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TMI Blog2019 (5) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. The CIT(A) confirmed the disallowance. The Tribunal allowed the appeal and directed the Assessing Officer to grant deduction of 100% of its eligible profits to the assessee following decision of Hon'ble Himachal Pradesh High Court in the case of M/s Stoverkraft India [ 2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT] . The matter is no longer res integra. The Apex Court has finally in M/S. AARHAM SOFTRONICS [ 2019 (2) TMI 1285 - SUPREME COURT] held that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and identical issues are involved therein. For brevity, the facts are being extracted from ITA- 334-2018. 2. ITA-334-2018 has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short the Act ) against the order dated 29.1.2018 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh (hereinafter referred to as the Tribunal ) in ITA No. 1123/Chd/2017, for the assessment year 2012-13, claiming the following substantial questions of law:- i) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT has erred in deleting the addition of ₹ 1,98,11,235/- (made on account of restricting the claim of deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;substantial expansion' only once? iv) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT has erred in allowing 80IC deduction on disallowance of ₹ 1,50,00,000/- u/s 37 of the Act, by relying on the Board's circular No. 37/2016, even when the Ld. CIT(A) has held the expenditure claimed as not genuine? v) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT has erred in allowing 80IC deduction on addition of ₹ 13,01,872/- and ₹ 38,800/- made u/s 36(1)(iii) even when the AO and CIT(A) in their orders have categorically stated that the amount so advanced served no business purpose, nor it was incurred on account of any comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act by the Assessing Officer vide order dated 30.9.2014 (Annexure A-1) at ₹ 1,98,11,235/-. The penalty proceedings under Section 271(1)(c) of the Act were also initiated separately against the assessee. Feeling aggrieved by the order, Annexure A-1, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) vide order dated 22.5.2017 (Annexure A- 2) confirmed the disallowance of 75% of deduction claimed under Section 80IC of the Act. The disallowance of bad debt under Section 37 of the Act on 'loss of shares forfeited' was also upheld. However, the deduction claimed under Section 36(1)(iii) of the Act, the Assessing Officer was directed to recompute the disallowance thereunder on the day t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 80-IC itself and instead based its conclusion on the definition contained in Section 80-IB, which does not apply in these cases. The definitions of initial assessment year in the two sections, viz. Sections 80-IB and 80-IC are materially different. The definition of initial assessment year under Section 80-IC has made all the difference. Therefore, we are of the opinion that the aforesaid judgment does not lay down the correct law. ( b) An undertaking or an enterprise which had set up a new unit between 7th January, 2003 and 1st April, 2012 in State of Himachal Pradesh of the nature mentioned in clause (ii) of sub-section (2) of Section 80-IC, would be entitled to deduction at the rate of 100% of the prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the revenue. 8. Regarding the disallowances made under Section 37 of the Act amounting to ₹ 1,50,00,000/-; and ₹ 13,01,872/- and ₹ 38,800/- under Section 36(1)(iii) of the Act in ITA-334-2018 and that of ₹ 5,60,000/-under Section 36(1)(iii) of the Act in ITA-347-2018, the Tribunal had held that the disallowances challenged in the additional grounds pertaining to interest and bad debts resulted in increasing the business profits of the assessee. Since the assessee was held entitled to claim deduction of its profits at the rate of 100%, therefore, the additions so made were entitled to deduction under Section 80IC of the Act as accepted by the Department also vide the Circular dated 2.11.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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