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of <h1>Tribunal Upholds 100% Deduction for Substantial Expansion Post 5 Years</h1> <h3>Asst. CIT Circle-2, Kashipur. Versus M/s Naini Tissues Ltd.</h3> Asst. CIT Circle-2, Kashipur. Versus M/s Naini Tissues Ltd. - TMI Issues:- Appeal by Department against orders of CIT(A) for Assessment Years 2011-12 and 2012-13 regarding deduction u/s 80IC.- Claim of deduction @ 100% by assessee for 6th and 7th years of claim of deduction u/s 80IC.- Interpretation of whether the initial assessment year can be re-fixed in case of substantial expansion.- Department's contention that deduction should be allowable only @ 30% after initial 5 years.Analysis:- The Department filed appeals against orders of CIT(A) for Assessment Years 2011-12 and 2012-13, challenging the allowance of deduction u/s 80IC to 100% by the CIT(A). The Department argued that the deduction should be limited to 30% after the initial 5 years of claim.- The assessee, a manufacturing company, claimed deduction @ 100% of eligible profits for the 6th and 7th years of deduction u/s 80IC. The Department contended that the law allowed deduction only @ 30% after the initial 5 years.- The key issue revolved around whether the initial assessment year could be re-fixed in case of substantial expansion by the assessee. The CIT(A) allowed the deduction @ 100% based on a previous ITAT judgment, which held that deduction could be claimed at full rate for up to 10 years in case of substantial expansion.- The Tribunal, after examining the facts and legal provisions, upheld the CIT(A)'s decision. It cited the ITAT judgment and a Supreme Court ruling to support the allowance of deduction @ 100% for the 6th and 7th years post substantial expansion. The Tribunal emphasized that the law did not restrict multiple substantial expansions and that the deduction could not exceed a total period of 10 years.- Ultimately, the Tribunal dismissed the Department's appeals, stating that the CIT(A) correctly followed the legal interpretation established by the ITAT and Supreme Court. The decision was pronounced on 31/05/2021, upholding the allowance of deduction @ 100% for the relevant assessment years.
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