TaxTMI 
TaxTMI 
2019 (9) TMI 864
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....heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in the assessee`s appeal in ITA No. 279/GAU/2018, in the case of M/s Charu Engineering Industries & Charu Innovation Department Industries for AY 2012-13, is taken as the lead case for deciding the above appeals en masse. 3. Grounds of appeals raised the assessee as per its lead case in ITA No. 279/GAU/2018 are as follows: - "(i). For that the ld. Commissioner of Income Tax (Appeals), Guwahati, is not legally justified disallowing 100% of the profits and gains derived out of the manufacture activities during the assessment year 2012-13 holding that the assessee has already availed the exemption u/s 80IB and 10C in the earlier periods prior to Assessment Year 2010-11 for 10 years. Hence, the assessee is not eligible u/s 801E after its expansion/modernization in its plant & machineries by further investing 133 % of its initial capital outlay in plant & machineries in the Financial Year 2008-09. The Id. Commissioner, of Income Tax has wrongly invoked the provisions of Sec. 801E(5) of the Income Tax Act, 1961 which is not applicable in this pres....
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.... of Sikkim during the period beginning on 1st April,2007 and ending on 31st March, 2017 and the benefit is applicable to existing undertakings undergoing substantial expansion during the prescribed period as mentioned in the said section. The impugned Order-in-Appeal is not sustainable in law as the impugned Assessment Order was not in accordance with the decision of the Hon'ble Apex Court decided in Civil Appeal No. 4765-4766 of 2018 in the case of Mahabir Industries Vs. Principal Commissioner of Income Tax, Shimla, wherein the law has been settled that appellants are allowed exemption u/s. 801C of the IT Act, 1961 from the date of undergoing substantial expansion for a period of 10 years. In the present case in hand the Id. Commissioner Appeals has not considered the law points applying has judicious mind. Hence, the demand for the AY 2012-13 is not sustainable in law and is liable to be set aside in the ends of justice. (V) For that the Ld. Commissioner (Appeals) committed an error in interpreting the provisions of sub-sec. 5 of Sec. 801E which supersedes the other conditions of Sec. 801E only for those undertakings availed benefits under the NEIIP, 2007 if the said undert....
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....25,60,390/- and claim of deduction u/s 80-IE in the case of M/s Charu Innovation Department and Industries at Rs. 87,60,893/-. Assessee has furnished copy of Tax Audit Report u/s 44AB in the case off both, M/s Charu Engineering Industries and M/s Charu Innovation Department and Industries, along with audited accounts. However, AO noticed that assessee has not furnished audit reports u/s 80-IC/80-IE in Form No. 10CCB for both proprietary concerns. 5. The AO noticed that M/s Charu Engineering Industries commenced commercial production w.e.f 26.12.1994 and has already exhausted the claim of deduction u/s 80-IB of the Act in the earlier assessment years. Thereafter, on the premise of having infused additional capital investment by more than 25% of theinitial investment in Plant & Machinery of Rs. 22,51,982/- in financial year 2008-09, assessee again claimed deduction under section 80-IE of the Income Tax Act, 1961 from assessment year 2009-10 onwards. The assessee is claiming deduction under section 80-IE on the pretext that it has made a 'substantial expansion' as defined in clause (iii) of sub-section (7) of section 80-IE of the Act. In doing so, assessee has failed to understand a....
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....mercial production within the 10 year period from the date of notification of NEIIPP-2007 will be eligible for incentives for a period of ten years from the date of commencement of commercial production. Here, refer the incentive clause under the NEIIPP-2007 Policy dated New Delhi the 1st April 2007 issued from file No. 10(3)2007-DBE-lI/NER, Government of India, Ministry of Commerce & Industry, Department of Industrial Policy and Promotion, incentives Clause No (VI) of the policy stated hereunder: "100% Income Tax Exemption will continue under NEIIPP-2007" And also refer the said Policy Serial No. 4 for wherein a directives had been, issued to all concern Ministries/Department of the Government of India to amend their, respective Act/Rules/Notification etc and issue necessary instruction giving effect to these decisions" The factory/production unit of M/s Charu Innovation Department & industries located at Thakuria Industrial Area, Chandrapur, Guwahati, had also been visited by the inspector of Income Tax 04.03.2015. The Inspector's Report dated 04.03.2015 had also been examined by AO. As per relevant report, the unit has a pucca structure but the concerned persons prese....
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....ergone 1st and 2nd substantial expansions on 10.12.2001 [A. Y .2002- 03] and on 02.05.2008 [A. Y .2009-10] respectively. A second proprietorship concern, M/s. Charu Engineering Innovation Department & Industries was further set up as a new industrial undertaking on 23.11.2011 [A. Y .2012-13]. On the above facts, it was held by the AO and CIT(A) that the period of deduction available for a span of 10yrs starting from the initial assessment year, being A Y .1995-96 was exhausted in A.Y.2004-05 and hence the assessee was ineligible for further deductions U/s.80IC/80IE beyond that period. The assessee on the other hand claimed further deduction of 10yrs from the date of 1st substantial expansion i.e. 10.12.2001 [A. Y .2002-03] U/s.80IC and was also under the impression that it would be eligible for deduction U/s.80IE for another span of 10yrs following its 2nd substantial expansion on 02.05.2008[A.Y.2009- 10). Before proceeding further, it is relevant to mention that the Hon'ble Apex Court judgment in M/s Dilip Kr. And company & Others lays down the rules of interpretation of a tax exemption provision / notification, hence the said judgment should be followed and deduction claimed by....
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....nd the prescribed cap of 10 years and, in the case of the Assessee, more so when the assessee had already availed deduction under section 80IB/10C earlier. We note that the contention of the assessee, before the Ld AO was that since its industrial undertaking had undergone substantial expansion during AY 2009-10 and therefore the said AY 2009-10 should be taken as the first year for claim of deduction under section 801E of the Act. However, ld DR submitted before us that assessee cannot claim deduction for more than 10 Years, in view of the bar/capping provided under section 80lE of the Act. The ld DR further submitted before us that the assessee shall not be entitled to claim deduction u/s 80IC and 80lE taken together for more than ten assessment years from the initial assessment year howsoever whether by way of commencement of the undertaking or the substantial expansion thereof taken together. Any other interpretation of this incentive section would only render the provisions of section 80IE(5) to be otiose.On the other hand, the contention of the Counsel is that the assessee was the proprietor of the above undertaking, which was newly set up during the above assessment year w.....
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....nt Promotion Policy, 2007 (NEIIP, 2007) and commenced its commercial production w.e.f. 02.05.2008 after undergoing substantial expansion in its plant & machinery. Copy of the North East Industrial Policy, 1997 and NEIIP, 2007 is enclosed in paper book page 29.The assessee availed benefit of Income Tax exemption in terms of Sec. 80-IA and 80IB and 10C in the earlier assessment years and availed benefit of exemption under Chapter VIA of the Income Tax Act 1961 and after undergoing substantial expansion of its existing plant and machinery and production capacity by investing more than 25 % of its existing capital investment in terms of NEIIP,2007 in the Financial Year 2008-09 . The other one M/s. Charu Innovation Department and Industries, a new Industrial Undertaking, established in the year 2011-12 and commenced its commercial production w.e.f 23.11.2011, engaged in production of polyethylene Water Storage Tank and other plastic articles such as, Dustbin, Traffic Signal Point and injunction moulded Item and moulded filter etc. We note that after implementation of North-East Industries Investment Promotion Policy (NEIIP), 2007, the Assessee undergone modernization of its unit M/s. C....
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.... starting from the initial assessment year. According to the definition of "initial assessment year" contained in section 80- IC(8)(c) , there can be an "initial assessment year", relevant to a previous year, in any of the following contingencies : (i) the previous year in which the undertaking or the enterprise begins to manufacture or produce article or things, or (ii) commences operation, or (iii) completes substantial expansion. The benefit of section 80-IC is, thus, admissible not only when an undertaking or enterprise sets up a new unit and starts manufacturing or producing articles or things. The advantage of this provision also accrues to existing units, if they carry out "substantial expansion" of their units by investing the required capital, in the previous year relevant to the assessment year. "Substantial expansion" is defined in section 80-IC(8)(ix) as 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 any year), as on the first day of the previous year in which the substantial expansion is undertaken. There can thus be another "initial assessment year" on the fulf....
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....shall be entitled to 100 per cent. deductions of the profits and gains. (iii) That such deduction, however, would be for a total period of ten years, as provided in section 80-IC(6) . For example, if the expansion is carried out immediately, on the completion of the first five years, the assessee would be entitled to 100 per cent. deduction again for the next five years. On the other hand, if substantial expansion is undertaken, say, in the eighth year by an assessee such an assessee would be entitled to 100 per cent. deduction for the first five years, deduction at 25 per cent. of the profits and gains for the next two years and at 100 per cent. again from eighth year as this year becomes the "initial assessment year" once again. However, this 100 per cent. deduction would be for the remaining three years, i.e., the eighth, ninth and tenth assessment years. Decision of the Himachal Pradesh High Court in STOVEKRAFT INDIA v. CIT [2018] 400 ITR 225 (HP) affirmed. Decision of the Punjab and Haryana High Court in ADMAC FORMULATIONS v. CIT [2018] 409 ITR 661 (P&H) reversed. In Classic Binding Industries' case [2018] 407 ITR 429 (SC) the court, on the basis of section 80-IB(14)....