AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 665
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....ts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals) gravelly erred in upholding the action of the Id. Assessing Officer who had made disallowance of Rs. 2,65,573/-by invoking the provisions of Section 36(l)(iii) of the Income Tax Act, 1961. 4. That in the facts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals) gravelly erred in upholding the action of the Id. Assessing Officer who had disallowed deduction under Section 80IC on miscellaneous income of Rs. 2,81,825/-. 5(a). That in the facts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals) gravelly erred in upholding the action of the Id. Assessing Officer who had made addition of Rs. 10,44,833/- by allowing the deduction under section 80IC of the Income Tax Act, 1961 @ 30% as against 100% claimed by the appellant. (b) That in the facts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals) gravelly erred in ignoring the judgment of Hon'ble Himachal Pradesh High Court in the case of M/s Stovekraft India vs. Commissioner of Income Tax. Even after judgment of Hon'ble Himachal Pradesh High Court in the case of M/s Stovekraf....
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....t for five years period. It was noticed by the A.O. that the assessee firm had again claimed 100% deduction against eligible profits in the impugned assessment year, i.e. A.Y 2011-12, which was the 7th year by claiming to have carried out substantial expansion during the year under consideration. The A.O. for the detailed reasons mentioned in the assessment order and following the decision of the ITAT Chandigarh Bench in the case of M/s Hycron Electronics Vs. ITO in ITA No.798/Chd/2012, held that the assessee was eligible for deduction u/s 80IC only @ 30% as against the claim of 100% made by the assessee. 4. The assessee went in appeal before the CIT(A) who allowed the assessee's appeal. 5. Aggrieved by the same, the Revenue has come up in appeal before us. 6. During the course of hearing before us, the Ld.Counsel for the assessee, at the outset itself, pointed out that the Hon'ble Apex Court has decided this issue in favour of the assessee in bunch of cases with the lead case being Pr.CIT, Shimla Vs. M/s Aarham Softronics in Civil No.1784 of 2019 dated 20.2.2019. 7. Ld.DR fairly conceded that the issue was settled in favour of the assessee by the above decision of the ....
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....on 80-IC. If that is the purpose of the legislature, we see no reason as to why 100% deduction of the profits and gains be not allowed to even those units who had availed this deduction on setting up of a new unit and have now invested huge amount with substantial expansion of those units." 9. The Hon'ble Apex Court thereafter concluded that a newly set up undertaking or enterprise in the State of Himachal Pradesh would be entitled to deduction @ 100% of the Act its profits for the first five years and even thereafter in the case of substantial expansion is carried out by it, then the assessment year relevant to the previous year in which substantial expansion is undertaken becoming the initial assessment year. That in any case, the period of deduction u/s 80IC of the Act would not exceed 10 years. The conclusion of the Hon'ble Apex Court at para 24 of its order is as under: "24. The aforesaid discussion leads us to the following conclusions: (a) Judgment dated 20th August, 2018 in Classic Binding Industries case omitted to take note of the definition 'initial assessment year' contained in Section 80-IC itself and instead based its conclusion on the definition contain....
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....of its profits thereafter on account of substantial expansion undertaken by it. 11. Since in the present case the fact that the assessee had undertaken substantial expansion in the impugned year is not disputed, the assessee, we hold, is entitled to claim deduction @ 100% of its eligible profits even if it has already claimed deduction of its profits at the said rate for first five years, in view of the law laid down by the Apex court in this regard in its decision in the case of M/s Aarham Softronics(supra). 12. We, therefore, uphold the order of the CIT(A) and dismiss the appeal of the Revenue." 5. The above order of the Tribunal passed in relation to the eligibility of deduction @ 100% u/s 80IC of the Act was in respect of the 7th year from the start / operation of manufacturing activity of the assessee. The findings given above are applicable for the assessment year under consideration also being the 8th year as it has been held that the assessee will be eligible for deduction @ 100% on account of substantial expansion subject to the condition that the total period of deduction u/s 80IC would not exceed to 10 years. In view of this, this issue is decided in favour of the ....