TaxTMI 
TaxTMI 
2019 (2) TMI 635
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....the power under section 263 of the Act cannot be invoked by CIT to substitute the alternative view. 4. On the facts and circumstances of the case, the order passed by CIT under section 263 of the Income Tax Act is unsustainable as power to revise can be invoked in the case of lack of enquiry, not in the case of inadequate enquiry. 5. (i) On the facts and circumstances of the case, the contention of the CIT that the deduction under section 80IC of the Act should be available to the assessee at the rate of 30% and not 100% is perverse and against the facts of the case. (ii) On the facts and circumstances of the case, the learned CIT has erred, both on facts and in law in raising the above contention by misinterpreting the provisions of section 80IC of the Act regarding the "substantial expansion". On the facts and circumstances of the case, the learned CIT has erred both on facts and in law in setting aside the matter to the file of the AO without giving a finding as to the error and prejudice caused to the revenue by the assessment order, and as such the order passed is bad in law and liable to be quashed. 2. Briefly stated, the facts of the case are that the assessee compa....
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....e assessment order was erroneous in as much as prejudicial to the interest of Revenue. Show cause notice u/s. 263 was issued to the assessee and finding the reply of assessee as against the provisions of the Act and various judicial pronouncements, the ld. Pr. CIT therefore, set aside the assessment order and directed the Assessing Officer to allow 30% deduction u/s. 80IC for the year under appeal after giving an opportunity to the assessee of being heard. Aggrieved, the assessee is in appeal before the Tribunal. 4. We have heard the submissions of both the parties and have gone through the entire material available on record. 5. A perusal of the record reveals that the primary issue to be decided in this appeal is whether under attending facts and circumstances of the case, the ld. Pr. CIT was justified in holding that in the year under consideration, the assessee was entitled to deduction @ 30% of the profits instead of 100% under the provisions of section 80IC of the Act. It is an admitted fact that the business unit of assessee was setup in 2004-05 and business activity was commenced in April, 2006. It is also not in dispute that as per the year of commencement of business, t....
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....stantial 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. Subsection (3), as noted above, mentions the period of 10 years commencing with the initial Assessment Year. Subsection (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 ....
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....re 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 80-IB 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 for the first time for the Assessment Year 2006-07. Thus, insofar as those cases are concerned, the initial Assessment Year under Section 80-IC started only from the Assessment Year 2006-07. In contrast, position here is altogether different. These assessees have availed deduction under Section 80-IC alone. Initially, they claimed the deduction on the ground that they had set up their units in the State of Himachal Pradesh and after availing the deduction @ 100% they want continuation of this rate of 100% for the next 5 years also under the same provision on the ground that they have made substantial expansion. As pointed out above, once the assessees had started claiming deduction under Section 80-IC and the initial Assessment Year has commenced within the aforesaid period of 10 years, there cannot be another initial Ass....