2018 (3) TMI 1868 - AT - Income Tax

Appellant granted full deduction under section 80IC for expansion, High Court affirms decision.

A.C.I.T., Circle-32, Kolkata Versus Sri Umang Goenka,

The appellant was allowed to claim a deduction of 100% under section 80IC of the Act for the assessment year in question. The High Court upheld the ... Deduction @100% u/s 80IC - Assessee claimed such deduction for first five years as there was no bar in the statute to claim deduction after undertaking substantial expansion within the prescribed period - HELD THAT:- We find that the AO by placing reliance in the case of M/s Hycron Electronics [2018 (3) TMI 1867 - ITAT CHANDIGARH] which confirmed the order of CIT(A) the disallowance of claim @ 100% made by the AO, we find the said decision of Chandigarh benches were challenged by a group of assesses before the Hon’ble High Court of Himachal Pradesh [2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT] We find that the Hon’ble High Court was pleased to quash the order of the Tribunal in confirming the order of CIT(A) and AO in denying allowance @100% u/s 80IC of the Act and held that Sub clause (v) of sub section 8 of section 80IC of the Act contemplates more than one ‘Initial assessment year’ and for a unit which completes substantial expansion, initial assessment year means A.Y. relevant to the previous year in which it completes substantial expansion. In the present case, claim of the assessee was that substantial expansion was taken place during the previous year i.e. 2012-2013 and claimed deduction @ 100% for A.Y.2013-14. Assessee is entitled to claim deduction @100% u/s 80IC of the Act. We therefore find no infirmity in the order of CIT(A). Accordingly grounds raised by the revenue in 1 and 2 are dismissed. Issues:- Justification of allowing deduction @100% u/s 80IC of the Act as against 25% restricted by the AO.Analysis:1. The appeal by the Revenue challenges the order passed by C.I.T-(A)-9, Kolkata for A.Y.2013-14, specifically regarding the deduction claim under section 80IC of the Act. The AO restricted the deduction to 25%, but the CIT(A) allowed 100% deduction based on the interpretation of the initial assessment year and substantial expansion criteria.2. The CIT(A) relied on the decision of Delhi Benches of ITAT in the case of Tirupathi LPG Industries Ltd. to support the allowance of 100% deduction. The CIT(A) emphasized that there can be more than one initial assessment year and that an Industrial Unit covered under section 80IC can claim deduction for expansion after the initial period.3. The High Court of Himachal Pradesh also addressed similar issues and held that undertakings established before 7.1.2003 undertaking substantial expansion up to 1.4.2012 are entitled to benefits under section 80-IC for the period not covered under section 80-IB. The judgment highlighted that there can be multiple substantial expansions and initial assessment years, subject to a cap of ten years.4. The argument presented by the appellant was that substantial expansion occurred in the previous year, allowing for the claim of 100% deduction for the assessment year 2013-14. The AO's denial was based on the initial deduction claimed in A.Y. 2008-09, limiting the deduction to 25% for A.Y. 2013-14. The decision of the Hon'ble High Court of Himachal Pradesh supported the appellant's claim for 100% deduction under section 80IC for the relevant assessment year.5. The judgment concludes that based on the interpretations of the initial assessment year and substantial expansion criteria, the appellant is entitled to claim deduction @100% u/s 80IC of the Act for the assessment year in question. The order of the CIT(A) allowing the deduction is upheld, and the appeal by the Revenue is dismissed.