9911796707
TMI Blog2025 (2) TMI 1138X X X X Extracts X X X X X X X X Extracts X X X X ..... nsibility of the ld PCIT to show that the enquiry or verification conducted by the AO was not in accordance with the enquires or verification that would have been carried out by a prudent officer in the facts and circumstances of the present case. Merely the fact that the order so passed is cryptic doesn't give the jurisdiction to ld PCIT to exercise the jurisdiction u/s 263 as what needs to be seen is the assessment records at the time of examination by the ld PCIT and which speak about the issue of notices, the submissions and documentation so submitted by the assessee which reflect due application of mind by the AO. The assessment order is reflection of conclusion of assessment proceedings and it is an accepted practice that only where an adverse view is taken against the assessee, the basis of arriving at such a adverse view find mention in the assessment/reassessment order which in turn allows the assessee to challenge and avail remedial action as so advised. AO after calling for required information/documentation and after duly considering the explanations and documentation submitted before him, reached a rightful conclusion that the assessee is eligible for claim of 100% d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y examination/verification, the assessment proceedings were completed under section 147 r.w.s 144B vide order dt. 30/03/2022 without drawing any adverse inference with regard to claim of deduction under section 80IC @ 100% and income so returned was accepted. 4. Subsequently, the assessment records were called for and examined by the Ld. Pr. CIT, Chandigarh -1 and a show cause under section 263 dt. 14/03/2024 was issued to the assessee. In the show cause, it has been stated by the Ld. Pr. CIT that on perusal of the Form 10CCB filed by the assessee company in support of claim of deduction under section 80IC, it is noticed that the date of commencement of operations/activities by the assessee firm was 03.11.2008 and the initial assessment year from which the deduction claimed was the A.Y. 2009-10. It was stated by him that as per the provisions given in section 801C of the Income Tax Act 1961, the assessee firm is entitled to claim deduction u/s 80IC at 100% of the eligible profit for first five assessment years and 25% from the sixth assessment year onwards till the 10th Assessment Year. It was further stated by the ld PCIT that the substantial expansion was carried out by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer must be an erroneous one; and secondly, the order must be prejudicial to the interests of the Revenue. It was submitted that the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. 243 ITR 83 (SC) has held that "a bare reading of this provision makes it clear that the pre-requisite to the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to S. 263(1) of the Act." Accordingly, the Commissioner can only invoke Section 263 if both the conditions, i.e. order is erroneous and prejudicial to the interest of the revenue are satisfied. It therefore needs to be seen that both the conditions have been satisfied before initiating the revision proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision in Sunbeam Auto Ltd.'s case (supra), "that would not by itself give occasion to the Commissioner to pass orders under section 263 of the said Act, merely because he has a different opinion in the matter". No substantial question of law arises for our consideration. Consequently, the appeal is dismissed." 11. It was submitted that the Hon'ble Delhi High Court in the case of Vodafone Essar South Ltd. [2012] 28 taxmann.com 273 (Delhi HC) has similarly held as under: "It is well settled that if there is some enquiry by the Assessing Officer in the original proceedings even if inadequate that cannot clothe the Commissioner with jurisdiction under section 263 merely because he can form another opinion." In the instant case, the assessee was specifically queried regarding the nature and character of the one-time regulatory fee paid by it as well as the bank and stamp duty charges. A detailed explanation and other documents required by the Assessing Officer were produced at the stage of original assessment. Clearly this was not a case of 'no enquiry'. The lack of any discussion on this cannot lead to the assumption that the Assessing Officer did not apply his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concern of the assessee i.e. M/s SBS Biotech Unit-I (PAN ABKFS2514E) which was completed on 27.12.2019 where the assessee has claimed 100% deduction u/s 80IC of the I.T. Act and same was restricted to @25% as entitled 3. Analysis of information collected/received: It is pertinent to mention here that the case of the assessee, M/s SBS Biotech Unit-1 (PAN. ABOFS6830P) was not under scrutiny for A.Y. 2017-18, therefore, the then AO has cross verified the claim of deduction u/s 80IC in the case of M/s SBS Biotech Unit-II (PAN: ABOFS6830P) from departmental system ITBA and AST. From the perusal of the returned of income and form 10CCB, it is noticed that the assessee has claimed deduction of Rs. 15,12,63,064/- u/s 80IC which is more than eligible deduction @25% of the eligible profit of Rs 16,85,84,575/- (shown in ITR) being 5th year after substantial expansion was carried out on 30.03.2012. As per provision given in Section 8010 of the Income Tax Act, 1961, the assessee is entitled to claim deduction u/s 801C @100% of the eligible profit for first five assessment year and 25% (30% in case of company) from the sixth assessment year onwards till the 10th assessment year. Further, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of proceedings in terms of section 147 of the Income Tax Act, 1961. 7. Applicability of the provisions of section 147/151 to the facts of the case: In this case, a return of income was filed for the year under consideration but no scrutiny assessment u/s 143(3) of the Act was made. Accordingly, in this cases, the only requirement to Initiate proceedings u/s 147 is reason to believe which has been recorded in paragraph 6. The case is within four years from the end of the Assessment Year under consideration. Therefore, necessary approval u/s 151 of the Income Tax Act, 1961 is solicited for issuance of notice u/s 148 of the Act for the Assessment Year 2017-18." 15. Further, our reference was drawn to factual and legal submissions in connection with eligibility of 100% deduction under section 80-IC of the Act so made by the assessee during the course of reassessment proceedings and the contents of which read as under: "Sub: Notice under sub-section (1) of section 142 of the Income-tax Act, 1961('Act) Dear Sir, The assessee is in receipt of subject notice no. ITBA/AST/F/142(1)/2021- 22/1041197705(1) dated March 21, 2022 Issued by your goodself. (Copy of notice is encl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing, not being any article or thing specified in the Thirteenth Schedule and undertakes substantial expansion during the period beginning- (i) on the 23rd day of December, 2002 and ending before the [1st day of April, 2007], in any Export Processing Zone or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, In the State of Sikkim; or (ii) on the 7th day of January, 2003 and ending before the 1st day of April, 2012, in any Export Processing Zone or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in the State of Himachal Pradesh or the State of Uttaranchal; or (ill) on the 24th day of December, 1997 and ending before the 1st day of April, 2007, in any Export Processing Zone or Integrated Infrastructur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction from eligible profits for five assessment years. Due attention is invited to the fact that section 80-IC had a sunset clause and In order to avail benefit of the said section, the requirements had to be complied with before 1st day of April 2012. 7. It is further submitted that the basic intent of the lawmakers behind the introduction of section 80-IC was promotion of the said notified areas through setting up of new manufacturing units or substantial expansion of already established units. This would promote development, employment and revenue generation in such backward areas. Therefore, in order to encourage people to set up undertaking / enterprise in such areas, deduction was provided under section 80-IC. 8. The intent of section 80IC of the Act has been explained by Central Board of Direct Tax (CBDT) vide Circular No. 7/2003 dated September 5, 2003 (memorandum explaining the provisions of Finance Bill, 2003) which is reproduced below: "49.1 The Union Cabinet has announced a package of Fiscal and non-fiscal concessions for the special category States of Himachal Pradesh, Uttaranchal, Sikkim and North-Eastern States, in order to give boost to the economy in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of substantial expansion. The advantage of this provision is also accrued to those existing units, if they carry out "substantial expansion" of their units by Investing required capital, in the assessment year relevant to the previous year. Relevant extract of the judgement is reproduced below: "24. The aforesaid discussion leads us to the following conclusions: (a) Judgment dated 20th August, 2018 in Classic Binding Industries case omitted to take note of the definition 'initial assessment year' contained in Section 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 Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under section 80-IC in AY 2017-18. 16. With regard to the quantum of deduction, it is respectfully submitted that the assessee has claimed a deduction of INR 15,12,63,064 under section 80-IC for subject AY as enumerated in below table. The same has been duly reported by the assessee in schedule 80-IC of the income tax return filed for the subject AY. Particulars Amount (In INR) Profits derived from Manufacturing unit set upto at Kala Amb, Himachal Pradesh 16,08,74,713.51 Total (A) 16,08,74,713.51 Less: Interest on FDR (Crdited in P&L) 95,57,387.08 Dividend (Credited in P&L) 54,262,.66 Total (B) 96,11,649.74 Net Eligible Profits (A-B) 15,12,63,064.00 Form 10CCB and Tax Audit Report issued by Chartered Accountant also justify the claim of the assessee 17. It is further submitted that the deduction claimed by the assessee is also supported by the certificate (In Form 10CCB) Issued by the Chartered Accountant (CA) certifying that the assessee is eligible to claim 100% deduction. Copy of form 10CCB issued by CA is enclosed as Annexure 4. Further, the aforesaid claim has also been reported by CA In its Tax Audit Report. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of the assessee: Textile Machinery Corpn. Ltd. v. CIT [1977] 107 ITR 195 (SC) CIT v. Gaekwar Foam & Rubber Co. (1959) 35 ITR 662, 673 (Bom) Capsulation Services Pvt. Ltd v. CIT, (1973) 91 ITR 566, 570 (Bom) CIT v. Simpson & Co. (1980) 122 ITR 283, 287 (Mad.) CIT v. Sanghi Beverages Pvt. Ltd. (1982) 134 ITR 623 (MP) 22. In light of the above legal arguments and judicial precedents and considering the fact that there is no express prohibition in section 80-IC of the Act for grant of benefit where a substantial expansion is made by newly set up unit during a qualified period, and assessee shall be eligible to claim 100% deduction for FY 2017-18 (which is within the block of ten years). Our Prayer: 23. In view of the aforesaid facts and legal position, it is respectfully submitted that there was no warrant at all for Initiating proceedings under section 147 of the Act in the case of the assessee. 24. The assessee is of sanguine belief that on going through the aforesaid reply, your goodself would be satisfied that there is no escapement of income and your goodself would be pleased to drop the proceedings initiated by your goodself. 25. Without prejudice to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med any reassessment per se. It was submitted that logically, the AO should have simply dropped the initiation of reassessment proceedings instead of passing a separate reassessment order. Once, the reassessment order per se framed by the AO is not sustainable in the eyes of law, any revision proceedings under section 263 seeking to revise such unsustainable order cannot be accepted in the eyes of law. In support, reliance was placed on the Hon'ble Telangana and Andhra Pradesh High Court in case of PCIT vs Shri P Narasimha Reddy (ITA no 97/2019), ITAT Chandigarh Benches in case of Ram Lal (ITA no 370/2022) and ITAT Hyderabad Benches in case of Ganga Vinay Babu (ITA no 123/Hyd/2021). 19. It was further submitted that without prejudice to the above, even on merits, the assessee is eligible to claim 100% deduction under section 80-IC of the Act for the impugned assessment year 2017-18. In this regard, it was submitted that the assessee commenced its business operations on 3rd of November, 2008 and set up its manufacturing facility in the state of Himachal Pradesh in an area notified by the government for the purpose of availing deduction under section 80-IC of the Act. Further, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in any of the North-Eastem States; (b) which has begun or begins to manufacture or produce any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule, or which manufactures or produces any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule and undertakes substantial expansion during the period beginning- (i) on the 23rd day of December, 2002 and ending before the 2 [1st day of April, 2007], in the State of Sikkim, or (ii) on the 7th day of January, 2003 and ending before the 1st day of April, 2012, in the State of Himachal Pradesh or the State of Uttaranchal; or (iii) on the 24th day of December, 1997 and ending before the 1st day of April, 2007, in any of the North-Eastern States. (3) The deduction referred to in sub-section(1) shall be- (i) in the case of any undertaking or enterprise referred to in sub-clauses (i) and (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 003) which is reproduced below: "49.1 The Union Cabinet has announced a package of Fiscal and non-fiscal concessions for the special category States of Himachal Pradesh, Uttaranchal, Sikkim and North-Eastern States, in order to give boost to the economy in these States. With a view to give effect to these new packages a new section 80-IC has been inserted to allow a deduction for ten years from the profits of new undertakings or enterprises or existing undertakings or enterprises on their substantial expansion, in the States of Himachal Pradesh, Uttaranchal, Sikkim and North-Eastern States. For this purpose, substantial expansion is defined as increase in the investment in the plant and machinery by at least 50% of the book value of the 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." 23. It was submitted that the circular makes it clear that section 80-IC of the Act was inserted to give effect to the new package announced by the Union Cabinet. The circular further clarifies that this section provides for deduction for a period of 10 years from the profits of new undertaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said 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 profits and 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)" 26. It was accordingly submitted that the assessee's claim of 100% deduction again at the time of substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) "It is necessary to remember that when a provision is made in the context of a law providing for concessional rates of tax for the purpose of encouraging an industrial activity, a liberal construction should be put upon the language of the statute." 28. Further, reliance was placed on following judicial precedents wherein the Courts laid down preposition that provisions relating to exemption or concession must as far as possible be liberally construed and in favour of the assessee: * Textile Machinery Corpn. Ltd. v. CIT [1977] 107 ITR 195 (SC) * CIT v. Gaekwar Foam & Rubber Co. (1959) 35 ITR 662, 673 (Bom) * Capsulation Services Pvt. Ltd v. CIT, (1973) 91 ITR 566, 570 (Bom) * CIT v. Simpson & Co. (1980) 122 ITR 283, 287 (Mad.) * CIT v. Sanghi Beverages Pvt. Ltd. (1982) 134 ITR 623 (MP) 29. In light of the above legal arguments and judicial precedents and considering the fact that there is no express prohibition in section 80-IC of the Act for grant of benefit where a substantial expansion is made by newly set up unit during a qualified period, the assessee is eligible to claim 100% deduction for AY 2017-18 and which has been rightly allowed by the Assessing officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the assessee against the present revision proceedings initiated based on decision and findings in law of the various Hon'ble Courts and Tribunal Benches are discounted and disregarded as either parimateria inapplicable or since the orders of the ITAT Benches in other cases are only orders in personam and not orders in rem or are the ratios of non-jurisdictional High Courts not directly binding on the facts of this instant case of the assessee. Further, the legislated statutory provisions and substance of Explanation 2(a) to section 263(1) of the Act would supersede and overwhelm all other legal considerations including the fact of previous reopening and reassessment u/s 147 r.w.s 144B of the Act in according permission to re-verify and re-examine the matters in reference being the question of the proportion of deduction (viz. 25% versus 100%) u/s 80IC of the Act and the consequent assessability and chargeability to tax of any additional incomes in the hands of the assessee. This is because prior to the initiation of the revision proceedings, enquiries/examinations in the manners in which these ought to have been carried out were not so carried out rendering such previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lure on the part of the Assessing Officer would then be referred to and recognized u/s 263 of the Act. It is such failure that would call for revision of the assessment order u/s 263 of the Act. That such jurisdiction for revision proceedings u/s 263 of the Act by the Commissioner would be applicable and called for is held in following cases: - i) Thus, even as observed in paragraph 9 by this Court in the case of Malabar Industrial Co. Ltd. that the scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. It is further observed that if due to an erroneous order of the Income Tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue- The Commissioner of Income Tax Vs. M/s Paville Projects Pvt. Ltd. in Civil Appeal No. 6126 of 2021 [@ SLP (C) No. 13380 of 2018] dated 06.04.2023 ii) Where the Assessing Officer had accepted entry in the statement of account filed by the assessee showing certain income as agricultural income, without making any enquiry, the exercise of jurisdiction by the Commissioner u/s 263(1) would be justified- M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct." vii) Hon'ble Rajasthan High Court in the case of Commissioner of Income-Tax vs Emery Stone Manufacturing Company (213 ITR 843) has held as under: "Simply because the facts have been disclosed by the assessee, it does not give immunity from revisional jurisdiction which the Commissioner can exercise u/s 263 and as such even in a case where the facts have been disclosed by the assessee to the Assessing Authority and the correct provisions of law have not been examined by the Assessing Authority, the power u/s 263 can be invoked." viii) Commissioner is free to exercise his jurisdiction on consideration of all relevant facts, provided an opportunity of hearing is afforded to assessee to contest facts on basis of which he had exercised revisional ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the contrary scenario of that the assessee's submissions and arguments are unsatisfactory is obtained in the said matter, such matter can be processed by the JAO for further action of assessment and consequent initiation/imposition of penalty as applicable under the statute. The assessee is at liberty to adduce the facts as deemed relevant before the JAO in consequence to this order. The JAO shall allow the assessee adequate opportunity of being heard and to make relevant submissions, and reverify the submissions already made. It may be ensured that any fresh assessment order is passed within the prescribed time as stipulated under section 153(3) of the Act. 38. Relying on the aforesaid findings of the ld PCIT, the ld CIT/DR submitted that the ld PCIT has rightly invoked his jurisdiction u/s 263 of the Act and in view of the same, there is no merit in the appeal so filed by the assessee and the same should be dismissed and the impugned order should be confirmed. 39. We have heard the rival contentions and pursued the material available on record. The ld. Pr.CIT while exercising his jurisdiction u/s 263 of the Act has stated that the legislated statutory provisions and subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, satisfactory and complete inquiries into the assessee's claim that the issue of deductibility u/s 80IC of the Act, viz. whether at 25% or 100%, has already been examined and accepted during the earlier assessment proceedings, and into the consequent matter of arising and bringing to tax any disallowed portions of the deductions claimed u/s 80IC as incomes in the hands of the assessee. The ld Pr. CIT has directed the Jurisdictional Assessing Officer to verify the factual submissions so made by the assessee, and only if found correct and satisfactory, pass the necessary order u/s 143 of the Act dropping the matters in reference. If the contrary scenario of that the assessee's submissions and arguments are unsatisfactory is obtained in the said matter, such matter can be processed by the Jurisdictional Assessing officer for further action of assessment and consequent initiation/imposition of penalty as applicable under the statute. The assessee was granted liberty to adduce the facts as deemed relevant before the JAO in consequence to the impugned order and the JAO was directed to allow the assessee adequate opportunity of being heard and to make relevant submissions, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s 263 of the Act as can be seen in the instant case as it is a settled legal proposition that the powers have to be exercised by an authority who is authorized and competent to exercise such powers under the statue and not by any other authority. 43. As far as the invocation by the Ld. PCIT of Explanation 2(a) to section 263 of the Act is concerned, the Delhi Benches of the Tribunal had an occasion to consider this aspect in the case of Amira Pure Foods Pvt. Ltd Vs. Principal CIT (2017) 51 CCH 0473 (Delhi- Tribunal) wherein, the Delhi Benches, while relying upon the judgement of the Hon'ble Delhi High Court in the case of PCIT Vs. Delhi Airport Metro Express Pvt Ltd (ITA No. 705/2017) has held that Explanation 2 cannot be stated to have overridden the law as interpreted by various High Courts, where the High Courts have held that before reaching the conclusion that the order of the Assessing officer is erroneous and prejudicial to the interest of Revenue, the Commissioner himself has to undertake some enquiry to establish that the assessment order is erroneous and prejudicial to the interest of Revenue. Similarly, the Coordinate Mumbai Benches in the case of Narayan Tatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yond a particular stage and the lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. 20. Further clause (a) of Explanation states that an order shall be deemed to be erroneous, if it has been passed without making enquiries or verification, which should have been made. In our considered view, this provision shall apply, if the order has been passed without making enquiries or verification which a reasonable and prudent officer shall have carried out in such cases, which means that the opinion formed by Ld Pr. CIT cannot be taken as final one, without scrutinising the nature of enquiry or verification carried out by the AO visà- vis its reasonableness in the facts and circumstances of the case. Hence, in our considered view, what is relevant for clause (a) of Explanation 2 to sec. 263 is whether the AO has passed the order after carrying our enquiries or verification, which a reasonable and prudent officer would have carried out or not. It does not authorise or give unfettered powers to the Ld Pr. CIT to revise each and every order, if in his opinion, the same has been passed without mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its manufacturing unit?". Referring to the definition of "initial assessment year" and "substantial expansion" and the discussions made thereafter, the Hon'ble Supreme Court affirmed the findings of the Hon'ble High Court wherein the latter has held that the moment substantial expansion is completed, the statutory definition of initial assessment year comes into play and consequently, the assessee becomes entitled to 100% deduction for five years commencing with completion of substantial expansion subject to maximum of total ten years for which deduction is allowed originally as well as on account of substantial expansion. It was held by the Hon'ble Supreme Court that the provisions of Section 80IC were enacted with a view of encouraging enterprises to establish and set up units in States involving hilly areas to make them industrially advance States and where the said objectives are kept in mind, the irresistible conclusion would be to grant 100% deduction of the profits and gains from the year when the substantial expansion is completed. It was held by the Hon'ble Supreme Court that where the substantial expansion involves great deal of investment which has to be at least 50% in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the CBDT Circular No. 7/2003 dt. 05/09/2003 wherein the benefit regarding substantial expansion has been explained by the CBDT and the decision of Hon'ble Supreme Court in case of M/s Aarham Softronics and after taking into consideration the explanation and documentation so submitted by the assessee in terms of the Audit Report in Form No. 10CCB and having satisfied himself that the assessee is eligible for 100% deduction for the impugned assessment year i.e. A.Y 2017-18, the AO has not drawn any adverse inference. We therefore find that the matter has been duly enquired into and examined by the AO during the course of reassessment proceedings and the AO did take into consideration the decision of the Hon'ble Supreme Court in case of PCIT Vs. M/s Aarham Softronics and has allowed the claim of deduction so made by the assessee. The Ld. PCIT has merely referred the matter for re-examination and re-verification without pointing out as to how the AO has wrongly applied the legal preposition so laid down by the Hon'ble Supreme Court. 47. Further, merely the fact that the order so passed is cryptic doesn't give the jurisdiction to ld PCIT to exercise the jurisdiction u/s 263 as what n ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
