Income Tax Appellate Tribunal - Chandigarh
M/S J.K. International, Kangra vs Dcit, Palampur on 28 May, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "एकल सद यीय', च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH
BENCH 'SMC' CHANDIGARH
ीमती दवा संह, या!यक सद य
BEFORE: SMT. DIVA SINGH, JM
M.A. NO. 49/CHD/2018 in
आयकर अपील सं./ ITA No. 815/CHD/2017
नधा रण वष / Assessment Year : 2011-12
M/s J.K.International, बनाम The DCIT,
Plot No. 18, Industrial Area, Circle,
VS
Bai Atarian, PO-Kanorori, Palampur.
Tehsil-Indora, Kangra (HP).
थायी लेखा सं./PAN No. : AAEFJ9527D
अपीलाथ /Appellant यथ /Respondent
&
आयकर अपील सं./ ITA No. 815/CHD/2017
नधा रण वष / Assessment Year : 2011-12
M/s J.K.International, बनाम The DCIT,
Plot No. 18, Industrial Area, Circle,
VS
Bai Atarian, PO-Kanorori, Palampur.
Tehsil-Indora, Kangra (HP).
थायी लेखा सं./PAN No. : AAEFJ9527D
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shrij.s.Bhasin, Advocate
राज व क ओर से/ Revenue by : Smt. Chanderkanta, Sr.DR
सन
ु वाई क तार#ख/Date of Hearing : 03.05.2019
उदघोषणा क तार#ख/Date of Pronouncement : 28.05.2019
आदे श/ORDER
By the present Miscellaneous Application u/s 254(2) of the Income Tax Act,1961, the assessee prays for recall of ex-parte order dated 11.08.2017 in ITA 815/CHD/2017 wherein the assessee's appeal was dismissed relying on the order of the ITAT in the case of Hycron Electronics V ITO in ITA 798/CHD/2012 dated 27.05.2015.
2. The ld. AR relying upon the decision of the jurisdictional High Court in the case of M/s Stove Craft India Versus CIT-V and others in ITA 20 to MA- 49/CHD/2018 & ITA 815/CHD/2017 Page 2 of 5 24/2015 submitted that the present Miscellaneous Application has been filed praying for a recall of the order. It was his submission that no doubt the decision of the Apex Court in the case of CIT Vs M/s Classic Binding Industries & Ors. in Civil Appeal No. 7208 and others of 2018 dated 20.08.2018 was against the assessee, however, the legal position as has now been finally settled by the latest decision of the Apex Court in the case of PCIT Shimla Vs M/s Aarham Softronics & others in Civil Appeal No. 1784 of 2019 dated 20.02.2019 is in favour of assessee's stated claim. Accordingly, it was his prayer that the order passed contrary to the position of law as addressed by the Apex Court may be recalled.
3. The ld. Sr.DR Ms. Chander Kanta in the face of the settled legal position agreed that the order is rectifiable and posed no objection to the prayer of recall.
4. It was also a common plea of the parties that since all necessary facts have been considered by the tax authorities as well as the ITAT , the arguments advanced in the Miscellaneous Application on the position of law would also be fully applicable to the issue at hand in the appeal. Accordingly, it was a common stand of the parties that the appeal may also be taken up today itself.
5. I have heard the rival submissions and perused the material available on record. It is seen that the appeal of the assessee was dismissed by an ex- parte order holding as under :
"2. At the time of hearing, a counsel stood up stating that he is proxy counsel, as such time was sought. The ld. Sr.DR objected to the request for time stating that it is a covered issue by the order dated 08.10.2015 of the Chandigarh Bench of the ITAT in the case of M/s Hycron Electronics Vs ITO, Baddi ITA No. 326/CHD/2015. Accordingly, a pass over was given to allow time to the concerned person to familiarize himself with the facts. In the second round, when the appeal was called, the person stating to be proxy counsel was not present. It was further noted that there is no Power of Attorney on record. Accordingly, it could not be said that request for time was made on behalf of the assessee. In the circumstances, considering the material available on record and the submissions of the ld. Sr.DR, it was proposed to proceed with the present appeal ex- parte qua the assessee appellant on merits.
3. The relevant facts of the case are that the AO vide his order dated 14.08.2015 u/s 263/143(3) of the Act considering the claim of deduction of 100% u/s 80IC restricted it to 25% on the ground that being the 6th year of the deduction from the initial assessment MA- 49/CHD/2018 & ITA 815/CHD/2017 Page 3 of 5 year 2006-07 100% deduction could not be allowed. The said claim was upheld by the CIT(A) relying upon the aforesaid order of the ITAT in the case of M/s Hycron Electronics Vs ITO, Baddi ITA No. 326/CHD/2015. In the absence of any distinction of facts, circumstances or position of law having been brought to the notice of the Bench, we find no good reason to interfere with the order. Being satisfied by the reasoning and the finding, the appeal of the assessee is dismissed."
5.1 Considering the legal position as settled in PCIT Shimla Vs M/s Aarham Softronics & others (supra) admittedly the view taken above is not in consonance with the legal position settled by the Apex Court. It is seen that the appeal was decided ex-parte where admittedly the assessee could not participate. Accordingly, in the light of the submissions of the parties before the Bench, exercising the powers as vested in me by proviso to Rule 24 of the ITAT Rules 1963, the order dated 11.08.2017 is recalled. Support is drawn from the decision of the Hon'ble Delhi High Court in the case of CIT Vs Ansal Housing Construction Ltd. 274 ITR 131 (Del).
6. In the result, the Miscellaneous Application of the assessee considering the legal position as set out in Aarham Softronics & others (supra) and the fact that the assessee was not heard, is allowed. Said order was pronounced in the Open Court itself.
7. Accordingly, in terms of the oral prayer of the parties ITA 815/CHD/2017 was taken up for hearing.
8. Both the parties have been heard. The common stand at the cost of re-iteration remains that the legal view is settled in favour of the assessee and on facts there is no dispute.
9. A perusal of the record shows that the present appeal has been filed by the assessee assailing the correctness of the order dated 24.03.2017 of CIT(A) Palampur pertaining to 2011-12 assessment year wherein the deduction claimed at 100% of eligible profits u/s 80IC was restricted following the decision of the ITAT in the case of Hycron Electronics V ITO in ITA 798/CHD/2012 dated 27.05.2015. The assessee's claim of having carried out substantial expansion during 2007-08 assessment year was considered to be not relevant as it was the 6th year of manufacturing activity and the tax holding of 100% deduction of five years stood exhausted. The MA- 49/CHD/2018 & ITA 815/CHD/2017 Page 4 of 5 view was affirmed by the CIT(A) also. However, it is seen that the Apex Court has considered the legal position in the case of PCIT Shimla Vs M/s Aarham Softronics & others (supra) wherein the said controversy has been settled. For ready reference, we extract the relevant paras from the said decision 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.
MA- 49/CHD/2018 & ITA 815/CHD/2017 Page 5 of 5
(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 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."
10. Accordingly, in view of the legal position as finally settled, the appeal of the assessee is allowed. Said order was pronounced in the Open Court at the time of hearing itself.
11. In the result, M.A./49/CHD/2018 filed by the Revenue is allowed.
12. In the result, the ITA 815/CHD/2017 filed by the assessee is allowed.
Order pronounced in the Open Court on 28th May,2019.
Sd/-
( दवा संह ) (DIVA SINGH) या!यक सद य/Judicial Member "पन ू म"
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 न/ध, आयकर अपील#य आ/धकरण, च1डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानुसार/ By order, सहायक पंजीकार/ Assistant Registrar