TaxTMI 
TaxTMI 
2015 (6) TMI 725
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.... the appeal of the assessee in ITA No. 798/Chd/2012 in the case of Hycron Electronics Vs. ITO. 4. In this appeal the assessee has raised the following grounds of appeal:- 1. Under the facts and circumstances of the case and in law, the order dated 11.06.2012 passed by the Ld. CIT(Appeals), Shimla u/s 250(6) of the Income Tax Act, 1961 is bad in law, illegal, without jurisdiction and void. 2. Under the facts and circumstances of the case and in law, Ld. CIT(Appeals), Shimla has erred in: I. Affirming the order of Ld. ITO, Ward-2, Solan in restricting the claim of appellant of deduction u/s 80-IC of the Income Tax Act, 1961 at 25%i instead of 100% claimed by the appellant in the sixth year of operation of new industrial undertaking of the appellant wherein substantial expansion was carried out in such new industrial undertaking by the Appellant. II. Misinterpreting the provisions of section 80-IC of the Act which provides for substantial expansion to be undertaken during the period beginning on 7th January 2003 and ending before 1st April 2012 and erroneously upholding that the benefit of 100% deduction u/s 80-IC of the Act for first five years in case of substantial e....
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....ses who installed the new units during this period and are now going for substantial expansion are not eligible to claim deduction u/s 80IC. In this regard it is submitted that the assessee unit i.e. M/s Hycron Electronics, Baddi first came into existence in the financial year 2003-04 i.e. relevant to the assessment year 2004-05. Thus it first claimed 100% deduction u/s 80IA/80IB of the I. T. Act in the assessment year 2004-05. The necessary deduction was also claimed in the subsequent assessment yeas i.e. 2005-06, 2006-07, 2007-08 and 2008-09. The assessment for these years were decided under scrutiny and orders were passed u/s 143(3) of the Income Tax Act 1961. In the financial year 2008-09, the assessee unit came for substantial expansion as per the provision of section 80IC of the I.T. Act. In this regard, it may be submitted that the section 80IC was inserted by the Finance Act 2003 w.e.f. 01.04.2004 i.e. relevant to the assessment year 2005-06 and onwards This section applies to any undertaking or enterprise which has begun or beings to manufacture or produce any article or thing not being any article or thing, not being any article or thing specified in the 13th Schedu....
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....oduction. Similarly in the case of substantial expansion, the initial assessment year would start from the year when substantial expansion is completed. In such cases, the assesee would not be entitled for the claim of any deduction beyond a period of 10 assessment years as it had already availed 100% deduction for 10 assessment years as per the provisions of section 80-IC(6) of the Act. In the present case, the assessee made investment in plant and machinery as under: 8. The Assessing Officer examined this reply and then referred to provisions of section 80IC. According to him, the most important question was who could carry out the substantial expansion. For this he referred to Circular No. 7 of 2003 issued by Central Board of Direct Taxes (for short CBDT) as well as Circular No 49 of 2003 issued by Central Excise Authorities. He concluded that on the basis of these two Circulars it is very clear that substantial expansion could be carried only by the existing units. He also referred to the provisions of clause (v) of sub section (8) of section 80IC which defines initial assessment year. According to him, this section makes it clear that there could be only one initial asse....
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.... 100% deduction in the case of substantial expansion shall be available to the units which were already in existence at the time of this section. Even the Circular No. 7 of 2003 issued on 5.9.2003 clarifies that benefit of deduction shall be available to all enterprises which undertake substantial expansion. 10. It was further pointed out that clause (25)(ii)(d) of Form No. 10CCB which states "If the existing business had undertaken substantial expansion, please specify......" clearly shows that Form prescribed by the Legislature requires information on whether the existing undertaking has undertaken substantial expansion. In any case when the provision was very clear the process of interpretation could not be adopted to deny deduction and in this regard various case laws was cited. 11. It was also contended that if view of the Assessing Officer was taken as correct that there can be only be one initial assessment year, then sub-section (6) of section 80IC would become redundant because then deduction would always be 100% for first five years and 25% for the next 5 years. Therefore, the provision of section 80IC should be constructed harmoniously. In any case if there was som....
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....or thing prior to the 7th day of Jay., 2003 and which undertakes substantial expansion during the period beginning on the 7day of Jan., 2003 and ending before the 1st day of April, 2012 in the State of Himachal Pradesh. 14. On the basis of above, she made the following conclusion in paras 4.3 and 4.4., which are as under:- "4.3 Thus it is clear from above that deduction u/s 80IC is available to the pre-existing undertaking or enterprises (which existed prior to the enactment of section 80IC) on the condition that they undertake substantial expansion during the period beginning on the 7l day of Jan., 2003 and ending before the 1srt day of April, 2012 in the State of Himachal Pradesh as per the conditions stipulated in section 80IC. However, deduction u/s 80IC is also available to the new undertakings or enterprises which undertake the manufacture or production of the specified articles or thing during the period beginning on the 7th day of Jan., 2003 and ending before the 1st day of April, 2012 in the State of Himachal Pradesh. Thus the law has been enacted in such a fashion that the pre-existing undertaking or enterprises do not suffer from any handicap merely on account of t....
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.... and Income tax are two different streams of taxation with their own independent laws, and therefore, Circular No. 49 of 2003 issued by the Excise Authorities could not be relied. In this regard she observed that explanation to Finance Act 2003 makes it absolutely clear that these provisions were being inserted on the basis of a package announced by Union Cabinet which consisted of fiscal and non-fiscal coverage for special category of states of Sikkam, Himachal Pradesh, Uttranchal and North-Eastern states in order to boost economy of these states. Since new project includes Central Excise benefits also as well as benefits in income tax which were of the same nature and emanating from the same package, it was natural to refer to Circular issued by Excise Authorities. 16. She also referred to provisions of sub section (6) of section 80IC and pointed out that sub section nowhere laid down that 100% deduction could be allowed to any undertaking for a continues period of 10 years. 17. She also referred to clause 25 (ii)(d) of Form No. 10CCB and pointed out that even the Form does not help the assessee's case. She observed that in fact clause 25 of Form 10CCB helps the Revenue....
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....eduction only for 10 years. (c) The reference made to Circular No. 7 of 2003 by Assessing Officer and CIT(A) is not proper because Circular itself provides for benefit to existing undertakings and their substantial expansion and the word 'existing' has not been qualified with reference to any particular date. It simply qualifies 'undertaking'. (d) The reference to Circular No. 49 of 2003 issued under Central Excise Act by the Excise Authorities is also not proper because this Circular is not issued u/s 119 of the Income Tax Act. Further this circular refers to the expansion of capacity by 25% whereas under the Income tax Act what is required is 50% increase in investment under the head 'plant and machinery' (e) In any case, Circulars are not binding on the Courts and Circular and same should not be considered in interpretation of provisions. In this regard reliance was placed on the decision of Hon'ble Karnataka High Court in case of Dinakar Ullal Vs. CIT 323 ITR 452 (Karnataka), Commissioner of Central Excise Vs. M/s Rattan Melting & Wire (2008) (13 (SC) 1). (f) Ld. counsel vehemently objected to the reliance placed by the Department on the ....
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....ich prescribes over all limits of deduction for 10 years. It was contended that this limit was with reference to the time period and not to the rate of deduction. (k) Reliance was also placed on the decision of Chandigarh Bench of the Tribunal in the case of DCIT Chandigarh Vs. S.K. Paryavaran Engineers (P) Ltd., in ITA No. 340/Chd/2010. It was contended that in this case it was held that assessee was entitled to deduction u/s 80IC on substantial expansion. Further reliance was also placed on the decision of Authority for Advance Rulings in case of Abhishek Bhargav AAR No. 1097 of 2011 (During the hearing, Ld. counsel of the assessee was requested to either give citation of the decision or file certified copy of the order. This has not been done. However, we have considered this decision also.) (l) Lastly, it was contended that incentive provision should be construed liberally in view of the decision of Hon'ble Supreme Court in the case of Bajaj Tempo Ltd v CIT 196 ITR 188 (SC) . 20. On the other hand Ld. CIT-DR, Dr. Amarveer Singh made detailed submissions and has also filed written submissions. The contentions of the Revenue can be summarized as under:- i) The new....
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....lso, the deduction was to be allowed to the industrial undertaking @ 100% of profits and gains for the five assessment years beginning with the initial assessment year and thereafter 25% (or 30% where the assessee is a company) and all the profits and gains derived from such industrial undertaking. It was pointed out that in the case of deduction u/s 80IB(4), there was a second proviso in the section by which it is clarified that the 100% deduction was available for 10 assessment years in case such undertakings which were located in North-Eastern region. Similar provision is made u/s 80IC(3)(ii). Thus, it is clear that provisions of section 80IC(3) is only an extension of section 80IB(4) and through section 80IC, only difference is that this was extended to industrial undertaking which were already existing on the commencement of the window period i.e. 7.1.2003 to the Ist day of April 2012. iv) It was empathetically argued that expression 'and undertakes substantial expansion' has been used in both sections 80IC(2(a) and 80IC(2)(b). However, it is to be noted that section 80IC(2)(a)(ii) is applicable to the state of Himachal Pradesh or Uttaranchal and similarly section 8....
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....y year of substantial expansion would become initial assessment year. If, this theory is accepted and going by the same analogy every assessment year would become initial assessment year since the undertaking commences production on the first day of each accounting year. Such an interpretation would not only result into absurdity but absolutely an improbable and unworkable situation. vi) If the benefit of deduction of substantial expansion was to be allowed to the new undertaking which commenced production on or after 7.1.2003, then such undertaking would automatically be disqualified for the deduction because of the restriction provided in sub section (4) of section 80IC because such substantial expansion would amount to reconstruction of the business. vii) If the interpretation adopted by the assessee was to be followed, the same would result in discrimination between the new units and the existing units. The new units would become eligible for 100% deduction for the first five years then again for 100% deduction for another set of five years on carrying out the substantial expansion whereas the existing unit would get benefit only of 100% deduction for initial five years a....
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....onsidered. A similar view was taken by the Karnataka High Court in the case of CIT Vs. M.S. Vaidya 224 ITR 186 (Karnataka). xi) A reference was also made to the decision relied on behalf of the assessee of the Chandigarh bench of the Tribunal in the case of DCIT Chandigarh Vs. S.K. Paryavaran Engineers (P) Ltd. (supra). It was pointed out that decision is totally distinguishable because in that case assessee claimed deduction u/s 80IB in 1999-2000 for the first time. Later on, after five years the assessee claimed benefit @ 30%. The assessee also undertook substantial expansion in financial years 2004-05 and 2005-06 and again claimed deduction of 100% of profits on the strength of substantial expansion but wrongly mentioned the section as 80IB instead of section 80IC. Therefore, it is clear that this is a clear case of expansion of existing unit which existed before 7.1.2003 and therefore, it is clearly distinguishable from the facts of the case of the assessee. It was further pointed out that decisions relied on behalf of the assessee are totally distinguishable on their own facts. 21. In the rejoinder, the submissions made by Ld. Shri Pavan Ved can be summarized as under:- ....
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....e. Further the decision in the case of M/s Novapan India Ltd vs Collector of Central Excise and Customs (supra) related to indirect tax and, therefore, cannot be relied upon while interpreting the provisions under direct tax. f) In respect of the 100% deduction u/s 80IC (2)(i) to the state of Sikkim and North-eastern states as contended by the Revenue, it was pointed out that Legislature can choose to give more benefit to any particular area. 22. We have considered the rival submissions including written submissions in the light of material on record, as well as judgments cited by the parties. Before we consider the relevant provisions which are required to be interpreted, it will be useful to deal with the various principles of interpretation as enunciated by various Courts. 23. It is settled that if the language of a particular Statute is clear then only literal meaning has to be given to such language as long the same does not result in absurdity or unintended consequences. Therefore, if the language of a particular Statute is clear then the same cannot be changed by applying different principles of interpretations. This is clear from the observations made by 'Hon&#....
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....eshavji Ravji and Co. v. CIT[1990] 183 ITR 1also lends concurrence to the views expressed above. This court observed (page 9): "As long as there is no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention of the Legislature cannot then be appealed to to whittle down the statutory language which is otherwise unambiguous. If the intendment is not in the words used. It is nowhere else. The need for interpretation arises when the words used in the statute are, on their own terms, ambivalent and do not manifest the intention of the Legislature... Artificial and unduly latidudinarian rules of construction, which with their general tendency to 'give the taxpayer the breaks', are out of place where the legislation has a fiscal mission." Be it noted that individual cases of hardship and injustice do not and cannot have any bearing for rejecting the natural construction by attributing normal meaning to the words used since "hard cases do not make bad laws". However, if some ambiguity is there in the language of a particular statute because of various reasons, the same is req....
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....tained in the head note reads asunder:- "The legislative history of a fiscal statute could be traced and considered to understand its scope. The courts are permitted to travel beyond the words used in a statute, to find out the purpose for which a particular provision is enacted; for this purpose, even the speech of the Finance Minister, while introducing the particular fiscal legislation could be looked into. The Circulars issued by the Central Board of Direct Taxes are not only binding on the Income-tax Department but are also in the nature of contemporanea exposition furnishing legitimate aid in the construction of a provision." 24. The Ld. counsel of the assessee had referred to the decision of Hon'ble Karnataka High Court in the case of Dinakar Ullal Vs. CIT (supra) and decision of Hon'ble Supreme court in the case of Commissioner of Central Excise Vs. M/s Rattan Melting & Wire (supra) for the proposition that since circulars are not binding on the Courts, therefore, the same should not be considered for interpretation of a particular provision. As far as the decision in the case of Commissioner of Central Excise Vs. M/s Rattan Melting & Wire (supra) is concerned....
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...., the Commissioner who was vested with the jurisdiction under Instruction No.13 of 2006 in respect of claim upto Rs. 10 lakhs accepted the cause shown for delay in filing the return but denied interest on refund amount in view of the condition set out in Circular No. 670 dated 26th Oct 1993. Therefore, question before the Court was whether these instructions were contrary to the provision of section 244A of the Act which provided for payment of interest on refunds. This becomes absolutely clear from the question framed by Hon'ble Court which is contained at placitum 6 and reads as under:- "(i) Whether the condition to deny interest on refund amount due to an assessee under the Act, while admitting an application to condone the delay in making a claim for belated refund under section 237 of the Act, as contained in Instruction No. 12 of 2003 dated October 30,2003 and 13 of 2006 dated January 22,2006, of the Board, is inconsistent with sub-section (2) of section 244A of the Act? (ii) Whether in the facts and circumstances, the respondent was justified in denying interest on belated refund claimed for the assessment year 1995-96, by the order impugned." 26. The Hon'bl....
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....rk, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in the State of Sikkim; or (ii) on the 7th day of January, 2003 and ending before the 1st day of April, 2012, in any Export Processing Zone or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in the State of Himachal Pradesh or the State of Uttaranchal; or (iii) on the 24th day of December, 1997 and ending before the 1st day of April, 2007, in any Export Processing Zone or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in any of the North-Eastern States; (b) which has begun or begins to manufacture or produce any article or thing, specified in the Fourteenth Schedule or comme....
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....lowed under any other section contained in Chapter VIA or in section 10A or section 10B, in relation to the profits and gains of the undertaking or enterprise. (6) Notwithstanding anything contained in this Act, no deduction shall be allowed to any undertaking or enterprise under this section, where the total period of deduction inclusive of the period of deduction under this section, or under the second proviso to sub-section (4) of section 80-IB or under section 10C, as the case may be, exceeds the assessment years. (7) The provisions contained in sub-section (5) and sub-sections(7) to (12) of section 80-IA shall, so far as may be, apply to the eligible undertaking or enterprise under this section. (8) For the purposes of this section,- (i) "Industrial Area" means such areas, which the Board, may, be notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government; (ii) "Industrial Estate" means such estates, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government. (iii) "Industrial Growth Centre" means such centres,....
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.... there is no restriction in this sub section itself, therefore, the deduction was available on substantial expansion by old undertakings as well as new undertakings during the window period. However, there is no force in this interpretation. Sub section (2) begins with the expression "this section applies to any undertaking or enterprise which has begun or begins" this itself shows that provision made even the existing undertakings entitled for the deduction because the expression 'begun' would refer to the undertaking which were already existing and began the manufacture before the window period mentioned in the sub section. The last line of the sub section reads "and undertakes substantial expansion during the period beginning........".". This would naturally refer to the undertaking which were already existing. If it is read the way the Ld. counsel of the assessee would like us to read then the provision would become unworkable because if there is an undertaking which is established during the window period then the same cannot possibly undertakes substantial expansion also simultaneously. The expression 'and" would refer to the cumulative condition that is both part....
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....any year), as on the first day of the previous year in which the substantial expansion is undertaken. 49.2 The section provides that the deduction shall be available to such undertakings or enterprises which manufacture or produce any article or thing, not being any article or thing specified in the Thirteenth Schedule and which commence operation in any Export Processing Zone, or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate, or Industrial Park, or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with rules prescribed in this regard. Similar deduction shall be available to thrust sector industries, as specified in the Fourteenth Schedule. 49.3 The amount of deduction in case of undertakings or enterprises in the States of Sikkim, and the North-Eastern States shall be one hundred per cent of the profits of the undertaking for ten assessment years. The amount of deduction in case of undertakings or enterprises in the States of Uttaranchal, Himachal Pradesh shall be one hundred per cent of the profits of the undertaking for five assessment years, and thereafter twenty-five per cent ....
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....ghts or liens. For us relevant meaning would be 'To be in present force' As per Oxford Dictionary 'exist' is defined as under Exist: 1 (not used in the progressive tenses) to be real; to be present in a place or situation: Does life exist on other planets? The problem only exists in your head, Jane. Few of these monkeys still exist in the wild. On his retirement the post will cease to exist. The charity exists to support victims of crime. 2- (on sth) to live, especially in a difficult situation or with very little money: We existed on a diet of rice. They can't exist on the money he's earning The above definition clearly shows that 'exist' would refer to something which is in force presently. 'Exist' would generally and in common sense refers to something which is already there. With reference to this provision, this would refer to an undertaking which was already present on the date when this provision was introduced. In any case the notification issued by the Govt. of India, Ministry of Commerce and Industry, Department of Industrial Policy and Promotion which is published in the Gazette of India removed all the doubts. This ....
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....y 25%. If the Legislature wanted to extend the benefit in the case of substantial expansion separately then the rate of deduction in the clause (i) & (ii) of sub section (3) would not have been different i.e. 100% for whole of the 10 years in case of State of Sikkim & North-Eastern states under sub clause (i) and for the state of Himachal Pradesh & Uttaranchal under sub clause (ii) 100% for first five years and thereafter 25% for next five years. The concept of substantial expansion remains same under sub section (2) for both types of states i.e state of Sikkim and North-Eastern states and State of Himachal Pradesh and Uttranchal. If the extended benefit of substantial expansion was to be separately allowed in case of State of Himachal Pradesh and State of Uttaranchal, then meaning of substantial expansion as given under sub section (2) which is same for the state of Sikkim and North-Eastern states become redundant. As noted earlier, the provision cannot be interpreted in such a way that part of the section becomes redundant or otiose. Therefore, whatever doubts may be there in sub section (2) when it is read with sub section (3), those doubts are totally removed and it become abso....
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....mencement of this section and the same claims deduction @ 100% and later on every five years a substantial expansion is carried out then according to the interpretation canvassed on behalf of the assessee, such unit would again become entitled to 100% deduction for another five years and further block of five years every time substantial expansion is carried out. If this interpretation is adopted then deduction would become almost perceptual as long as the assessee has carried out substantial expansion but in that case sub section (6) would loose its meaning. Such an unlimited period of deduction would not be in consonance of law. At the cost of repetition, we would like to emphasize that no principle of interpretation can be adopted which leads to a situation where a particular part of the section becomes totally redundant. In fact though it was contended that in the present case (i.e. in case of Hycron Electronics) deduction has been claimed only of 10 years but on the date of hearing some other appeals were also listed wherein the deduction was claimed for more than 10 years adopting the same contention which has been made before us. In case of M/s Mahavir Industries (ITA No. 12....
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....ent year to any undertaking or enterprise referred to in sub-section (2) of section 80-IC." 37. The careful perusal of the above provision would show that before the introduction of section 80IC which is before us for consideration, the deduction to the backward states was available in terms of section 80IB(4). The third proviso makes it clear that after 31.3.2004, this deduction will be available only u/s 80IC. The sub section further makes it clear that deduction would be @ 100% for the first five years and thereafter @ 25%. Further, the first proviso makes it clear that deduction will not exceed 10 consecutive assessment years. The second proviso further makes it clear that in the case of states of North-Eastern regions, the deduction would be @ 100% for all the 10 years. Thus, even in the earlier provision only in case of North-Easter states, the deduction of 100% was allowable for 10 years whereas in the case of states of Himachal Pradesh, the deduction was allowable @ 100% for first five years and 25% for next five years. 38. Further, it should be noted that sub section (6) starts with non obstante clause and therefore, in no case the deduction could be for period excee....
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....Pradesh (since all the cases before us are situated in the State of Himachal Pradesh) and thereafter 25% deduction for another five years on the new units or the existing units where substantial expansion was carried out. 40. It has also been contended that incentive provision should be construed liberally. Further, it was contended with reference to the decision of M/s Novapan India Ltd vs Collector of Central Excise and Customs (supra) by the Revenue is not correct because that provision was rendered under Indirect Tax Act. We find no force in these submissions. Every decision of the Hon'ble Supreme Court or for that matter of any High Court has to be seen for the ratio laid down in a particular decision and it does not matter under which particular Act such principles has been decided. No doubt the incentive provisions are required to be interpreted liberally but in case of M/s Novapan India Ltd v Collector of Central Excise and Customs (supra), it was observed as under:- "The learned counsel for the appellant then contended that since there is an ambiguity about the meaning and purport of item-6 of the table appended to the Exemption Notification, the benefit of such ....
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....or ambiguity, benefit of its must go to the State". The Hon 'ble Supreme Court in Orissa State Warehousing Corporation's case (supra) has laid down that "While it is true that in the event of there being any doubt in the matter of interpretation of a fiscal statute, the same goes in favour of the assessee, but the fact remains and the law is well-settled on this score that in the matter of interpretation of the taxing statutes the law courts would not be justified in introducing some other expressions which the legislature thought fit to omit. In the present context, there is no doubt as to the meaning of the words used in the section by reason of the language used, neither there is any difficulty in ascertaining the statutory intent. Incidentally, it cannot but be said that an exemption is an exception to the general rule and since the same is opposed to the natural tenor of the statute, the entitlement for exemption, therefore, ought not to be read with any latitude to the tax-payer or even with a wider connotation." 41. Therefore, it becomes clear that liberal interpretation of an incentive provision is possible if there is any doubt. As we have seen above that if ....
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....tantial expansion in assessment year 2006-07. However, the deduction was wrongly claimed u/s 80IB instead of section 80IC. The CIT(A) allowed the deduction by observing that deduction could not be denied simply because assessee has quoted a wrong section. On the appeal filed by Revenue, the deduction was held to be allowable because substantial expansion was carried out in a unit which was already in existence as on 7.1.2003. Therefore, in our opinion, this decision does not provide any assistance to the case of the assessee. 45. The Ld. Counsel has also relied on the decision of Abhishek Bhargav AAR No. 1097 of 2011 (supra). The facts in that case are that a partnership firm namely M/s. Himachal Power Products was formed on 23.05.2009. The firm commenced commercial production in March, 2010. Shri Abhishek Bhargav while planning to join the firm as partner by acquiring 20% share of profit and enhancing additional manufacturing facility by undertaking substantial expansion sought advance ruling on the issue whether the introduction of new partner would be treated as reconstruction of the existing business or the firm will be entitled to the benefit of substantial expansion as per....
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....ng Zone / Integrated Infrastructure Development Centre /Industrial Growth Centre/Industrial Park/Estate/Software Technology Park/Industrial Area/Theme Park and the District/State in which located :------------------ (b) Khasra No. of the undertaking or enterprise (Also indicate the Board's Notification No.) :------------------ (c) If the eligible business is new, please give the date of commencement of production or manufacture of article or thing. :----------------- (d) If the existing business has undertaken substantial expansion, please specify,- :----------------- (i) The date of substantial expansion (ii) The total book value of plant and machinery (before taking depreciation in any year)as on first day of the previous year in which sub-stantial expansion took place. (iii) Value of increase....
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.... new industrial undertaking of the appellant wherein substantial expansion was carried out in such new industrial undertaking by the Appellant. II. Misinterpreting the provisions of section 80-IC of the Act which provides for Substantial expansion to be undertaken during the period beginning on 7th January 2003 and ending before 1st April 2012 and erroneously upholding that the benefit of 100% deduction u/s 80-IC of the Act for first five years in case of substantial expansion is available only to the units that existed and were operational as on 07.01.2003 and such benefit is not at all meant for the units that came into being on or after the introduction of the scheme of such deduction. III. Upholding that once an 'initial assessment year' is determined in case of an undertaking claiming benefit u/s 80-IC of the Act, it cannot be changed even if such undertaking completes substantial expansion and again qualifies for deduction under the said section on the basis of 'qualifying expansion'. IV. Making a narrow interpretation of the provision of section 80-IC of the Income Tax Act, 1961 which was introduced as a welfare legislation for providing stimulus to ....
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....f M/s Ansysco Vs. ACIT in ITA No. 895/Chd/2012 and others has held that income from Foreign Exchange Fluctuations was directly linked to the business activity therefore deduction should be allowed. 57. On the other hand the Ld. DR strongly supported the order of CIT(A). 58. After considering the rival submissions carefully we find that Hon'ble Supreme Court in the case of Pandian Chemicals Ltd Vs. CIT (supra) was concerned with the issue of deduction u/s 80HH on interest income received on electricity deposit made by the assessee. On this issue, the following observations were made: - The words "derived from" in section 80HH of the Income-tax Act, 1961, must be understood as something which has a direct or immediate nexus with the assessee's industrial undertaking. Although electricity may be required for the purposes of the industrial undertaking, the deposit required for its supply is a step removed from the business of the industrial undertaking. 59. After the above observation, it was held as under: - "Held accordingly, that interest derived by the industrial undertaking of the assessee on deposits made with the Electricity Board for the supply of electri....
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....cs, Baddi, Solan in ITA No. 374/Chd/2014 vide Para No. 61. Therefore following the same we set aside the order of Ld. CIT and remit the matter back to the file of AO with similar direction as contained in Para 61. 66. In the result appeal is partly allowed for statistical purposes ITA No. 867/Chd//2014 (assessment year 2011-12) 67. In this appeal the assessee has raised various grounds. However, it was pointed out that only three disputes are involved. Issue No.1 - Denial of 100% deduction on account of substantially expanded unit Issue No. 2- Denial of deduction under section 80IC on account of Foreign Exchange Fluctuations Issue No. 3- Confirmation of disallowance amounting to Rs. 87,500/- under section 14A. 68. Issue No. 1: Since the issue as well as contentions remain the same has been decided by us in case of M/s Hycron Electronics Vs. ITO, Himachal Pradesh in ITA No. 798/Chd/2012 in vide para no. 22-49. Following the same, we decide this issue against the assessee. 69. Issue No. 2: This issue has already been decided by us in case of M/s Hycron Electronics, Baddi, Solan in ITA No. 374/Chd/2014 vide Para No. 61. Therefore following the same set aside th....
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....mit the matter back to the file of AO with similar direction as contained in Para 61. In the result appeal of the assessee is partly allowed for statistical purposes. ITA No. 896/Chd/2014 82. In this appeal the assessee has raised various grounds. However, it was pointed out that only three disputes are involved. Issue No.1 - Denial of 100% deduction on account of substantially expanded unit Issue No. 2- Denial of deduction under section 80IC on account of Foreign Exchange Fluctuations Issue No. 3- Denial of deduction under section 80IC on account of late deposit of employee contribution to ESI & PF by ignoring the fact that these statutory dues are clearly deposited before the due date of filing of return of income. 83. Issue No. 1- Since the issue as well as contentions remain the same has been decided by us in case of M/s Hycron Electronics Vs. ITO, Himachal Pradesh in ITA No. 798/Chd/2012 in vide para no. 22-49. Following the same, we decide this issue against the assessee. 84. Issue No. 2: This issue has already been decided by us in case of M/s Hycron Electronics, Baddi, Solan in ITA No. 374/Chd/2014 vide Para No.61. Therefore following the same set as....
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....a 89, following the same we set aside the order of Ld. CIT(A) and remit the matter back to the file of AO with a direction to verify that if amounts have been paid before due date of filing of return then the same may be allowed otherwise the issue should be decided in accordance with the law. We may also like to point out that if ultimately disallowance is made on this account then the profit of the assessee would increase and assessee would be entitled to increased deduction under section 80IC as consequences. 94. Issue No. 3: After hearing both the parties we find that during the assessment proceedings AO noticed that there was debit balance in the capital account of partner Shri. Sanjay Bafna amounting to Rs. 26,32,346/- and Shri Sunil Kumar Desadla amounting to Rs. 93,45,966/-. It was further noticed that no interest was charged from these partners. Since the assessee firm was paying interest to the banks therefore a query was raised why interest has not been charged from partners and why proportionate disallowance of interest should not be made. In response it was mainly submitted that there was credit balance in the case of other two partners i.e; Mrs. Kavita Desadla amou....
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....al is partly allowed for statistical purposes. ITA No. 782/Chd/2014 102. In this appeal various grounds have been raised but the only issue is regarding disallowance of denial of claim of deduction under section 80IC @ 100%. 103. Since this issue as well as contentions remain the same as has been decided by us in case of M/s Hycron Electronics Vs. ITO, Himachal Pradesh in ITA No. 798/Chd/2012 in vide para no. 22-49. Following the same, we decide this issue against the assessee. 104. In the result appeal of the assessee is dismissed. ITA No. 783/Chd/2014 105. In this appeal various grounds have been raised but the only issue is regarding disallowance of denial of claim of deduction under section 80IC @ 100%. 106. Since this issue as well as contentions remain the same as has been decided by us in case of M/s Hycron Electronics Vs. ITO, Himachal Pradesh in ITA No. 798/Chd/2012 in vide para no. 22-49. Following the same, we decide this issue against the assessee. 107. In the result appeal of the assessee is dismissed. ITA No. 175/Chd/2014 108. In this appeal assessee has raised various grounds : Issue No. 1 - Denial of 100% deduction on account of subs....
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.... ground of appeal. Since assessee has already agreed for the addition therefore assessee cannot be said to be aggrieved about this addition and therefore same was not even appealable as the assessee cannot be said to be aggrieved by such order which is made on the basis of concession. In this regard reference may be made to the decision of Hon'ble Punjab & Haryana High court in the case of Banta Singh Kartar Singh Vs. CIT 125 ITR 239. Therefore we find nothing wrong in the order of Ld. CIT and confirm the same. 115. In the result appeal of the assessee is dismissed. 176/Chd/2014 116. In this appeal the assessee has raised various grounds. However, it was pointed out that only two disputes are involved namely : Issue No. 1 - Denial of 100% deduction on account of substantially expanded unit. Issue No. 2- Denial of deduction under section 80IC on account of Technical know how rendered by its partner and reducing the claim 117. Issue No. 1-Since the issue as well as contentions remain the same as has been decided by us in case of M/s Hycron Electronics Vs. ITO, Himachal Pradesh in ITA No. 798/Chd/2012in vide para no. 22-49. Following the same, we decide this i....
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....M/s Pranav Associates due from 31/03/2007. The amount was received on 01/03/2011 i.e; in assessment year 2011-12. The AO was of the view that assessee shall have charged interest on the same. In response to the query it was submitted that advance was outstanding from 2007-08 and no business transaction was carried out after that date. However, no adverse inference was taken in Assessment year 2007-08, 2008-09 and 2009-10 where assessments were completed under section 143(3). Further it was a trade advance and no interest could have been charged. 129. On appeal the action of AO was confirmed by the Ld. CIT(A). 130. Before us Ld. Counsel for the assessee submitted that it was a case of trade advance and therefore no interest could have been charged in any case no disallowance was made in the earlier assessment year which were completed under section 143(3) therefore our view should not have been taken in this year. 131. On the other hand Ld. DR supported the order of Ld. CIT(A). 132. After considering the rival submissions we agree with the submissions of Ld. Counsel for the assessee firstly because it is a case of trade advance and therefore it was not necessary to charg....