TaxTMI 
TaxTMI 
2022 (6) TMI 1399
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....relevant grounds of appeal read as under :- 1. That the order of the learned Commissioner of Income Tax (Appeals) Shimla is defective both in law and facts of the case. 2. That the learned Commissioner of Income Tax (Appeals), Shimla is unjustified in upholding the order of the ld. Assessing Officer regarding disallowance of deduction amounting to Rs. 3,61,759/- claimed u/s 80IC of the I.T. Act, 1961 on account of exchange rate difference an cash discount which are derived from business eligible for deduction claimed u/s 80IC of the I.T. Act, 1961. This addition is uncalled for and deserves to be deleted. 3. That the learned Commissioner of Income Tax (Appeals), Shimla is unjustified in upholding the order of the ....
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....sessment year means the assessment year in which the undertaking completes the substantial expansion as done by the appellant in AY 2011-12 and there can be more than one initial assessment years as held by the Hon'ble Supreme Court in the case of Pr. CIT vs. Aarham Softronics (412 ITR 623). 6. That the learned Commissioner of Income Tax (Appeals), Shimla is unjustified in upholding the order of the ld. Assessing Officer regarding disallowance of expenditure amounting to Rs. 6,53,907/- as it has been incurred in due course of appellant's business. This addition is uncalled for and deserves to be deleted. 7. That any other ground may kindly be allowed to be taken at the time of appeal with due permission." 1. First we re....
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....year" cannot be accepted. As per the AO, the benefit of substantial expansion is available only to the existing units i.e. units that existed and were operational as on 07.01.2003 in order to make them eligible for 100% deduction under section 80IC for first five years and is not at all meant for units that came into being on or after the introduction of the Scheme i.e. 07.01.2003. Accordingly, the assessee's claim of substantial expansion was denied and the assessee was allowed to claim deduction under section 80IC to the tune of 25% of eligible profits for the impugned assessment year. 3. Being aggrieved, the assessee carried the mater in appeal before the ld. CIT (A). The ld. CIT (A) following the decision of Hon'ble Supreme Court in ....
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....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?" 7. After discussing the provisions of section 80IC, the legislative intent as well as its earlier decision in case of CIT vs. M/s. Classic Binding Industries case (supra), the Hon'ble Supreme Court has laid down the following legal proposition which are contained at para 24 of its order which reads as under :- "24. The aforesaid discussion leads us to the following conclusions: (a) Judgment dated 20th August, 2018 in C....
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....tion (6). For example, if the expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five years. On the other hand if substantial expansion is undertaken, say, in 8th year by an assessee such an assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes 'initial assessment year' once again. However, this 100% deduction would be for remaining three years, i.e., 8th, 9th and 10th assessment years." 8. Applying the legal proposition so laid down by the Hon'ble Supreme Court in the instant case where the undisputed fac....
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....ealization thereof at the time of receipt of payment and it was accordingly submitted that the exchange rate fluctuation is clearly flowing from the eligble business and, therefore eligible for deduction under section 80-IC of the Act. In support reliance was placed on the Coordinate Chandigarh Bench decision in case of DCIT vs. Ansysco, 184 TTJ 1 (Chd) wherein it was held that where the foreign exchange fluctuations relate to the export activity carried out by the assessee, the foreign exchange fluctuations is to be treated as trading receipts/receipts from manufacturing activity and which is eligible for claiming deduction under section 80-IC of the Act. Similarly, reliance was placed on the earlier decision of Chandigarh Benches in case ....