TaxTMI 
TaxTMI 
2016 (3) TMI 1239
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....ellate Tribunal was right in law in holding that the assessee is entitled to deduction of 25 per cent. and not 100 per cent. under section 80-IB(11A) as claimed by the assessee ? (3) Whether in the facts and circumstances of the case the Income- tax Appellate Tribunal was right in law in not appreciating the fact that initial assessment year would be 2005-06 as deduction to the said effect was available to the assessee by virtue of amendment in the section by the Finance Act, 2004, with effect from April 1, 2005 ? 2. The assessment years are 2007-08, 2008-09 and 2009-10. The appellant assessee is engaged in the business of processing, preservation and packing of vegetables and fruits. For all the three years under appeal, the assessee claimed deduction under section 80-IB(11A) of the Act at 100 per cent. of the profits and gains of the business of processing, preservation and packaging of fruits and vegetables. The Assessing Officer, while accepting the assessee's claim of eligibility under section 80-IB(11A) of the Act, was of the view that the assessee was entitled to deduction at the rate of 25 per cent. and not 100 per cent. The assessee admittedly had commenced....
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.... deriving profit from the business of processing, preservation and packaging of fruits and vegetables with effect from April 1, 2005 and hence, the appellant is entitled to the benefit of the said provision for a consecutive period of ten years from the coming into force of the said provision. Therefore, the authorities below were not justified in holding that the ten consecutive years are required to be computed from the date when the assessee commenced the business and not from the date when the provision was made applicable to the assessees like the appellant. In support of his submission, the learned counsel placed reliance upon the decision of the Karnataka High Court in the case of Ace Multi Axes Systems Ltd. v. Deputy CIT [2014] 367 ITR 266 (Karn) ; [2014] 49 taxmann.com 168 (Karn), wherein the court has held that while there is no express provision indicating as to what would be the position if the small scale industry ceases to be a small scale industry during the period of ten years, if one keeps in mind the object of the legislature providing for these incentives and when a period of ten years is prescribed, then that is the period which is required for any industry to s....
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....or vegetables came into force with effect from April 1, 2005. The Tribunal, however, took note of the fact that the expression "initial assessment year" has already been defined in section 80-IB(14)(c) of the Act and that as per the definition, the initial assessment year for an undertaking engaged in the business of processing, preservation and packaging of fruits or vegetables means the assessment year relevant to the previous year in which the undertaking begins such business. Admittedly, the assessee has begun the business of processing, preservation and packaging of fruits and vegetables with effect from June 2, 2001. Therefore, the assessment year relevant to previous year April 1, 2001 to March 31, 2002 would be the initial assessment year. The Tribunal, accordingly, agreed with the finding of the lower authorities that the initial assessment year was assessment year 2002-03 and that the assessee would be entitled to 100 per cent. deduction only for the first five years including the initial assessment year which would last up to assessment year 2006-07 and thereafter, the assessee would be entitled to 25 per cent. deduction for the next five years. 5. In the aforesaid ba....
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....ins of an undertaking deriving profit from the business of processing, preservation and packaging of fruits and vegetables for ten consecutive years beginning with the initial assessment year. "Initial assessment year" has been defined under section 80-IB(14)(c)(iv) of the Act to mean in the case of an undertaking engaged in the business of processing, preservation and packaging of fruits or vegetables or in the integrated business of handling, storage and transportation of foodgrains, the assessment year relevant to the previous year in which the undertaking begins such business. Thus, in terms of the definition of initial assessment year as defined under section 80-IB(14)(c)(iv) of the Act, the initial assessment year is the assessment year relevant to the previous year in which the undertaking begins such business. Therefore, the appellant assessee would be entitled to the benefit of deduction under section 80-IB(11A) of the Act with effect from initial assessment year namely, the assessment year relevant to the year in which it commenced its business, that is, the assessment year 2002-03. However, during the assessment year 2002-03, the provisions of section 80-IB(11A) of the A....