Section 80-IC deduction on substantial expansion allowed under binding precedent, rejecting the 25% cap on the claim.

Entitlement to deduction under section 80-IC turned on whether the assessee's substantial expansion of the undertaking justified the full claim. Applying the binding precedent in Principal Commissioner of Income Tax, Shimla v. M/s. Aarham Softronics, the earlier view in CIT v. Classic Binding Industries was treated as no longer good law. On that basis, the restriction of the deduction to 25% could not be sustained, and the disallowance by the Revenue authorities failed.

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Issues: Whether the assessee was entitled to deduction under section 80-IC of the Income-tax Act, 1961 on the basis of substantial expansion of the undertaking.

Analysis: The issue was covered by the earlier decision in Principal Commissioner of Income Tax, Shimla v. M/s. Aarham Softronics, which held that the view taken in CIT v. Classic Binding Industries was no longer good law. In light of that binding precedent, the restriction of the claim to 25% could not be sustained.

Conclusion: The assessee was entitled to the claimed relief under section 80-IC, and the disallowance made by the Revenue authorities could not stand.

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