100% deduction U/s. 80IC can be claimed for 5 Years and not for 10 years

PCIT Vs. Aarham Softronics (Supreme Court)

Conclusion: Deduction under section 80-IC was allowable to assessee @ 100% for a period of 5 years and for remaining 5 Assessment Years @ 25% (or 30% where the assessee is a company) as once assessee had started claiming deduction under Section 80-IC and the initial Assessment Year had commenced within the aforesaid period of 10 years, there could not be another initial Assessment Year thereby allowing 100% deduction for the next 5 years also.

Held: The question was whether assessees could again start claiming 100% exemption under section 80-IC for the next five years from profits and gains after availing the same for first five years on the ground that they had now carried out substantial expansion. High Court had answered the question in affirmative and for this reason, Department had come up to this Court challenging the said decision. It was held once assessees had started claiming deduction under Section 80-IC and the initial Assessment Year had commenced within the aforesaid period of 10 years, there could not be another initial Assessment Year thereby allowing 100% deduction for the next 5 years also when sub-section (3) of section 80-IC, in no uncertain terms, provides for deduction @ 25% only for the next 5 years. It might be asserted again that assessees accepted the legal position that they could not claim deduction of more than 10 years in all under Section 80-IC. Therefore, after availing deduction for a period of 5 years @ 100% of such profits and gains from the ‘units’, assessees would be entitled to deduction for remaining 5 Assessment Years @ 25% (or 30% where the assessee is a company), as the case may be, and not @ 100%.

FULL TEXT OF THE SUPREME COURT JUDGMENT

A neat question of law which arises in these appeals revolve around Section 80-IC of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’). The High Court by its impugned judgment dated 28^th November, 2017 has discussed various aspects and nuances of the aforesaid provisions which had arisen because of varied kinds of issues raised in a batch of appeals filed by the assessees before the High Court. We are not concerned with all those issues. The only question which needs to be answered in these appeals is as follows:

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