TaxTMI 
TaxTMI 
2020 (6) TMI 427
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.... Ld. Asst. Commissioner of Income Tax on wrong interpretation of substantial expansion and initial Assessment Year wrongly and arbitrarily restricted the claim of deduction U/s. 80IC at Rs. 10172628/- being 25% of the total claim as against eligible claim of deduction of 100% of the total income of Rs. 37118499/- and the Ld. CIT(A) erred in confirming the action of the Assessing officer inspite of the fact that similar claim of deduction @100% was allowed in earlier Assessment Year by Hon'ble ITAT Kolkata Bench in Assessment Year 2013-2014 & 2014-2015. 3. For that in view of the facts and circumstances of the case the appellant had fulfilled all the criteria for claiming deduction U/s. 80IC of the IT Act, 1961 @ 100% of the profit on making substantial expansion in the plant & machinery as provided in Section 80IC(8)(IX) of the IT Act, 1961, the Ld. CIT(A) ought to have deleted the addition in full instead of confirming the action of the Assessing officer. 4. For that in view of the facts and circumstances of the case the Ld. Assessing officer failed to compute Book profit U/s. 115JC of the IT Act, 1961 and taxed and allowed set off of tax credit U/s. 115JD and th....
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....tial expansion as per the provisions of section 80 IC of the Income Tax Act 1961, but on appeal the learned CTT(Appeal) vide his order dated 31th May 2016 in Appeal No. 347/CIT appeal- 09/Circle31/2015-16/Kolkata was pleased to allow deduction @ 100% of the profit. Audit Report in form No. 10CCB has already been furnished on 30th August, 2016. If any further details and or explanation is required in the matter the same will be furnished accordingly " 6. The details submission and explanation filed in AY 2014-15 by the assessee before the Assessing Officer is reproduced below: 1. As per sub-section (2) of Section 80IC deduction under this Section is available to any undertaking or enterprises in the following two categories: i) The undertaking or enterprises has begun or begins to manufacture or produce any article or thing during the period 07 01.2003 to 01.04.2012. OR ii) The undertaking which manufacture or produce any article or thing and undertakes substantial expansion during the period 07.01.2003 to 01.04.2012. 2. A bare reading of provisions of sub-section (2) would reveal that the deduction under the aforesaid two categories i....
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....as under: "Substantial expansion means increase in the investment in the Plant & Machinery by at least 50% of the book value of Plant & Machinery (before taking depreciation in any year) as on the 1st day of the previous year in which the substantial expansion was undertaken." 10. The book value of the Plant & Machinery before taking depreciation in any year as on the 1st day of the previous year in which substantial expansion took place was Rs. 66110/ - and value of the increased in the Plant & Machinery in the year of substantial expansion was Rs. 440026/- which is more than 50% of the book value of the Plant & Machinery as provided in Section 80IC(8)(IX) of the Income Tax Act, 1961. 11. The Tax Audit Report in Form 10CCB was also furnished in AY 2012-2013 and 100% claim of deduction u/s 80IC was allowed which was the 5th year of the business on substantial expansion made as per the Provision of Section 80IC of the IT Act, 1961 @100%. Thus, we have correctly claimed deduction U/s. 80IC of the IT Act, 1961 @ 100% of the profit as in view of the definition of initial Assessment Year and substantial expansion we are entitled to claim 100% deductio....
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....w of the above, the appeal of the assessee is dismissed." 9. Aggrieved by the order of ld. CIT(A), the assessee is in appeal before us. 10. The ld. Counsel for the assessee has relied on the order of the authorities below and on the other hand the ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. 11. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We note that the appellant is the proprietor of M/s. Electron Automates who is engaged in the business of designing and developing innovative electrical and electronic control gear and the factory is situated in Himachal Pradesh. The business activity in the proprietorship firm Electron Automates commenced operation on 26.05.2007 and as per the Provision of Section 80IC of the IT Act, 1961 the business income was eligible for deduction U/s. 80IC of the IT Act, 1961....
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....rovided in the Act and having fulfilled all the condition for claiming deduction @ 100% for further 5 years the appellant had claimed a sum of Rs. 37118499/- as deduction U/s. 80IC of the IT Act, 1961 for which Audit report in Form No 10CCB was also furnished. In Assessment Year 2013-2014 which was the 6th year of the production the appellant had claimed 100% deduction U/s. 80IC of the IT Act, 1961 but the AO had allowed 25% of the total claim U/s. 80IC of the IT Act, 1961. The Ld. CIT(A) vide its order dt. 31.05.2016 in Appeal No - 347/CIT(A)-9/Cir-31 /2015-16/Kol allowed the appeal and directed to allow deduction U/s. 80IC @ 100% of the total claim. The Ld. Assessing officer failed to follow the direction given in Assessment Year 2013-2014 and again allowed claimed U/s. 80IC @ 25% of Rs. 40690511/- i.e. Rs. 10172628/-as against the claim of 100% of the profit made by the industrial unit amounting to Rs. 37118499/- and the addition made needs to be deleted in full. The Ld. Assessing officer has relied upon certain ITAT decision while making addition U/s. 80IC of the IT Act, 1961 which is not applicable and the appellant submits that the similar issue involved in various case....
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....long with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We direct the Assessing Officer to compute the book profit u/s 115JC of the Act and allow the set off of tax credit u/s 115JD for taxes paid by the assessee in earlier years on book profit in accordance with law. Statistical purposes the additional grounds raised by the assessee is allowed. 16. Before parting, it is noted that the order is being pronounced after 90 days of hearing. However, taking note of the extraordinary situation in the light of the Covid-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Co- ordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JCB Limited in ITA No. 6264/Mum/2018 and ITA No. 6103/Mum/2018 for A.Y. 2013-14 order dated 14.05.2020. 17. In the result, the appeal of the assessee is partly allowed. Order pronounced in the Court on 12.06.2020 ============= Document 1 Similar issue was involved in AY 2013-14 & 2014-15 where the claim of 100% exemption was denied ....
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....n under any other Section, contained in Chapter VIA or Section 10A or 10B of the Act (Section 801B(5)) It is also the submission of the Ld. AR that the Delhi Benches of ITAT held that even if an existing unit which is claiming deduction U/s. 80IC of the Act undertakes first substantial expansion then also the year of completion of the substantial expansion will be the initial year, thereby held that the assessee is entitled to avail deduction U/s. 801C of the Act. In the present case the AO denied the deduction Uls. 80IC of the Act to the assessee on the ground that the assessee availed such deduction from AY 2008-09 being initial assessment year for availing deduction U/s. 80IC of the Act upto 2013 for five years, and he was of the opinion that the ITA No 1637/Kol/2016 Sri Umang Goenka AY 2013-14 assessee is not entitled to claim deduction @ 100% U/s. 80IC for the AY under consideration i.e. 2013-14. The AO found that from the tax audit report that the assessee started conducting its business from 26.05.2007, i.e. 2008-09 and the claim of deduction @ 100% is available for five years i.e. AY 2012-13 and the assessee is entitled to claim ....