TaxTMI 
TaxTMI 
2021 (4) TMI 460
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....ic problem, appeal could not be filed in time. Considering the brief delay of six days, and explanation of the assessee, we condone the delay and proceed to decide the appeal of the assessee on merit. 4. Brief facts of the case are that the assessee-company has filed its return of income on 28.11.2015 declaring total income at Rs. 9,08,58,880/-. The assessee-company at the relevant time was engaged in manufacturing and trading of soft drink concentrate/mixes and bakery items under the brand name "Rasna". The assesseecompany was entitled to claim deduction under section 80IC of the Act. It has claimed exemption of Rs. 11,02,39,702/- being 100% profit earned from industrial undertaking located at Uttaranchal. The AO has passed an assessment order under section 143(3) and allowed deduction. The ld.Commissioner pursued the record and observed that exemption under section 80IC is admissible at the rate of 100% for initial five years i.e. from the year in which the assessee had commenced commercial production from the unit and claimed deduction. The ld.CIT further observed that the assessee had claimed exemption for the first time in the Asstt.Year 2010-11. Therefore, this exemption w....
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....ncrease in the Plant & Machinery in the year of substantial expansion is of Rs. 1,70,80,638/- which have been duly verified in A.Y.2011-12 which has also been passed after scrutiny. Now the controversy of claiming 100% deduction on account of substantial expansion stand concluded by the decision of Hon'ble Supreme Court in the case of Pr.CIT Vs. Aarham Softronics reported in (2019)412 ITR 623. In this decision, the decision in Classic Binding Industries has been held to be not laying down correct law. The head-notes of this decision are reproduced below: "INDUSTRIAL UNDERTAKING IN SPECIAL CATEGORY STATES-SPECIAL DEDUCTION-INITIAL. ASSESSMENT YEARDWEFINITION- UNIT-AVAILING AT 25 PER CENT. FOR NEXT FIVE YEARS- CARRYING OUT SUBSTANTIAL EXPANSION WITHUIN TEBN YEARS PERIOD-YEAR OF SUBSTANTIAL EXPANSION WOULD BE INITIA EAR FOR START OF 100 PER CENT- DEDUCTION-BUT TOTAL PERIOD OF DEDUCTION NOT TO EXCEED TEN YEARS-INCOME TAX ACT, 1961 S.80IC" PRECEDENT-SUPREME COURT-DECISION IN CLASSIC BINDING INDUSTRIES' CASE DOES NOT LAW DOW CORRECT LAW. INTERPRETATION OF TAXING STATUTES-INTENTION OF LEGISLATURE TO BE SEEN" Therefore the controversy o claiming ....
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.... view of the above, I am of the view that the assessment order passed by the A.O. u/s. 143(3) of the Act on 09/11/2017 is erroneous in so far as it is prejudicial to the interest of the revenue and is squarely covered under the Explanation 2(a) & 2(b) of Section 263(1) of the Act as already discussed. Accordingly, by virtue of the powers vested in me u/s. 263 of the Income Tax-Act, I hereby setaside the order u/s. 143(3) of the Act and direct the Assessing Officer to pass a, fresh assessment order after properly ascertaining the genuineness of claims keeping in view the discussions above and also after gathering and examining other suitable evidence / making field enquiries and verification as necessary on facts of the case and make the assessment denovo. 6. The ld.counsel for the assessee at the outset submitted that the issue in dispute is squarely covered by the latest decision of Hon'ble Supreme Court rendered in the case of Aarham Softronics, (2012) 102 taxmann.com 343 (SC). He contended that in this decision, Hon'ble Supreme Court has propounded that expression "initial year" provided in section 80IC is to be read in such a manner that on substantial expansion, the assesse....
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....on made by the assessee, therefore, there is nothing wrong in the order of the ld.CIT for directing fresh inquiry. 9. We have considered rival submissions and gone through the record carefully. We find that Section 263 has a direct bearing on the controversy therefore, it is pertinent to take note of this section. It reads as under:- "263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. [Explanation.- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by t....
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....m. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests prop....
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....the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 11. Before adverting to the facts of the present case, we would like to deliberate upon the position of law with regard to admissibility of deduction under section 80IC as expounded by the Hon'ble Supreme Court in the judgment rendered in the case of Aarham Softronics (supra). The question of law formulated by the Hon'ble Supreme Court reads as under: "Whether an assessee who sets up a new industry of a kind mentioned in sub-section (2) of Section 80-IC of the Act and starts availing exemption of 100 per cent tax under sub-section (3) of Section 80-IC (which is admissible for five years) can start claiming the exemption at the same rate of 100% beyond the period of five years on the ground that the assessee has now carried out substantial expansion in its manufacturing unit?" 12. After detailed discussion, the Hon'ble Court has laid down the following ratios: 24. The aforesaid discussion leads us to the following conclusions: (a) Judgment dated 20th August, 2018 in Classic Binding Industries case omitted to take ....
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....ssee, the company has made substantial expansion in the Asstt.Year 2011-12 and is eligible for the exemption under section 80IC of the Act at the rate of 100% for five years for the Asstt.year 2011-12. The Asstt.Year 2015-16 fall in those five years. The next grievance of the ld.Commission is that the AO has not carried out the investigation or verification about the claim of substantial expansion. The ld.CIT failed to take note of the facts that in the Asstt.Year 2011-12, the assessee has made substantial expansion. The assessment order in this assessment year was passed under a scrutiny assessment and the copy of this assessment order has also been placed on record by the assessee at page no.70 of the paper book. The ld.AO has passed an assessment order on 12.3.2014 under section 143(3). The detailed explanations were available in the income-tax record, because the addition of Rs. 1.70 crores in the plant & machinery would increase WDV of the assets, and accordingly, depreciation would have also been accounted for. Earlier value of the assets was reported by the assessee at Rs. 1.68 crores. It has made further addition of Rs. 1.70 crores in the gross block of assets. Hon'ble Delh....