Income Tax Appellate Tribunal - Chandigarh
Rajeev Aggarwal, Baddi vs Dcit, Parwanoo on 21 January, 2021
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "बी", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH
BENCH 'B' CHANDIGARH
ीमती दवा संह, या"यक सद#य एवं, एवं ीमती अ नपण
ू ा' ग)ु ता, लेखा सद#य
BEFORE: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM
M.A. 89/CHD/2019
In I.T.A. No. 229/CHD/2017
(ASSESSMENT YEAR-2012-13)
Rajeev Aggarwal, बनाम The DCIT,
Plot No. 191-B, HPSIDC, Circle,
VS
Industrial Area, Parwanoo.
Baddi.
थायी लेखा सं./PAN No: AARPA0814H
अपीलाथ /Appellant यथ /Respondent
I.T.A. No. 229/CHD/2017
(ASSESSMENT YEAR-2012-13)
Rajeev Aggarwal, बनाम The DCIT,
Plot No. 191-B, HPSIDC, VS Circle,
Industrial Area, Parwanoo.
Baddi.
थायी लेखा सं./PAN No: AARPA0814H
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri Arun Bhardwaj, CA
राज व क ओर से/ Revenue by : Shri Ashok Khanna, Addl. CIT
सन
ु वाई क तार#ख/Date of Hearing : 19.01.2021
उदघोषणा क तार#ख/Date of Pronouncement : 21.01.2021
Hearing conducted via Webex
आदे श/ORDER
PER DIVA SINGH M.A. 89/CHD/2019 By the present Miscellaneous Application u/s 254(2) of the Income Tax Act,1962 in ITA 229/CHD/2017 pertaining to 2012- 2013 assessment year, the assessee makes a prayer for recalling MA-89/CHD/2019 & ITA 229/CHD/2017 A.Y. 2012-13 Page 2 of 6 the order of the I TAT dated 04.10.2018 to the extent where deduction u/s 80IC of the Act wa s restricted to five years thereby denying the assessee's claim of substantial expa nsion.
2. Relying upon the application, the ld. AR submitted that the assessee's claim restricted by the AO stood confirmed by the I TAT relying upon the decision of the Apex Court in the case of CIT Vs M/s Classic Binding Industries (2018) 96 Taxmann.com 405 (S.C). Relying upon the Revised Miscellaneous Application filed, it was his submission that the said view of the Apex Court stood re- considered by the Apex Court in its judgement and order dated 20.02.2019 in the case of PCI T Shimla Vs M/s Aarham Softronics & others in Civil Appeal No. 1784 of 2019. Accordingly, it was his limited prayer that the order of the I TAT may be recalled to the said extent as the order was not in conformity with the decision of the Apex Court hence, constituted a mistake which was rectifiable. It was also his submission that in the assessment year 2014-15, the AO while giving appeal effect to the order of the ld. Commissioner (Appeals) has ve rified the facts. Copy of the said order, it was submitted, was available at Paper Book page 134. 2.1 Accordingly, in the aforementioned legal position and the position of facts, it was his prayer that the order dated 04.10.2018 may be recalled to the said extent. It was also his prayer that since the facts, circumstances to argue the Miscellaneous Application are identical to the arguments to be considered in the MA-89/CHD/2019 & ITA 229/CHD/2017 A.Y. 2012-13 Page 3 of 6 appeal, accordingly in order to avoid duplication of the time and effort, the appeal may a lso be taken up together as no fresh arguments would be necessitated.
3. The Sr.DR Mr. Khanna considering the prayer of the assessee in the light of the decision of the Apex Court and the decisions cited, posed no objection to the recall of the order. On a perusal of the relevant pages of the Paper Book attached to the Revised application, he was also in agreement with the submissions of the ld. AR in as much as that fresh hearing may not be necessary as the very same facts and arguments are to be considered. Since the position of law stands addressed by the Apex Court.
4. We have heard the rival submissions and perused the material available on record. Considering the position as considered by the Apex C ourt in the case of A CIT vs Saurashtra K utch Stock Exchange Ltd, 305 ITR 227, (SC); and as considered by the Hon'ble Punjab & Ha ryan a Hi gh Cou rt (Full Bench) in the cas e of CIT vs Smt. Aruna Luthra, 252 ITR 76, we find on considering the decision of the Apex Court in the cas e of PCIT Shimla Vs M/s Aarham Softronics & others in Civil A ppeal No. 1784 of 2019 , there is a mistake in the aforesaid order of the I TAT which is rectifiable u/s 254(2) of the Act. Accordingly, in terms of the prayer of the parties before the Bench and considering the judicial position thereon, the issue as considered vide paras 5 to 6 while addressing ground No. 2 is recalled and at the instance of the parties, the appeal is taken up MA-89/CHD/2019 & ITA 229/CHD/2017 A.Y. 2012-13 Page 4 of 6 for hearing imme diately thereafter. This order was pronounced in the Court via Webex at the time of hearing itself.
5. In the result, the Miscellaneous Application of the assessee is allowed.
ITA 229/CHD/2017
6. In view of the prayer of the parties and with their consent, it is seen that in I TA 229/CHD/2017 wherein the assessee has assailed the correctness of the order dated 04.10.2018, the sole issue with which we are concerned is addressed vide Ground No. 2 wherein deduction u/s 80IC has been restricted to 25% as opposed to the claim of 100% of the assessee's eligible profits. The AO restricted the claim despite assessee's claim of having carried out substantial expansion in assessment year 2010-11 on account of the fact tha t deduction @ 100 % stood already allowed for five years starting from 2006-07 to 2010-11 assessment year. The assessee carried the issue before the CIT(A) who dismissed the appeal relying on the decision of the ITA T in the case of Hycron Electronics V I TO in I TA 798/CHD/2012 dated 27.05.2015. The assessee carried its appeal before the ITA T as by then, there was the decision of the jurisdictional High Court in the case of M/s Stove Craft India Versus CI T-V and others in I TA 20 to 24/2015 dated 28.11.2017. However, in the meantime the said view did not find favour by the Apex Court as held in the case of CIT V s M/s Classic B inding Industries & Ors. Following the said decision, the MA-89/CHD/2019 & ITA 229/CHD/2017 A.Y. 2012-13 Page 5 of 6 assessee's case stood dismissed. However, the vie w taken in M/s Classic B inding Industries & Ors ( supra) come up for re-considering again before the Hon'ble Apex C ourt in the case of PCIT Shimla V s M/s A arham Softr onics & others (supra) wherein the Court held as under :
22. It would be pertinent to point out that in Para 20 of the judgment in Classic Binding Industries, this Court observed that if deduction @ 100% for the entire period of 10 years, it would be doing violence to the language of sub-section (6) of Section 80-IC.
However, this observation came without noticing the definition of 'initial assessment year' contained in the same very provision.
"23. Having examined the matter in the aforesaid perspective, judgment in the case of Mahabir Industries v. Principal Commissioner of Income Tax would, in fact, help the assessee. The fine distinction pointed out in Classic Binding Industries elopes thereby. To recapitulate, in Mahabir Industries, it was held that if an assessee get 100% 2 Civil Appeal Nos. 4765-4766 of 2018 decided on May 18, 2018 24 exemption under Section 80- IB of the Act for five years and thereafter carries out the substantial expansion because of which said assessee becomes entitled to exemption under the new provision i.e. Section 80-IC of the Act, the assessee would be entitled to deduction @ 100% even after five years. This ruling was predicated on the ground that there can be two initial assessment years, one for the purpose of Section 80-IB and other for the purposes of Section 80-IC of the Act. Once we find that there can be two initial assessment years, even as per the definition thereof in Section 80-IC itself, the legal position comes at par with the one which was discussed in Mahabir Industries.
"24. The aforesaid discussion leads us to the following conclusions:
(a) Judgment dated 20th August, 2018 in Classic Binding Industries case omitted to take note of the definition 'initial assessment year' contained in Section 80-IC itself and instead based its conclusion on the definition contained in Section 80-IB, which does not apply in these cases. The definitions of 'initial assessment year' in the two sections, viz.
Sections 80-IB and 80-IC are materially different. The definition of 'initial assessment year' under Section 80-IC has made all the difference. Therefore, we are of the opinion that the aforesaid judgment does not lay down the correct law.
(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 25 Pradesh of the nature mentioned in clause (ii) of sub-section (2) of Section 80-IC, would be entitled to deduction at the rate of 100% of the profits and gains for five assessment years commencing with the 'initial assessment year'. For the next five years, the admissible deduction would be 25% (or 30% where the assessee is a company) of the profits and gains.
(c) However, in case substantial expansion is carried out as defined in clause (ix) of sub- section (8) of Section 80-IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become 'initial assessment year', and from that assessment year the assessee shall been entitled to 100% deductions of the profits and gains.
(d) Such deduction, however, would be for a total period of 10 years, as provided in sub- section (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 MA-89/CHD/2019 & ITA 229/CHD/2017 A.Y. 2012-13 Page 6 of 6 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. 26 However, this 100% deduction would be for remaining three years, i.e., 8th, 9th and 10th assessment years.
25. In view of the aforesaid, we affirm the judgment of the High Court on this issue and dismiss all these appeals of the Revenue. Likewise, appeals filed by the assessees are hereby allowed."
7. Accordingly, considering the lega l position as available, we allow the appeal of the assessee directing the AO to grant necessary relief in accordance with law. Said order was pronounced in the Open Court at the time of hearing itself.
8. In the result, appeal of the assessee is allowed.
9. In the result, Miscellaneous Application of the assessee and the appeal of the assessee are allowed.
Order pronounced in the Open Court on 21 s t Jan.,2021.
Sd/- Sd/-
( अ नपण
ू ा' ग)ु ता ) ( दवा संह )
(ANNAPURNA GUPTA) (DIVA SINGH)
लेखा सद#य/ Accountant Member या"यक सद#य/ Judicial Member
"Poonam"
आदे श क त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant 2. यथ / The Respondent 3.आयकर आयु/त/ CIT 4.आयकर आयु/त (अपील)/ The CIT(A)5.-वभागीय त न2ध, आयकर अपील#य आ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH 6.गाड फाईल/ Guard File आदे शानुस ार/ By order, सहायक पंजीकार/ Assistant Registrar