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TMI Blog2023 (6) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirming the deduction u/s 80IC only to the extent of 25% as against 100% as claimed by assessee on undertaking substantial expansion relying on the decision of Hon'ble SC in the case of CIT Vs. M/s Classic Binding Industries: Civil Appeal No. 7208 of 2018 without appreciating the fact that said decision is overruled by the Hon'ble SC in the case of Pr. CIT Vs. M/s Aarham Softronics: Civil Appeal No. 1784 of 2019, so eligible for deduction u/s 80IC@ 100%." 2. Briefly the facts of the case are that the assessee is engaged in manufacturing of rubber compound and had set up an undertaking in A.Y. 2018-19 at Baddi, Himachal Pradesh. For the A.Y. under consideration, the assessee filed its return of income declaring NIL income after claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onics vide Civil Appeal No. 1784 of 2019 dt. 20/02/2019 has decided the matter in favour of the assessee and the action of the AO in restricting the deduction under section 80IC to the extent of 25% instead of 100% is therefore unsustainable in law. 3.1 As per the Ld. CIT(A), the AO has followed the decision of Hon'ble Supreme Court in case of CIT Vs. Classic Binding Industries (supra) which was applicable as on the date of the assessment order and the order of the AO was upheld. At the same time, given that Hon'ble Supreme Court in its subsequent decision dt. 20/02/2019 has allowed 100% deduction under section 80IC, it was stated by the ld CIT(A) that the option is open for both the AO and the assessee to take remedial action in the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were brought on the statue unless otherwise so stated. 8. In this regard, we also refer to the decision of Coordinate Chandigarh Bench in case of M/s Classic Binding Industries vs. DCIT (in ITA No. 90/Chd/2021 dt. 14/06/2022) wherein speaking through one of us, the decision of the Hon'ble Supreme Court has been followed and it was held as under: "6. We have heard the rival submissions and perused the material available on record. In case of PCIT vs. Aarham Softronics (supra), the question of law which came up for consideration before the Hon'ble Supreme Court reads as under :- "Whether an assessee who sets up a new industry of a kind mentioned in sub-section (2) of Section 80-IC of the Act and starts availing exemption of 100 per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mencing 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 subsection (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 be 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 subsection (6). For example, if the expansion is carried out immedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the Revenue and the grounds of appeal of the assessee are thus allowed." 9. Following the decision of Hon'ble Supreme Court in case of Pr. CIT Vs. M/s Aarham Softronics (supra) and which has been followed by the Coordinate Bench in case of CIT Vs. Classic Binding Industries (supra), in the instant case, the assessee has started its business activity during financial year 2007-08 relevant to assessment year 2008-09 and has carried out substantial expansion in the financial year 2011-12 relevant to assessment year 2012-13 and the year under consideration being the 9th year of claim of tax holiday, it shall be eligible for claim of deduction @ 100% and not 25% of profits and gains from its business and matter is accordingly decided in f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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