2016 (2) TMI 1279

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....ircumstances of case and in law, the assessee company was entitled to deduction u/s 80lC of Income Tax Act, 1961 @ 100% of profit derived from the industrial undertaking and the CIT(A) and the assessing officer has erred in restricting the deduction to 30%. The alleged reasons giving by the A.O. and CIT(A) for restricting the deduction to 30% are erroneous. 4. On the facts and circumstances of case and in law, the Commissioner of Income Tax (Appeal) erred in confirming the action of Assessing Officer of not allowing deduction u/s 80lC on Interest income of Rs. 35,44,359/-. 5. On the facts and circumstances of case and in law, the Commissioner of Income Tax (Appeal) erred in confirming the action of Assessing Officer of treating the interest income of Rs. 35,44,359/- as income from other sources instead of business income. 6. The appellant craves leave to add one or more ground of appeal or to alter / modify the existing ground before or at the time of hearing of appeal." 2. Facts of the case as narrated from paras 2.1 to 2.6 of Assessing Officer's order is extracted hereunder for ready reference. 2.1 "The assessee is a Limited company incorpor....

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....ve years. 3.9. The submission of the Ld.Counsel regarding the assessee fulfilling all the conditions claiming deduction and the claim having been allowed by the department since Assessment Year 2004-05 is well taken. Even during the instant year, the claim is not questioned for non-fulfillment of statutory conditions. What is being questioned is the claim @ 100% of profits for the seventh Assessment Year. 3.10. The assessee is claiming that substantial expansion has been completed again during the A.Y. 2009-10 resulting in increase of installed capacity of the unit. Since the substantial expansion is completed again therefore, the initial Assessment Year is being refixed at Assessment Year 2009-10. This action of the assessee, claiming that substantial expansion can be undertaken twice and initial Assessment Year can be refixed again during the period of ten years is neither in conformity with the letter nor with the spirit of the legislature. 3.11. For the AY 2009-10 which was sixth year for the claim of deduction u/s. 80IC, the AO after detailed discussions vide assessment order dated 19.12.2011 rejected the assessee's claim of deduction @100% in the si....

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.... entirly different. The assessee's claim has been made under a correct section according to it, it is found to be not allowable in law. Hence, the decision relied on by the assessee isn ot supporting its case." 3.12 In view of the above discussions, the deduction u/s 80 IC is restricted to 30% of profits of the instant Assessment Year. The assessee made the claim of deduction @ 100% of profits in the seventh year while it knew fully well that it was eligible for deduction @ 30% of the profits. Therefore, I have reasons to believe that the assessee furnished inaccurate particulars of income. Accordingly proceedings u/s 271(1)(c ) of the Act are being initiated separately for furnishing inaccurate particulars of income." 4. Aggrieved with the aforesaid order of the AO, assessee appealed before the Ld. CIT(A) who vide impugned order dated 22.2.2013 upheld the order of the AO on the issue of dispute and dismissed the appeal filed by the Assessee. 4.1 Against the order dated 22.2.2013 passed by the Ld. CIT(A), assessee is in appeal before the Tribunal. 5. First we take up the ground no. 4 & 5 raised by the assessee, in these grounds the grievance of the assessee is that Ld. ....

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....ions specified in the section; (b) that there is substantial expansion during the year as per requirement of the section. 10.4. The only dispute that arises for our consideration is the interpretation of the term "initial assessment year" and whether the same comes with any restriction. The Revenue seeks to take the color from the object of introducing Section 80-IC. The A.O. referred to policy of the government for giving incentives to the State of Uttaranchal and Himachal Pradesh. It is well settled that external aids should not be taken for the purpose of interpreting the Statute, when the language of the Section is clear and unambiguous. A plain reading of Sec.80-IC(8)(v) which defines the term "initial assessment year" read with Sec.80-IC(8)(ix) which defines the term "substantial expansion" makes it clear that there is no restriction or bar on more than one substantial expansion being undertaken by an assessee. In our view, a unit can undertake any number of substantial expansions, in the absence of any specific restriction in the Section. There is no suggestion in the language of the section that incentive u/s 80 IC is not available if the assessee substantially exp....

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....y be. Thus there is no evergreening of the provisions. The assessee cannot claim the said deduction for a total period exceeding 10 years. The deduction could be allowable only for the balance period of 5 years including this Assessment Year 2009-10. Only the rate of deduction goes up. 10.7. The Chandigarh "B" Bench of the Tribunal in the case of M/s S.R.Paryavaran Engineers P.Ltd. (supra) was considering a case where the assessee originally claiming deduction u/s 80 IB(iv) of the Act from the A.Y. 1999-2000. For the first 5 years it had claimed exemption of 100%. Thereafter it undertook substantial expansion and claimed deduction u/s 80 IB(iv). The AO rejected the same and observed that benefit could be availed u/s 80 IC and as the substantial expansion was less than 50% of the value of plant and machinery the claim is to be rejected. The Tribunal observed that the assessee is entitled to deduction u/s 80-IC. It held that mere mention of a wrong Section would not disentitle the assessee to claim the above said deduction. To our mind this case law is not directly on the point. 11. In view of the above discussion, as on a plain reading of the section and interpreta....