2021 (3) TMI 619 - AT - Income Tax

Tribunal grants full deduction under section 80IC, citing expansion evidence and relevant law.

The Tribunal allowed the appeal of the assessee, directing the Assessing Officer to allow 100% of the deduction claimed under section 80IC of the Income ... Revision u/s 263 - Disallowing 70% of the deduction claimed u/s 80IC - HELD THAT:- The schedule of fixed assets we find that as on 01.04.2011, the cost of plant and machinery and the additions made were to the tune of ₹ 1,85,23,460/- which makes the addition more than 50% and justifying that there was substantial expansion as per the relevant provisions of the Act and section 80IC of the Act which fact is also substantiated by the auditor’s report in Form 10CCB wherein the auditors were satisfied that there was substantial expansion as per provisions of the law. Respectfully following the ratio laid down M/S. AARHAM SOFTRONICS [2019 (2) TMI 1285 - SUPREME COURT] we set aside the findings of the ld. CIT(A) and direct the Assessing Officer to allow 100% of the deduction claimed u/s 80IC of the Act. - Decided in favour of assessee. Issues:Challenge to disallowance of deduction u/s 80IC of the Income Tax Act, 1961.Detailed Analysis:The appeal was filed against the order of the ld. CIT(A) regarding the disallowance made by the Assessing Officer concerning the deduction claimed u/s 80IC of the Income Tax Act, 1961 for the assessment year 2013-14. The Assessing Officer had disallowed 70% of the deduction claimed by the assessee, amounting to Rs. 5,30,284. The ld. CIT(A) upheld this disallowance, stating that the deduction for 10 years cannot be split into parts to claim 100% deduction multiple times for the same enterprise. The PCIT then directed the Assessing Officer to reexamine the excess claim of deduction u/s 80IC, leading to the disallowance.Subsequently, the Assessing Officer disallowed 70% of the deduction claimed by the assessee, leading to an addition of Rs. 5,30,284. The ld. CIT(A) affirmed this decision, emphasizing that the provisions applied to one undertaking or enterprise, and the appellant had tried to split the same undertaking to claim 100% deduction twice. The appellant argued that the issue was settled in favor of the assessee by a judgment of the Hon'ble Supreme Court in a specific case.Upon reviewing the orders of the authorities, it was noted that the restriction of deduction to 30% instead of 100% was based on the number of assessment years and not considering the substantial expansion undertaken by the appellant. The Hon'ble Supreme Court's judgment in a relevant case favored the assessee, stating that an enterprise undertaking substantial expansion within the specified period would be entitled to 100% deduction for the profits and gains. The Court's findings emphasized the definition of the 'initial assessment year' and the treatment of deductions in cases of substantial expansion.Based on the Supreme Court's ruling and the evidence of substantial expansion provided by the appellant, the Tribunal set aside the findings of the ld. CIT(A) and directed the Assessing Officer to allow 100% of the deduction claimed u/s 80IC of the Act. Consequently, the appeal of the assessee was allowed.In conclusion, the Tribunal's decision was influenced by the interpretation of the provisions of the Income Tax Act, the Hon'ble Supreme Court's judgment, and the evidence of substantial expansion by the assessee, leading to the allowance of the full deduction claimed under section 80IC of the Act for the relevant assessment year.