy discussion on the position of law as it prevailed on 3.2.20016 granted relief to the assessee holding as under :- Even the rate of deduction on Barotiwala unit has been reduced without actually differentiating the initial year in terms of expansion. There is actually no clarity in differentiating the two categories, viz initial business vis- -vis expansion and isolation of the latter. The case is squarely covered by the decision of the Hon'ble Delhi ITAT in Tirupati LPG Industries Ltd. vs DCIT in ITA No. 991/D/2013 dated 29.01.2014. The appellant has squarely distinguished its case from that of the case of the Hycron Electronics vs. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period for the deduction is availed under Section 80-IA and Section 80-IB, for the purpose of counting ten years, is provided in sub-section(6) of Section 80-IC and it is limited to those industrial undertakings or enterprises which are set-up in the North-Eastern Region. By making specific provision of this kind, the Legislature has shown its intent, namely, where the industry is not located in North- Eastern State, the period for which deduction is availed earlier by an assessee under Section 80-IA and Section 80-IB will not be reckoned for the purpose of availing benefit of deduction under Section 80-IC of the Act 10.4. On a perusal of para 21 of the decision rendered in the case of CIT vs. Classic Binding Industries reproduced earlier it is seen that the said position of law has not been varied. Accordingly upholding the order to the extent as far as position of law is concerned the issue is restored back to the file of AO with a direction to grant relief after verification of facts in accordance with law. Needless to say that the assessee shall be granted a reasonable opportunity of being heard. 10.5 Accordingly the ground raised by the Revenue is allowed for statisti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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