ITAT Chandigarh grants 100% deduction under section 80IC, following Pr. CIT Vs. M/s Aarham Softronics precedent

The ITAT Chandigarh ruled in favor of the Assessee, allowing 100% deduction under section 80IC for the relevant year. The decision was based on the precedent set by the Pr. CIT Vs. M/s Aarham Softronics case, which clarified that substantial expansion entitles the Assessee to full deduction for ten years from the initial assessment year of expansion. The ITAT set aside the lower authorities' decision and upheld the Assessee's claim for 100% deduction, concluding in favor of the Assessee.

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Issues involved:
The appeal concerns the disallowance of the benefit of substantial expansion under section 80IC(2) and the confirmation of deduction at 25% instead of 100% as claimed by the assessee, based on conflicting decisions of the Hon'ble Supreme Court.

Summary:
The Assessee, engaged in manufacturing rubber compound, set up an undertaking in A.Y. 2018-19 at Baddi, Himachal Pradesh, claiming deduction under section 80IC. The dispute arose when the AO allowed deduction at 25% instead of 100% for the A.Y. 2016-17, considering the substantial expansion in A.Y. 2012-13. The Assessee contended that the subsequent decision of the Hon'ble Supreme Court in Pr. CIT Vs. M/s Aarham Softronics favored 100% deduction under section 80IC.

The Ld. CIT(A) upheld the AO's decision based on the earlier judgment in CIT Vs. Classic Binding Industries but acknowledged the subsequent ruling allowing 100% deduction. The Assessee appealed against this decision.

During the hearing, the Assessee cited the Pr. CIT Vs. M/s Aarham Softronics case, while the Ld. DR supported the lower authorities' orders.

The ITAT Chandigarh found the matter covered by the Pr. CIT Vs. M/s Aarham Softronics decision, which clarified that substantial expansion entitles the Assessee to 100% deduction for ten years, starting from the initial assessment year of expansion. Referring to a similar decision by the Chandigarh Bench, the ITAT ruled in favor of the Assessee, allowing the appeal and granting 100% deduction for the relevant year.

In conclusion, the ITAT upheld the Assessee's claim for 100% deduction under section 80IC, in line with the Pr. CIT Vs. M/s Aarham Softronics judgment, setting aside the lower authorities' decision and ruling in favor of the Assessee.

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