TaxTMI 
TaxTMI 
2021 (6) TMI 882
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....onents. The return of income was filed declaring income at Nil after claiming deduction u/s 80IC of the Income Tax Act (herein after called 'the Act') amounting to Rs. 2,55,21,164/-. During the course of assessment proceedings, the Assessing Officer observed that the assessee had claimed deduction u/s 80IC of the Act @ 100% on the ground of substantial expansion. The year under appeal is the 7th year from the initial assessment year when the claim u/s 80IC of the Act was first made. The Assessing Officer was of the opinion that as per the provisions of section 80IC, the assessee was eligible for deduction only @ 25% and not 100%, although, it was the assessee's contention before the Assessing Officer that 100% deduction u/s 80IC had to be a....
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....ne was present on behalf of the assessee respondent when the appeal was called out for hearing. However, there is a communication on behalf of the assessee wherein written submissions have been enclosed and it has been prayed that the appeal may be decided on the basis of said written submission. Accordingly, we deem it fit to proceed with the hearing. 6.0 The Ld. SR. Departmental Representative (DR) submitted that the Ld. CIT(A) had erred in allowing the assessee's claim of deduction to the full as against the legally permissible deduction of 25% because the law was very clear on the issue that for persons other than the companies deduction was allowable only @ 25% after expiry of the initial five years. It was submitted by the Ld. Sr. D....
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....the initial Assessment Year in the case of substantial expansion from the year in which the substantial expansion has taken place for the purpose of claiming deduction at full rate subject to over of limit of 10 years. Although, the Department has vehemently opposed the order of the Ld. CIT(A) granting deduction @ 100%, we find no error either in law or facts having been committed by Ld. CIT(A) as the Ld. CIT(A) has only followed the interpretation as laid down by the Co-ordinate Bench of this Tribunal. Further, the Ld. Sr. DR also could not bring to our notice any order contrary to the order of the Co-ordinate Bench of this Tribunal in the case of Tirupati LPG Industries (supra). It will also be relevant here to reproduce the relevant port....
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.... 'substantial expansion' is stated in S.80-IC(8)(ix) requires investment in plant & machinery exceeding at least 50% of the book value of plant and machinery i.e. gross value before taking depreciation into account. If such substantial expansion is completed, then, for the purpose of this section, the Assessment Year relevant to the P.Y. in which such substantial expansion is completed becomes the initial assessment year. Once it becomes the initial Assessment Year consequently under sub section (3) the assessee would be entitled to 100% deduction of profits and gains for a period of 5 years commencing from such initial Assessment Year, and thereafter the % of deduction from profits come down. The term "initial year" has been defined, as ....
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....d 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 1C and as the substantial expansion was less than 50% of the value of plant ITA N0.2786/Del/2013 10 and machinery the claim is to be rejected. The Tribunal observed that the assessee is entitled to deduction u/s 8....