J.C. International Appellant Vs DCIT (Himachal Pradesh High Court)
Himachal Pradesh High Court has allowed M.D. Securities Private Limited to claim 100% deduction of profit under Section 80-IC of the Income Tax Act, 1961, for the Assessment Year 2013-14. The court’s decision overturns an Income Tax Appellate Tribunal (ITAT) order that had restricted the deduction to 25%, by relying on a Supreme Court Constitution Bench judgment that clarified the benefit for units undergoing substantial expansion.
J.C. International, engaged in manufacturing fans and geysers, commenced operations on January 28, 2004. Established within the fiscal incentive window announced by the Union Cabinet for Himachal Pradesh (starting January 7, 2003), the company was eligible for various benefits, including the profit deduction under Section 80-IC. For the initial five assessment years (AY 2005-06 to AY 2009-10), the appellant claimed and received a 100% deduction on its profits.
The dispute arose for the Assessment Year 2013-14. Prior to this year, specifically in AY 2010-11 (the sixth year of operation), J.C. International undertook a substantial expansion, investing more than 50% of the opening book value of its plant and machinery. Following this expansion, the appellant again claimed a 100% deduction under Section 80-IC on the profit derived from the newly expanded unit, filing a nil income return.
