Income Tax Appellate Tribunal - Chandigarh
M/S Smart Enterprises, Parwanoo vs Dcit, Parwanoo on 31 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.495/Chd/2017
(Assessment Year : 2014-15)
M/s Smart Enterprises, Vs. The D.C.I.T.,
Khasra No.186-187, Circle Parwanoo,
Opp. Terminal Market, H.P.
Sector-6, Parwanoo, H.P.
P A N : AB JFS5729C
(Appellant) (Respondent)
Appellant by : Shri Manoj Kumar, CA
Respondent by : Smt.Chander Kanta, Sr.DR
Date of hearing : 09.08.2017
Date of Pronouncement : 31.08.2017
O R D E R
PER ANNAPURNA GUPTA, A.M.:
Th i s a p p e a l h a s b e e n f i l e d b y th e a s s e s s e e a g ai n st t h e o r d e r p as s e d by t h e L d. CI T( A p pe a l s ) , Sh i m l a , H. P . d a t ed 1 8 . 1 . 2 0 1 7 r e l a ti n g t o a s se s s m e nt y e a r 2 0 14 - 1 5 .
2. I n t he p r e s e n t Ap p e a l t h e a s s e sse e h a s c h a l l e n ged t h e r e s t r i c ti o n o f d ed u c t i o n c l a i me d u / s 8 0 I C o f t h e I n c o m e Ta x A c t , 1 9 6 1 ( i n s ho r t ' t h e A ct ' ) @ 1 0 0 % o f t h e el i gi b l e p r o f i t s to 25%. Th e a s s e s s e e as a c on s e q u e n c e h a s r a i s e d t he f o l l o w i ng g r o u nds o f a p p ea l :
"1. The Id. CIT(A) is wrong in disallowing the benefit of substantial expansion u/s 80IC(2) and confirming the deduction u/s SOIC only to the extent of 25% as against 100% by holding that benefit of substantial expansion is allowable only to the undertaking which were existing as on 07.01.2003.
2. In view of above & such other grounds, which may be taken at the time of hearing, the appeal may please be allowed & justice rendered."2
3. B r i e f f a c t s r el e va n t t o t h e c a s e a r e t h a t t h e a s se s s e e firm is e ng a g e d in m a n u f ac t u ri n g of w a te r ge y s e r and e l e c t r i c i r o n a nd h a d e - f i l e d h i s r e t u r n d e cl a r i n g i n c o m e o f R s . 2 1 , 0 0 0/ - on 2 2 . 9 . 2 0 14 a f t er claiming d e du c t i o n u /s 8 0 I C o f t h e Ac t, a m o u n t i ng t o R s . 2 , 6 6 , 84 , 6 9 4 /-. I n th e p r e s e n t c a s e , t he a s s e ss e e ha d s t a r t e d i t s m a nu f a c t u r i ng a c t i v i t y /o p e r a ti on o n 5. 7 . 2 0 07 a n d t h e i n i ti a l a s s e s s m e nt year for claim of deduction u/ s 80IC of the Act, was a s s e s s m e nt y e a r 2 0 0 8 - 0 9 . Th e A s s e s s i ng O f f i ce r n o t i c ed t h a t t h e a s s e ss ee h a d a l r e a d y c l a i m e d d e d u ct i o n u / s 8 0 I C o f t h e A c t to t he e x t e n t o f 1 0 0% o f t h e e l i g i b l e p r o f i t s f or f i v e y e ar s p e ri o d s t a r t i ng f r o m as s e s s m e n t y e a r 2 0 0 8 - 0 9 to 2 0 1 2 - 1 3 a n d a ga i n c l a i m e d 100 % d e d u c t i on a g a i n s t t he e l i g i b l e p ro f i t s i n t h e r e l e v a n t a s s e s s m e n t y ea r 2 0 1 4 - 15 w h i c h w a s 7 t h y ea r o f p r o du c t i o n f o r t h e fi r m b y cl a i m i n g to h a v e c a r r i ed o ut s u b s t a n t i a l e xp a n s i o n i n f i n an c i a l y e a r 2011-12 r el e v an t to a s s e ss me n t year 2 01 2- 1 3 . Th e assessee c l a i med that the ye ar under c o n s i de r a t i o n be t r e a t e d as t h e 3 r d y e ar f o r el i g i b i l i t y o f de d u c t i o n u / s 8 0I C o f t h e A c t a n d no t a s t h e 7 t h y e ar o f c l a i m o f d e du c t i o n u / s 8 0 I C o f t h e A c t. Th e A s s e s s i ng O f f i c e r f o r t he d e t a i l e d r e a s o n s m e n t i o ne d i n t h e a s s e s sm e n t o r d e r , h e l d t h a t t h e a s s e s s e e wa s e l i g i b l e f o r de d u c t i o n u / s 8 0I C of th e A c t o n l y @ 2 5 % a s a g a i n st t h e c l a i m o f 1 00 % m a d e by t h e a s s e s s e e .
4. A g g r i e v e d b y t he s a m e , t h e a s se s s e e w e n t i n ap p e a l b e f o r e t h e L d. CI T( A p p e a l s ) w h o u p h e l d t h e o rd e r o f t h e Assessing O f f i ce r following t he decision of the I TA T 3 C h a n d i g a rh B e nc h i n t he c a s e o f M / s H y c r o n E l e c t r o n i c s V s . I TO i n I TA N o . 7 9 8 / C hd / 2 0 12 a n d o t h e r r e l at e d c a s e s. I t i s a g a i n s t t hi s o r d e r o f t h e L d . C I T( A p p e al s ) t h a t t h e a s s e s s e e h a s f i l ed t h e p r es e n t app e a l b e f or e u s .
5. D u r i n g t h e co u r se o f he a r i n g b e f or e u s t h e Ld . c ou n s el f o r a s s e s s e e f ai r l y c o n c e d e d t ha t t h e i s s u e w as c o v e r e d a g a i n s t i t b y t h e d e c i s i o n of t h e I TA T C h a n d i g a r h B e n c h i n t h e c a s e o f M / s H y c r o n E l e c t ro n i c s ( s u p r a) .
6. Th e Ld. DR relied upon the order of the L d . CI T( A p p e a l s ) .
7. W e h a v e h e ar d th e c o n te n t i o ns of b o t h t h e p a r ti es . We see no reason to interfere in the order of the L d . CI T( A p p e a l s ) r e s t r i c ti n g t h e de d u c t i o n c l a i m e d u / s 8 0I C o f t h e A c t , t o th e e x t e n t o f 2 5% o f t h e e l i g i b l e p r o f i t s as a g a i n s t 1 0 0 % c l a i m e d by t h e as s e s s e e . Th e un d i s p u t e d f a c t s i n t h e p r e se n t c a s e b e i n g th a t t h e i n i t i al as s e s s m e n t y e a r f o r t h e p u rp o s e o f c l a i m i n g d e d u c t i o n u / s 8 0 I C o f t h e A c t w a s a ss e s sm e n t y e a r 2 0 0 8- 0 9 a n d t he a ss e s s e e h ad a l r e a d y c l a i m e d d e d u c t i o n o f 1 00 % o f i t s p ro f i t s u n d e r t he s a i d s e ct i o n f o r f i v e y e ar s p er i o d s t a r t i ng f r om as s e s s m e n t y e a r 2 0 0 8- 0 9 to a s s e s s me n t y ear 2 0 1 2 - 1 3. I t i s a l s o no t disputed that in f i n a nc i a l yea r 2 0 1 1 - 12 relevant to a s s e s s m e nt year 2012-13 the assessee had ca r r i e d out s u b s t a n t i a l e x p an s i o n o n a c c o unt o f w h i c h i t h ad c l a i m e d 1 0 0 % d e d u ct i o n o f i t s p r of i t s i n t h e i m p u g ne d as s e s s m e n t y e a r w h i c h i s 7 t h y e a r o f p r od u ct i o n b y t h e as s es s e e f i r m . W e h a v e a l s o g on e t h r o ug h t h e o r d e r o f t h e I . T. A . T. i n t h e 4 c a s e o f M /s H yc r o n E l e c t r o ni c s ( s u p r a ) an d f i nd t h a t t h e I . T. A . T. i n th e sa i d c a s e h a d e xh a u s t i v e l y i n t e rp r e t e d th e p r o v i s i o ns o f s ec t i o n 8 0I C o f t he A c t a n d s t a t ed t h a t t he b e n e f i t t o cl a i m 1 0 0 % d e d u c ti o n o n a c c o u n t o f su b s t a n t i al e x p a n s i o n w a s a v a i l a b l e a s p e r t h e se c t i o n o nl y t o t h e e x i s t i n g un i t s i . e . w h i c h w er e e x i s t i n g o n t he d a t e t h e s e c t i o n w a s br o ug h t o n S t a t u te i .e . 1 . 4 . 2 0 0 4. Th e Tr i b u n a l h e l d t h a t n e w un d e r t a k i ng s w h i ch c a m e i n t o e x i s te n c e a f t er t h a t d a t e w e r e n o t e n t i t l ed t o c l a i m 1 0 0 % d e du c t i o n of p r o f i t s o n a cc ou n t o f s u b s t an ti a l e x p a n s i o n un d e r t a k e n. I n te r p r e ti n g v a r i o u s s u b - s e c ti o n o f s e c t i o n 8 0I C t h e I . T. A . T. h e l d t h a t a n el i g i b l e u n i t se t up i n t h e S t a te of H i m a c h a l P r a d e s h w a s i n an y c a s e e n t i t l ed t o d e d u c t i o n o f 10 0 % o f i t s e l i g i b l e p r o fi t s fo r a p er i o d o f 5 y e a r s o n l y b e g i n n i n g f rom t h e y e a r i n w h i ch i t b e g a n m a n u f a c t u r i ng a n d i n n o c a s e the s e c ti o n co ul d be i n t e r p re te d so as to allow 100% d e d u c t i o n o f e l i gi b l e p r o f i t s b e yon d t h a t . Since the facts in t h e p r e s en t c a s e d e m o n s t ra t e t h at t h e a s s es s e e un d e r t a k i ng w a s a n e w u n d ert a k i n g w h i c h h ad c o m e i n t o e xi st e n c e a f t er 0 1 . 0 4 . 2 0 04 a n d i t h a d a l s o c l a i me d d e d u c t i o n o f i t s e l i g i bl e p r o f i t s f o r a p e ri o d o f 5 y e a r s , w e f i n d t h a t the i s s u e i s s q u a r e l y c ov e r e d b y t h e d e c i s i on o f t h e I TA T C h a n d i g a r h B e n c h i n th e c as e o f M / s H y c r on E l e c tr o n i c s ( su p r a ) . W e, t h e r e f o r e, find no i n f i rm i t y in the or d er of t he L d . CI T( A p p e a l s ) r e s t r i c ti n g t h e d e d u c t i o n c l a i me d b y t he a s s e s s e e i n t h e pr e s e n t c as e @ 25% o f t h e e l i g i b l e p r o f i t s . 5
8. I n t h e re s u l t , t he a p p e a l o f t he a s s e s s e e i s , th e re f o r e , d i s m i s s e d.
O r d e r p r on o u n c ed i n t h e o p e n cou r t .
Sd/- Sd/-
(SANJAY GARG) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 31 s t August, 2017
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh