TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 1459
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.... Act,1961,(hereinafter referred to as "Act") to 30% of the eligible profits, as against 100% claimed by the assessee on account of substantial expansion carried out by it. 2. Brief facts relating to the issue are that the assessee is engaged in the manufacturing of pharmaceutical formulations at Baddi in Himachal Pradesh. The industrial undertaking of the assessee was installed and commenced the production 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 deductio....
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....mber of substantial expansion, in the absence of any specific restriction in the section. The Ld. Assessing Officer's GBPt Worthy CIT (A)'s failed to appreciate the fact that the assessee has done substantial expansion during the year and accordingly it is entitled for 100% deduction of its profits u/s 801C of the Act. But the Ld. A.O. proceeded to add back the sum without giving any proper opportunity and making the assessment in haste. The Id. AO & worthy CIT(A) had ignored the judgement of Hon'ble IT AT Delhi in the case of Tirupati LPG Industries Ltd. vs. DCIT, Cirlce 22014 (1) TMl 1689 & Hon'ble Supreme court in the case of Baja Tempo (1992 (4) TMl 4Supreme Court, Gwalior Rayon Silks Mfg. Co. Ltd. (1992 (4) TMl 3- Sup....
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....nits 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 profits and gains derived by an undertaking or an enterprise from any business referred to i....
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....s and gains for five assessment years commencing with the initial assessment years and, thereafter, 25% (or 30% where the assessee is a company) of the profits and gains for next five years. The deduction is limited to a period of 10 years. 17. In this backdrop, the question is as to whether these assessees, who had availed deductions @ 100% for first five years on the ground that they had set up a manufacturing unit as prescribed under sub-section (2) of the Act, can start claiming deductions @ 100% again for next five years as they had undertaking "substantial expansion" during the period mentioned in subsection (2)? The answer has to be in the negative for the following the reasons: 18. We are dealing with the deductions in respect o....
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.... Year. Another significant feature under sub-section (3) is that the deduction allowable is 100% of such profits and gains from an undertaking or an enterprise for five Assessment Years commencing with the initial Assessment Year and thereafter the deduction is allowable at 25% (or 30% where the assessee is a company) of the profits and gains. Cumulative reading of these provisions brings out the following aspects: (a) Those undertakings or enterprises fulfilling the conditions mentioned in sub-section (2) of Section 80-IC become entitled to deduction under this provision. (b) This deduction is allowable from the initial Assessment Year. "Initial Assessment Year" is defined in Section 80-IB(14)(c) of the Act. (c) The deduction is @ 10....
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....ision, 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 ....