TaxTMI 
TaxTMI 
2018 (10) TMI 1001
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....15, Annexure A.3 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (in short, "the Tribunal") in ITA No.1007/Chd/2014, for the assessment year 2011-12, claiming following substantial questions of law:- i) "Whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that benefit of deduction under section 80IC @ 100% of profit was not available to units set up after 7.1.2003, on undertaking substantial expansion from the year of completion of substantial expansion? ii) Whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that units set up after 7.1.2003 would not be entitled to enlarged deduction under section 80IC of the Act @ 100% of profit, even on undertaking substantial expansion within the specified period? iii) Whether on the facts and in the circumstances of the case, the Tribunal erred in law in disallowing the benefit of substantial expansion under Section 80IC to the units that came into existence after 7.1.2003 by stating that initial assessment year can't be re-fixed for such units? iv) Whether on the facts and in the circumstances of the case, the Tribunal erred in law....
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....tion 80IC(8)(v) of the Act would be restricted to only one initial assessment year. Relying upon the notification of the Central Excise Department, the CIT(A) held that the assessee was eligible for deduction under Section 80IC of the Act only to the extent of 25% for the assessment year in question. Still not satisfied, the assessee filed an appeal before the Tribunal. Vide order dated 27.05.2015, Annexure A.3, the Tribunal held that the benefit of substantial expansion @ 100% deduction would not be granted to the existing units where the assessee had already availed the period of full deduction @ 100% in the earlier five years and in such a situation, the benefit @ 25% deduction would be available for the remaining period where the substantial expansion had taken place after 07.1.2003 and before 01.04.2012.Hence the instant appeals. 4. We have heard learned counsel for the parties. 5. Before adjudicating the issue involved in these appeals, it would be advantageous to reproduce the relevant statutory provision i.e. Section 80IC of the Act which reads thus:- "80-IC. Special provisions in respect of certain undertakings or enterprises in certain special category States-(1) Wher....
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....enth Schedule or commences any operation specified in that Schedule and undertakes substantial expansion during the period beginning- (i) on the 23rd day of December, 2002 and ending before the 1st day of April, 2012, in the State of Sikkim; or (ii) on the 7th day of January, 2003 and ending before the 1st day of April, 2012, 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 of the North-Eastern States. (3) The deduction referred to in sub-section (1) shall be- (i) in the case of any undertaking or enterprise referred to in sub-clauses (i) and (iii) of clause ( a) or subclauses (i) and (iii) of clause ( b), of sub-section (2), one hundred per cent of such profits and gains for ten assessment years commencing with the initial assessment year; (ii) in the case of any undertaking or enterprise referred to in sub-clause (ii) of clause (a) or sub-clause (ii) of clause ( b), of sub-section (2), one hundred per cent of such profits and gains for five assessment years commencing with the initial assessment year and thereafter, twenty-five per cent (or thirty per cent wh....
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....y the Central Government; (iv ) "Industrial Park" means such parks, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government; (v ) "Initial assessment year" means the assessment year relevant to the previous year in which the undertaking or the enterprise begins to manufacture or produce articles or things, or commences operation or completes substantial expansion; (vi ) "Integrated Infrastructure Development Centre" means such centres, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government; (vii) "North-Eastern States" means the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura; (viii) "Software Technology Park" means any park set up in accordance with the Software Technology Park Scheme notified by the Government of India in the Ministry of Commerce and Industry; (ix ) "substantial expansion" means increase in the investment in the plant and machinery by at least fifty per cent of the book value of plant and machinery (before taking depreciation in....
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.... or enterprises which were established, became operational and functional prior to 07.01.2003 and have undertaken substantial expansion between 07.01.2003 upto 01.04.2012, should be entitled to benefit of Section 80-IC of the Act, for the period for which they were not entitled to the benefit of deduction under Section 80-IB. (b) Such of those units which have commenced production after 07.01.2003 and carried out substantial expansion prior to 01.04.2012, would also be entitled to benefit of deduction at different rates of percentage stipulated under Section 80-IC. (c) Substantial expansion cannot be confined to one expansion. As long as requirement of Section 80-IC(8)(ix) is met, there can be number of multiple substantial expansions. (d) Correspondingly, there can be more than one initial Assessment Years. (e) Within the window period of 07.01.2003 to 01.04.2012, an undertaking or an enterprise can be entitled to deduction @ 100% for a period of more than five years. (f) All this, of course, is subject to a cap of ten years. [Section 80-IC(6)] (g) Units claiming deduction under Section 80-IC shall not be entitled to deduction under any other Section, contained i....
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....ailable @ 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. Sub-section (3), as noted above, mentions the period of 10 years commencing with the initial Assessment Year. Sub- section (6) puts a cap of 10 years, which is the maximum period for which the deduction can be allowed to any undertaking or enterprise under this section, starting from the initial Assessment 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 Sec....