Income Tax Appellate Tribunal - Delhi
Ito, Circle-1(2), Kashipur vs Agron Remedies P.Ltd, Kashipur on 8 January, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI 'SMC' BENCH,
NEW DELHI
BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER
ITA No. 5524/DEL/2017 [A.Y. 2014-15]
The ITO, Vs. Agron Remedies Pvt. Ltd
Circle - 1(2,) Sarverkhera Moradabad Road
Kashipur Kashipur, U.S. Nagar
PAN : AABCA 7572 K
[Assessee] [Respondent]
Date of Hearing : 27.12.2017
Date of Pronouncement : 08.01.2018
Assessee by : Shri S.C. Agarwal, C.A.
Revenue by : Ms. Ashima Neb, Sr. DR
ORDER
This appeal of the Revenue arises from the order of the ld. CIT(A), Haldwani vide order dated 28.06.2017 for A.Y. 2014-15.
2. Brief facts of the case are the assessee is a private limited company and in the relevant A.Y. filed the return of income declaring total income at nil. The case of the assessee was selected for scrutiny assessment by issuance of notice u/s 143(2) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] on 04.09.2014. The assessee is engaged in the business of manufacturing of medicines and 2 ITA No. 5524/DEL/2017 claimed deduction u/s 80IC of the Act amounting to Rs. 39,88,690/-. The assessee completed substantial expansion during F.Y. 2005-06 and declared A.Y. 2006-07 to be the initial assessment year for claiming deduction u/s 80IC of the Act. By virtue of sub section (3) the quantum of deduction for the first five years is @ 100% from the eligible business and for the subsequent years, deduction @ 30% is allowed. The maximum number of years for which the said deduction can be claimed has been restricted to 10 years under sub section (6). The assessee further claimed completion of substantial expansion during F.Y. 2007- 08 and re-fixed the initial assessment year at A.Y. 2008-09. The assessee again claimed substantial expansion during F.Y. 2009-10 and claimed the initial assessment year as A.Y. 2010-11.
3. According to the AO, the relevant A.Y. 2014-15 is the eighth year from the initial A.Y. 2006-07. The AO held that the action of the assessee in claiming substantial expansion thrice by fixing multiple assessment years within a span of 10 years is neither in conformity with the law nor with the spirit of the legislature. The 100% deduction amounting to Rs. 54,21,553/- claimed by the assessee was reduced to deduction @ 30% at Rs. 16,26,466/- and the balance amount of Rs. 37,95,087/- was disallowed.
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4. The ld. CIT(A) allowed the ground of appeal raised by the assessee by following his own order in the case of the assessee for A.Y. 2012-13 under identical facts and circumstances.
5. The revenue is in appeal before us and has raised the following grounds of appeal:
"(i) On the facts and circumstances of the case, CIT(A) has erred in allowing 100% deduction under section 80IC to the assessee company in the 8th Assessment Year from its initial Assessment Year.
(ii) On the facts and circumstances of the case whether initial assessment year can be changed multiple times for claiming deduction u/s 80IC of the Income Tax Act, 1961, if once it is fixed by the assessee company itself. (Hi) Whether Ld. CIT(A) accepted the ground of the assessee company without considering the fact that the assessee has made substantial expansion in three different financial year and claim multiple initial assessment year for claiming 100% deduction u/s 80IC of the Income Tax Act, 1961.
6. The ld. DR submitted that the relevant A.Y. would be the eighth assessment year from the initial assessment year 2006-07 and therefore, deduction u/s 80IC is not allowable @ 100%. It was further 4 ITA No. 5524/DEL/2017 submitted that the initial assessment year as contemplated u/s 80IC can be fixed only once during the period of 10 years and cannot be re- fixed as done in the present case. The ld. DR relied upon the judgment of ITAT Chandigarh Bench, in M/s Zee Laboratories Vs. ITO, ITA NO. 230/CHD/2016 dated 11.08.2016 and also the judgment in the case of M/s Classic Binding Industries Vs. JCIT, ITA No. 352/CHD/2016 dated 11.08.2016.
7. The ld. AR on the other hand submits that there is no prohibition under the Act to claim deduction @ 100% even if substantial expansion has been carried out again. He further submitted that the case of the assessee is covered by the judgment of this Tribunal in the case of Tirupati LPG Industries Ltd. Vs. Assessee, ITA No. 991/DEL/2013 dated 29.01.2014. He further relied upon the judgment of the Hon'ble High Court of Himachal Pradesh, Shimla in the case of M/s Stovekraft India Vs. CIT in ITA No. 20/2015.
8. We have heard the rival submissions and perused the record of the case. The only issue to be decided is as to whether substantial expansion can be confined to one expansion u/s 80IC of the Act and whether there can be more than one initial assessment years. The said 5 ITA No. 5524/DEL/2017 issue came for consideration before the Hon'ble High Court of Himachal Pradesh in the case of M/s Stovekraft India (supra) wherein it has been held that substantial expansion cannot be confined to one expansion as long as the requirement of Section 80IC (8)(ix) of the Act is met. In the aforesaid judgment it has been held as under:
"Substantial expansion cannot be confined to one expansion. As long as requirement of Section 80- IC(8)(ix) is met, there can be number of multiple substantial expansions, (d) Correspondingly, there can be more than one initial Assessment Years, (e) Within the window period of 7.1.20013 upto 1.4.2012, an undertaking or an enterprise can be entitled to deduction @ 100% for a period of more than five years."
9. In the case of Tirupati LPG Industries (supra), this Tribunal held as under:
"10.4. The only dispute that arises for our consideration is the interpretation of the term "initial assessment year" and whether the same comes with any restriction. The Revenue seeks to take the color from the object of introducing Section 80-IC. The A.O. referred to policy of the government for giving incentives to the State of Uttaranchal and Himachal Pradesh. It is well settled that external aids should not be 6 ITA No. 5524/DEL/2017 taken for the purpose of interpreting the Statute, when the language of the Section is clear and unambiguous. A plain reading of Sec.80-IC(8)(v) which defines the term "initial assessment year" read with Sec.80-IC(8)(ix) which defines the term "substantial expansion" makes it clear that there is no restriction or bar on more than one substantial expansion being undertaken by an assessee. In our view, a unit can undertake any number of substantial expansions, in the absence of any specific restriction in the Section. There is no suggestion in the language of the section that incentive u/s 80 IC is not available if the assessee substantially expands for a second or third time. Substantial expansion requires additional investment and results in higher production, employment etc. Industrialists have to be encouraged to undertake substantial expansion. The section recognizes this fact and provides for an incentive, if an assessee undertakes "substantial expansion".
10. The ld. counsel for the revenue could not point out any contrary judgment of any other Hon'ble High Court or the Hon'ble Apex Court taking a view against the assessee on the aforesaid issue. In view thereof, we find no infirmity in the order passed by the ld. CIT(A) on the issue challenged before me and the same is upheld. The grounds of appeal raised by the Revenue are dismissed.
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11. In the result, the appeal of the Revenue in ITA No. 5524/DEL/2017 is dismissed.
The order is pronounced in the open court on 08.01.2018.
Sd/-
[B.P. JAIN] ACCOUNTANT MEMBER Dated: 08th January, 2018 VL/ Copy forwarded to:
1. Assessee
2. Respondent
3. CIT
4. CIT(A)
5. DR Asst. Registrar, ITAT, New Delhi