TaxTMI 
TaxTMI 
2019 (8) TMI 1200
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the findings of the jurisdictional Hon'ble Income Tax Appellate Tribunal, Guwahati, in the appellant's own case for the immediately two preceding assessment years. Accordingly, it is prayed that the order may kindly be quashed / cancelled / set aside. 2. Without prejudice to the validity and the legality of the order as challenged above, on the facts and on the circumstances of the case, the Learned CIT(A) had grossly erred in treating the assessment year under appeal - that is assessment year 2014- 15 to be the 13th Year for claiming the deduction under section 80lE of the Act in respect of the Asbestos Unit; 3. Without prejudice to the validity and the legality of the order as challenged above, on the facts and on the circumstances of the case, the Learned CIT(A) had further erred in holding the Assessment Year 2002-03 to be the initial assessment year, for claiming the deduction under section 801E of the Act in respect of the Asbestos Unit; 4. Without prejudice to the validity and the legality of the order as challenged above, on the facts and on the circumstances of the case, the Learned CIT(A) had grossly erred in not appreciating the fact that the Assessing O....
X X X X Extracts X X X X
X X X X Extracts X X X X
....led an appeal before the Hon'ble High Court at Guwahati, and the appellant is filing cross appeal and also to keep the issue alive, the following further Ground is preferred - (i) That on the facts and on the circumstances of the case, the AO and the CIT(A) had grossly erred in not appreciating the fact that since the appellant had gone in for a substantial expansion in respect of both its units - including that of the asbestos unit also, during the previous year ended 31't March 2011, relevant to the assessment year 2011-12; (ii) That on the facts and on the circumstances of the case, the AO and the CIT(A) had grossly erred in not appreciating the fact that since the commercial production, pursuant to such substantial expansion, started on 28th February, 2011 - a fact which has not disputed by the AO and the CIT(A) - the appellant is fully eligible to its bona fide and legitimate claim for deduction under section 80lE of the Act, in the 4th. year of such "substantial expansion" for the previous year ended 31st March 2014, relevant to the assessment year 2014-15, which is under appeal, as under the provisions of section 80lE, there is no restriction, whatsoever, that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rned representatives state during the course of hearing that the sum and substance of the assessee's foregoing pleadings raises the sole issue of its deduction claim raised u/s 80IE of the Act involving total sum of Rs.9,56,84,571/-. This deduction claims involved assessee's two units i.e. steel and asbestors. There is hardly any dispute that the latter unit forms subjectmatter of the instant lis. The assessee's pleading and detailed paper book running into 37 pages made it clear that the very issue of sec. 80IE deduction pertaining to asbestors units itself had come up before the tribunal in preceding two assessment year(s) 2012-13 & 2013-14. Learned co-ordinate bench' order dated 07.06.2017 concluded that the "initial assessment year" in its case qua this unit involving sec. 80IE deduction had to be taken as assessment year 2008-09 as under:- "2. The only issue to be decided in these appeals is as to whether the ld CITA was justified in treating the Asst Year 2011-12 as initial assessment year for claim of deduction u/s 80IE of the Act, in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee company is engaged in the business of manuf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve of the period of deduction under this section, or under section 80IC or under the second proviso to sub-section (4) of section 80IB or under section 10C, as the case may be, exceeds ten assessment years. Based on this provision, the ld AO concluded that the total period of 10 assessment years commencing from Asst Year 2002-03 was already over in Asst Year 2011-12 in respect of the Asbestos Unit, the assessee was not entitled for any deduction u/s 80IE of the Act in respect of Asbestos Unit and accordingly disallowed the same. 3.3. The ld AO however, in the case of Steel Unit, observed that the said unit had fulfilled all the prescribed conditions as laid down in section 80IE(2) & (3) of the Act and Asst Year 2012-13 being the second year of claim for steel unit, he granted deduction u/s 80IE of the Act for the same for Asst Years 2012-13 and 2013-14, being the second and third year of claim of deduction. 4. The ld CITA observed that the main assertions of the ld AO in disallowing the claim of deduction are as under:- a) The initial year for claiming such deduction u/s 80IE would have been the year when the 'substantial expansion' first took place and not assessment year ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 4.2. The ld CITA observed that it is an undisputed fact that 'substantial expansion' of both the Asbestos as well as the Steel unit took place, which has been admitted and accepted by the ld AO. The ld AO while framing the assessment for the Asst Year 2011-12 u/s 143(3) after examining, the various approvals from various authorities, books of accounts, audit report in Form 10CCB and other relevant details had considered and accepted the claim for deduction u/s 80IE of the Act for both the units - Steel unit as well as Asbestos unit. It is clear that the ld AO was satisfied that the provisions of section 80IE(5) of the act was not applicable in the case of the assessee for both the units while framing the assessment for the Asst Year 2011-12, otherwise he would not have allowed such claim made before him and would not have considered the same to be the 'Initial assessment year' for both the units. He observed that the ld AO had himself while passing the assessment order for assessment year 2011-12 had considered the assessment year 2011-12 to be the 'Initial assessment year' as envisaged in sub-section (7) to section 80IE of the Act. Accordingly by applying the principles laid down....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Asst Year 2011-12 would be the 'Initial Assessment Year' for the Asbestos Unit and accordingly the years under appeal would only be 2nd and 3rd year of claim by the assessee and accordingly the ld AO erred in denying deduction to the assessee. But we find that the finding given by the ld AO in AY 2011-12 section 143(3) order is only in respect of substantial expansion carried out on 28.2.2011 relevant to Asst Year 2011-12 in Asbestos unit. This fact is evident from the audit report given in Form No, 10CCB which is placed on record before us, where in response to reply to Question No. 25, the chartered accountant had mentioned the date of substantial expansion in Asbestos Unit as 28.2.2011 by also mentioning the value of increase in plant and machinery in the year of substantial expansion to the tune of Rs. 7,55,44,483/-. Hence it would be incorrect to place reliance only on the assessment order for AY 2011-12 for deciding the 'Initial Assessment Year' for the entire Asbestos Unit. We find lot of force in the argument of the ld AR that substantial expansion was also carried out earlier in Asbestos Unit for which deduction was first allowed to the assessee by the ld AO in Asst Year ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and within the period specified in the said section; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Explanation - ............ (4) ................ (5) ............... (6) ............... (7) For the purposes of this section,- (i) "initial assessment year" means the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things, or completes substantial expansion; 5.1.1. From the bare reading of the aforesaid provisions, it could be concluded that deduction u/s 80IE of the Act would be eligible to an undertaking as and when substantial expansion is carried out by the assessee by making huge investment in plant and machinery resulting in installed capacity increasing by more than 25% as compared to the earlier year. For example, if an assessee had commenced the manufacturing of eligible articles say in Asst Year 2009-10 , deduction u/s 80IE of the Act is also allowed to him in that year treating Asst Year 2009-10 as the 'Initial Assessment Year'. Thereafter in Asst Year 2013-14, the undertaking carries out substantial expansion, then more libe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o include the expression 'or completes substantial expansion'. Hence the undertaking even if it involves in substantial expansion after 20 years from the date of its commencement and even if it had already enjoyed deduction u/s 80IE of the Act for 10 years, that would not disturb the fresh claim and allowability of deduction u/s 80IE for future 10 years i.e from the year in which substantial expansion has been undertaken. This in our considered opinion, would be the correct understanding of the provisions of section 80IE of the Act from its plain reading. 5.2. Looking at the issue before us in the light of the aforesaid provisions and example stated therein, the deduction u/s 80IE of the Act overlaps to the assessee from Asst Year 2011-12 onwards for the substantial expansion carried out in Asbestos Unit on 28.2.2011. It is not in dispute that the assessee has already been allowed deduction u/s 80IE of the Act from Asst Year 2008-09 onwards treating the same as 'Initial Assessment Year' for its Asbestos Unit. The substantial expansion carried out in Asbestos Unit in Asst Year 2011-12 makes the assessee eligible for fresh claim of 10 years treating AY 2011-12 as 'Initial Assessmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....80-IA further provides that the aforesaid deduction can be claimed by the assessee, at his option, for any ten consecutive assessment years out of fifteen years (twenty years in certain cases) beginning from the year in which the undertaking commences operation, begins development or starts providing services etc. as stipulated therein. Subsection (5) of section 80-IA further provides as under- "Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that subsection for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made". In the above sub-section, which prescribes the manner of determining the quantum of deduction, a reference has been made to the term 'initial assessment y....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... perused. It is submitted that the Hon'ble ITAT may consider the above cases and the Circular by also considering the averments of revenue in the aforementioned case laws for the present appeal as well. 5.6. In view of our aforesaid findings and respectfully following the aforesaid Circular issued by the CBDT and the decision of the Hon'ble Apex Court supra, we decide the issue before us in favour of the assessee. To summarise, we hold that the deduction u/s 80IE of the Act would be eligible to the assessee as follows:- For Asbestos Unit - Asst Year 2012-13 - 5th year of claim Asst Year 2013-14 - 6th year of claim For Steel Unit - Asst Year 2012-13 - 2nd year of claim Asst Year 2013-14 - 3rd year of claim Accordingly the Grounds raised by the Revenue for both the years are dismissed." 4. Mr. Sengupta at this stage seeks to crave out an exception in facts of the instant case. He submits that the assessee's asbestors unit started its business operation on 01.01.1978 followed by first, second and third expansions in assessment year 2002-03, 2008-09 and 2011-12; respectively. He then quotes hon'ble apex court's decision in PCIT vs. Aarham Softronics (2019) 102 taxmann....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (8) of Section 80-IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become 'initial assessment year', and from that assessment year the assessee shall been entitled to 100% deductions of the profits and gains. (d) Such deduction, however, would be for a total period of 10 years, as provided in sub-section (6). For example, if the expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five years. On the other hand, if substantial expansion is undertaken, say, in 8th year by an assessee such an assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes 'initial assessment year' once again. However, this 100% deduction would be for remaining three years, i.e., 8th, 9th and 10th assessment years." 5. Mr. Bhardwaj as well as Mr. Sengupta have taken a lot of pains to refer to sec. 80IE(5) of the Act in the nature of a non obstante clause that notwithstanding t....