Tribunal grants deduction under Section 80-IC for manufacturing activities in industrial area

The Tribunal allowed the assessee's appeal, directing the Assessing Officer to allow the deduction under Section 80-IC of the Income Tax Act, 1961. The Tribunal found that the assessee's undertaking met the eligibility criteria and conditions for claiming the deduction under Section 80-IC(2)(a) and 80-IC(2)(b), as it was situated in a notified industrial area and engaged in manufacturing activities specified in the relevant schedules. The appeal was decided in favor of the assessee on 28/04/2020.

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Issues Involved:
1. Disallowance of deduction under Section 80-IC of the Income Tax Act, 1961.
2. Eligibility criteria and conditions for claiming deduction under Section 80-IC(2)(a) and 80-IC(2)(b).
3. Notification of industrial area by CBDT for eligibility under Section 80-IC.

Detailed Analysis:

1. Disallowance of Deduction under Section 80-IC:
The assessee filed an appeal against the order of the CIT(A)-II, Jaipur, which confirmed the disallowance of Rs. 40,64,288/- claimed under Section 80-IC. The assessee had been claiming this deduction since A.Y. 2011-12, and it was allowed in previous assessments, including A.Y. 2013-14. The principle of consistency was emphasized, supported by multiple judicial pronouncements.

2. Eligibility Criteria and Conditions for Claiming Deduction under Section 80-IC(2)(a) and 80-IC(2)(b):
Section 80-IC provides for deductions on profits derived from eligible businesses in specified states, including Uttaranchal. The eligibility under Section 80-IC(2)(a) requires:
- The undertaking must not produce articles specified in the Thirteenth Schedule.
- Manufacturing must begin between 07.01.2003 and 01.04.2012.
- The undertaking must be in a notified area.

For Section 80-IC(2)(b):
- The undertaking must produce articles specified in the Fourteenth Schedule.
- Manufacturing must begin within the same period.
- The undertaking must be in Uttaranchal.

The assessee's undertaking met these conditions under both clauses, as it was situated in a notified area and engaged in manufacturing TVs, DVDs, and LCDs, which fall under the Information and Communication Technology Industry in the Fourteenth Schedule.

3. Notification of Industrial Area by CBDT for Eligibility under Section 80-IC:
The CIT(A) dismissed the appeal, stating no CBDT notification was on record for the industrial area where the unit was situated. However, the assessee provided Notification No. 177/2004, which included the Khasra numbers of the assessee's location. This notification, issued by CBDT, designated the industrial area for eligibility under Section 80-IC.

Conclusion:
The Tribunal noted that the undertaking was in the specified industrial area per Notification No. 177/2004 and satisfied all other conditions for deduction under Section 80-IC. The revised audit report in Form 10CCB, filed during assessment proceedings, was accepted. The Tribunal set aside the lower authorities' order and directed the Assessing Officer to allow the deduction under Section 80-IC. The appeal was decided in favor of the assessee.

Order Pronounced:
The appeal filed by the assessee was allowed, and the order was pronounced on 28/04/2020.

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