2014 (8) TMI 1078

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....er 'the Act'). 3. Brief facts of the case are that the AO noted that assessee established a new unit during the Assessment Year 2004-05 and accordingly claimed deduction u/s 80IC. However during the Assessment Year under consideration it has claimed that it has undertaken substantial expansion and therefore claimed 100% deduction u/s 80IC. The AO denied the claim by holding that ld CIT(A), Dehradun has upheld the disallowance in the case of M/s. Tirupati LPG Industries Ltd. Therefore assessee preferred an appeal by the before the ld. CIT(A) who was pleased to confirm the disallowance and as such the assessee is in appeal. The ld counsel brought to our notice that the disallowance upheld by the ld CIT(A) in the case of M/s. Tirupati LPG I....

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.... 10.3 There is no dispute on the fact that (a) the assessee is entitled to exemption U/S 80 IC of the Act ie. that the assessee has satisfied all the conditions specified in the section; (b) that there is substantial expansion during the year as per requirement of the section 10.4 The only dispute that arises for our consideration is the interpretation of the term "initial assessment year" and whether the same comes with any restriction The Revenue seeks to take the color from the object of introducing Section 80-IC. The A.O. referred to policy of the government for giving incentives to the State of Uttaranchal and Himachal Pradesh. It is well settled that external aids should not be taken for the purpose of interpreting the Stat....

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....100% deduction of profits and gains for a period of 5 years commencing from such initial Assessment Year, and thereafter the % of deduction from profits come down The term "initial year" has been defined, as a year in which substantial expansion is completed. There is nothing to suggest that there cannot be a second initial year if a second substantial expansion is completed. Even if an existing unit which is claiming 80- IC, undertakes first substantial expansion then also the year of completion of the substantial expansion will me "initial year". If the literal meaning of the term "initial assessment year" is to be taken, then there is no requirement of defining this term in the section. We have to go by the language of the section. ....