Substantial expansion under Section 80IC can trigger a fresh initial assessment year and renewed 100% deduction within the ten-year cap.

Section 80IC allows a fresh initial assessment year when substantial expansion is completed, so an eligible undertaking can again claim 100% deduction within the statutory framework. The Tribunal applied the binding Supreme Court interpretation that the year of substantial expansion forms part of the definition of "initial assessment year" and that the later ruling prevails over the earlier contrary view. It further noted that the higher deduction remains subject to the ten-assessment-year outer limit, so the renewed 100% deduction is available only within that ceiling.

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Issues: Whether the assessee was entitled to claim deduction at 100% under section 80IC of the Income-tax Act, 1961 after carrying out substantial expansion, and whether such expansion could generate a fresh initial assessment year within the statutory ceiling.

Analysis: The Tribunal followed the binding Supreme Court ruling holding that the definition of "initial assessment year" in section 80IC includes the year in which substantial expansion is completed. It applied the statutory scheme of section 80IC, particularly the provisions governing eligibility, the rate of deduction, the meaning of substantial expansion, and the ten-year outer limit. On that basis, it held that a unit in Himachal Pradesh which had already availed deduction at 100% for the first five years could again become entitled to 100% deduction after substantial expansion, subject to the overall cap of ten assessment years. It also held that the later Supreme Court ruling overruled the earlier contrary view and, being binding, had to be followed.

Conclusion: The assessee was entitled to the higher deduction after substantial expansion, and the Revenue's challenge failed.

Ratio Decidendi: Under section 80IC, completion of substantial expansion can create a fresh initial assessment year, entitling the eligible undertaking to 100% deduction again, provided the total deduction period does not exceed ten assessment years.

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