Income Tax Appellate Tribunal - Chandigarh
Acit, C-4(1), Chandigarh vs M/S Him Overseas, Chandigarh on 18 March, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "ए", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH
BENCH 'A' CHANDIGARH
ीमती दवा संह, याय"क सद#य एवं, एवं ीमती अ नपूणा& ग(ु ता, लेखा सद#य
BEFORE: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM
M.A. No. 243/CHD/2018
In ITA No. 1261/CHD/2018
नधा रण वष / Assessment Year : 2013-14
ACIT, बनाम M/s. Him Overseas,
Circle-4(1), Plot No. 181/12, Phase - 1,
VS
Chandigarh. Chandigarh.
थायी लेखा सं./PAN No. : AABFH7617P
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Revenue by : Shri Manjit Singh, Sr.DR
राज व क ओर से/ Assessee by : Shri Vineet Krishan, Adv
सन
ु वाई क तार"ख/Date of Hearing : 26.02.2019
उदघोषणा क तार"ख/Date of Pronouncement : 18.03.2019
आदे श/ORDER
PER DIVA SINGH, JM
By the present Miscellaneous Application the Revenue prays for rectifying the order dated 18.06.2017 in ITA No. 1261/CHD/2017. The ld. Sr.DR submitted that the ITAT relying on the decision of the Hon'ble High Court in the case of M/s. Stove Craft India Vs. CIT-V had remanded the issue to the AO. In view of the decision of the Hon'ble Apex Court in the case of CIT Vs. Classic Binding Industries, the M.A. has been filed. The Ld. AR submitted that the appeal of the assessee was allowed for statistical purposes directing a remand to the A.O in terms of the decision of the Jurisdictional High Court in the case of M/s Stove Craft India Vs. CIT-V. However, after the decision of the Apex court in the case of CIT Vs. Classic Binding Industries, the Hon'ble Apex Court in the recent decision dated 20.02.2019 in CA Nos. 1784 of 2019 and others in the case of Pr. CIT Vs. M/s Aarham Softronics has set out the correct position of law by re- appreciating the view taken in CIT Vs. Classic Binding Industries. A perusal of the same shows that the issue has been settled in favour of the assessee. Accordingly, relying on the same, it was his prayer that the departmental Miscellaneous Application may be dismissed.
M.A. 243/CHD/2018 In ITA 1261/CHD/2018 Page 2 of 3
2. We have heard submissions and perused the material available on record, it is seen that the position of law on the issue is set at rest by the Hon'ble Apex Court in the aforementioned recent judgment and order in the case of Pr. CIT Vs. M/s Aarham Softronics (supra), wherein the following paras cut short the controversy :
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% f or the entire period of 10 years, it would be doing violence to the language of sub-section (6) of Section 80- IC. Ho wever, this observation came without noticing the def inition of 'initial assessment year' contained in the same very provision.
23. Having examined the matter in the af oresaid perspective, judgment in the case of Mahabir Industries v. Principal Commissioner of Income Tax2 would, in f act, help the assessee. The f ine distinction pointed out in Classic Binding Industries elopes thereby. To recapitulate, in Mahabir Industries, it was held that if an assessee get 100% exemption under Section 80-IB of the Act f or f ive years and thereaf ter 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 af ter f ive years. This ruling was predicated on the ground that there can be two initial assessment years, one f or the purpose of Section 80- IB and other f or the purposes of Section 80-
IC of the Act. Once we f ind that there can be two initial assessment years, even as per the def inition thereof in Section 80- IC itself , the legal position comes at par with the one which was discussed in Mahabir Industries.
24. The af oresaid discussion leads us to the f ollowing conclusions:
(a) Judgment dated 20th August, 2018 in Classic Binding Industries case omitted to take note of the def inition 'initial assessment year' contained in Section 80- IC itself and instead based its conclusion on the def inition contained in Section 80-
IB, which does not apply in these cases. The def initions of 'initial assessment year' in the two sections, viz. Sections 80- IB and 80- IC are materially diff erent. The def inition of 'initial assessment year' under Section 80- IC has made all the diff erence. Theref ore, we are of the opinion that the af oresaid judgment does not lay do wn 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 prof its and gains f or f ive assessment years commencing with the 'initial assessment year'. For the next f ive years, the admissible deduction would be 25% (or 30% where the assessee is a company) of the prof its and gains.
(c) Ho wever, in case substantial expansion is carried out as def ined in clause (ix) of sub-section (8) of Section 80-IC by such an undertaking or enterprise, within the af oresaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become 'initial assessment year', and f rom that assessment year the assessee shall been entitled to 100% deductions of the prof its and gains.
M.A. 243/CHD/2018 In ITA 1261/CHD/2018 Page 3 of 3
(d) Such deduction, however, would be f or 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 f irst f ive years, the assessee would be entitled to 100% deduction again f or the next f ive 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 f or the f irst f ive years, deduction @ 25% of the prof its and gains f or the next two years and @ 100% again f rom 8th year as this year becomes 'initial assessment year' once again. Ho wever, this 100% deduction would be f or remaining three years, i.e., 8th, 9th and 10th assessment years.
25. In view of the af oresaid, we aff irm the judgment of the High Court on this issue and dismiss all these appeals of the Revenue. Likewise, appeals f iled by the assessees are hereby allowed.
3. Accordingly, in the absence of any infirmity in the order passed which can be said to be rectifiable u/s 254(2) of the Income Tax Act, 1961 and considering the legal position as recently stated by the Hon'ble Apex Court the Miscellaneous Application filed by the Revenue is dismissed. Said order was pronounced in the open court at the time of hearing itself.
4. In the result, the Miscellaneous Application filed by the Revenue is dismissed.
Pronounced in the Open Court on 18.03. 2019.
Sd/- Sd/-
( अ नपण
ू ा& ग(ु ता ) ( दवा संह )
(ANNAPURNA GUPTA) (DIVA SINGH)
लेखा सद#य/ Accountant Member याय"क सद#य/ Judicial Member
Ravi Kumar, PS (Hyderabad) /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 आय,
ु त/ CIT
4. आयकर आय,
ु 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 शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar