2021 (4) TMI 1191

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... that :- "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by AO by disallowing the deduction u/s 80-IC of Rs. 3,85,61,355/-, ignoring the fact that once an initial assessment year had been determined for a claim of deduction (as made by the assessee), then there cannot be second initial assessment year for a claim under same section by the same undertaking. If such an interpretation is made that would not only result into an absurdity but absolutely an improbable and unworkable situation. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made u/s 80-IC ignoring the fact that the interpret....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....der this section, where the total period of deduction inclusive of the period of deduction under this section, or under the second proviso to sub-section (4) of section 80-IB or under section 10C, as the case may be, exceeds ten assessment years. 4. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in holding that 100% deduction in section 80-IC would be available to the assessee after completing 5 years if the assessee substantially expands its undertaking as held by Hon'ble Gujrat High Court in the case of M/s Anand Food & Dairy Products vs. ITO 394 ITR 0531 inter-alia that in case of deduction u/s 80-IB, deduction would be available to the assessee 25% after completion of 5 years. The prov....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ts, cosmetic items and toiletry goods under the name and style of M/s Vanesa Cosmetics at Khasra No. 196/186/1113, Village, Joharan, Trilok Pur Road, Tehsil Nahan, Distt. Sirmor (known as Kala AMB, Industrial Area), Himachal Pradesh, duly notified industrial area vide Notification No. SO1269(E) dated 04.11.2003 for the purpose of section 80IC of the Income-tax Act, 1961 (for short 'the Act') . Assessee filed return of income claiming total income of Rs. 37,66,522/- which was subjected to scrutiny assessment. Assessing Officer (AO) made addition of Rs. 3,85,61,355/- while making disallowance under section 80IC of the Act by restricting the same to 25% instead of 100% claimed by the assessee on the ground that 100% deduction u/s 80IC is avail....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....preme Court in the case of Principal Commissioner of Income tax, Shimla Vs. Aarham Softronics (2019) 412 ITR 0623 and order passed by the coordinate Bench of the Tribunal in the case of Tirupati LPG Industries Ltd. Vs. DCIT (supra) (2014) 151 ITD 0001. GROUNDS NO.1, 2, 3 & 4 7. Undisputedly assessee has set up its business of manufacturing of perfumes, etc. in the name and style of M/s Vanesa Cosmetics at Kala AMB, Indl. Area duly notified for the purpose of section 80IC. It is also not in dispute that the assessee has started commercial production in 2007-08 and successfully claimed deduction u/s 80IC for 5 years till 2012-13 and allowed as such. It is also not in dispute that in the subsequent assessment years viz. 2014-15, 2015-16,....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nsion carried out as per clause (ix) of sub section 8 of section 80IC within the aforesaid period of 10 years the said previous years in which the substantial expansion is undertaken would become initial assessment year and as such entitled for 100% deductions of profits and gains. Operative part of the judgment (supra) is extracted for ready perusal as under: "a) ..... b) An undertaking or an enterprise which had set up a new unit between 7th January, 2003 and 1st April, 2012 in State of Himachal Pradesh of the nature mentioned in clause (ii) of sub-section (2) of Section 80-IC, would be entitled to deduction @ 100% of the profits and gains for five assessment years commencing with the 'initial assessment year'. For th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....has availed deduction u/s 80IC for a period of 5 years @ 100%, it would be entitled to deduction on substantial expansion for remaining five assessment years @ 25%/30%. However, Hon'ble Supreme Court in case of Aarham Softronics (supra) in the preceding para after duly discussing the decision rendered by Hon'ble Supreme Court in case of Classic Binding Industries (supra), reached the conclusion that when the assessee has carried out substantial expansion in the existing unit immediately on completion of first five years i.e. FY 2011-12 and duly complied with the conditions laid down in clause (ix) sub-section 8 of section 80IC, it is entitled for deduction u/s 80IC for the year under assessment. So, we are of the considered view that ld. CI....