TaxTMI 
TaxTMI 
2018 (9) TMI 1459
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....ction in 2005 and was eligible to claim deduction of its profits u/s 80IC of the Act , with the initial assessment year for the said purpose being A.Y. 2008-09. The assessee had claimed 100% deduction from the profits in the first five assessment years between A.Y 2008-09 to A.Y 2012-13. The impugned year was the 6th year of claiming deduction under section 80IC of the Act and the assessee had again claimed deduction @ 100% from the eligible profits claiming that substantial expansion to the existing plant and machinery had been made by it. The assessee relied upon the judgement of the Hon'ble ITAT, Delhi in the case of Tirupati LPG Industries Ltd. vs. DCIT to interpret the term 'substantial expansion' and 'initial assessment year'. The Assessing Officer elaborately discussed the issue in the assessment order relying upon the decision of Hon'ble ITAT, Chandigarh in the case of M/s Hycron Electronics, Baddi Solan vs. ITO ward-(2), Baddi, in ITA No. 798/Chd/2012. and distinguishing the judgement in the case of Tirupati LPG Industries Ltd, and restricted the claim of the deduction to the extent of 30% of the eligible profits. 3. The matter was carried in ....
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....ction @ 100% of profits beyond the stipulated period of five years is allowable. The relevant findings of the Hon'ble Apex Court are as under: 14. A gist of the legislative history and purpose behind the insertion of Section 80-IA, 80-IB and 80-IC has already been mentioned above. We have to keep in mind that these cases are confined to Section 80-IC alone. As mentioned above, subsection (2) of Section 80-IC provides for tax benefit to those undertakings or enterprises which had set up their manufacturing units in certain specified areas including State of Himachal Pradesh to which this case is belonged. 15. It also gives benefit to these undertakings and enterprises which have undertaken substantial expansion during the periods mentioned therein. As there is no dispute that all these assessees are covered by the provisions of sub-section (2), that aspect need not be stated in detail. We, thus, reproduce those portions of the provision which are relevant for our discussion: "S.80-IC. Special Provisions in respect of certain undertakings or enterprises in certain special category States.- (1) Where the gross total income of an assessee includes any ....
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....profits and gains under Section 80-IC of the Act. No other provision is involved. This section makes special provisions in respect of certain undertakings or enterprises in certain special category States. Section 80-IC was inserted by the Finance Act, 2003 w.e.f. April 1, 2004. As per this provision, certain undertakings orenterprises in certain special category States are allowed deduction from such profits and gains, as specified in sub-section. (3) of Section 80-IC. The provisions of Section 80-IC provided deduction to manufacturing units situated in the State of Sikkim, Himachal Pradesh and Uttaranchal and North-Eastern States. The deduction was provided to new units established in the aforesaid States, and also to existing units in those States if substantial expansion was carried out. The deduction was available @ 100% for ten Assessment Years for the units located in North-Eastern and in the State of Sikkim and for the units located in Himachal Pradesh, the deduction was available @ 100% for five years and @ 25% for next five years. 19. In the instant case, we are concerned with the assessees who had established their undertakings in the State of Himachal Pradesh. ....
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.... decided on May 18, 2018). However, a fine distinction needs to be noted between the two sets of cases. In Mahabir Industries, the assessees had availed the initial deduction under a different provision, namely, Section 80-IA of the Act, i.e. by fulfilling the conditions mentioned in sub-section (4) of Section 80-IA. Those conditions are altogether different. Deduction in respect of profits and gains under the said provision is admissible when these profits and gains are from industrial undertakings or enterprises engaged in infrastructure development etc. Even this availment started at a time when Section 80-IC was not even on the statute book. As mentioned above, Section 80-IC was inserted by the Finance Act, 2003 with effect from April 01, 2004. The assessees in those cases had started claiming and were allowed deductions from the Assessment Years 1998-99 and 1999-2000 under Section 80-IA and from the Assessment Year 2000-01 to Assessment Year 2005-06 under Section 80IB of the Act. The deduction was, thus, claimed by the assessees in those appeals under the new provision i.e. Section 80-IC on fulfilling conditions contained in sub-section (2) of Section 80-IC f....