Supreme Court grants 100% tax exemption under Section 80-IC, overturning High Court decision.

The Supreme Court allowed the appeals, granting the Assessees 100% exemption under Section 80-IC of the Income Tax Act, 1961. The Court clarified that the judgment in a previous case did not consider the definition of "Initial Assessment Year" under Section 80-IC, confirming the entitlement to full exemption. The High Court's decision, based on the earlier case law, was overturned in favor of the Assessees, with the Revenue accepting their entitlement to the exemption.

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Issues involved:
The judgment involves the availability of exemption to the appellants under Section 80-IC of the Income Tax Act, 1961, and the applicability of the decision in the case of Commissioner of Income Tax V/s. Classic Binding Industries (2018) 9 SCC 753.

Availability of 100% exemption under Section 80-IC:
The appellants challenged the order passed by the High Court of Punjab and Haryana regarding the availability of exemption under Section 80-IC. The Supreme Court referred to its decision in Principal Commissioner of Income Tax, Shimla V/s Aarham Softronics (2020) 11 SCC 551, which clarified that the judgment in Classic Binding Industries case did not consider the definition of "Initial Assessment Year" under Section 80-IC. The Court held that 100% exemption is permissible under certain paragraphs of the judgment. The respondent did not dispute this proposition, leading to the conclusion that the Assessees are entitled to 100% exemption, overturning the High Court's decision.

Specific cases:
In the case of Tejpal Chaudhary, the Assessing Officer initially granted only 25% exemption under Section 80-IC, which is now corrected to be 100% based on the Supreme Court's ruling. The finding of entitlement to deduction for the Assessee is now final. Regarding M/s. Friends Alloys, the Revenue accepted that the Assessee is entitled to exemption. Consequently, the Appeals were allowed, and the Assessees are entitled to 100% exemption under Section 80-IC. The High Court's decision, which was based on Classic Binding Industries case, is set aside in favor of the Assessees.

Conclusion:
The Supreme Court granted leave and allowed the Appeals, disposing of them in favor of the Assessees, who are now entitled to 100% exemption under Section 80-IC of the Income Tax Act, 1961. The judgment clarified the applicability of the law and overruled the High Court's decision based on the previous case law.

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