From perusal of the order of the AO, it was found that the AO had not disputed that the assessee had carried out substantial expansion as provided under clause (b) of sub-section (2) read with clause (ix) of sub-section (7) of section 80-IC. Hence, the impugned order of the CIT(A) was set aside and the AO was directed to grant the deduction @ 100 per cent to the assessee.
FULL TEXT OF THE ITAT JUDGMENT
This appeal has been preferred by the assessee against the order of Ld. Commissioner of Income Tax(Appeals), [hereinafter referred to as ‘CIT(Appeals)’]-2, Chandigarh dated 25.10.2016 relating to assessment year 2013-14.
2. The only ground raised by the assessee reads as under
That on the facts and in the circumstances of the case the Ld. CIT(A)-2, Chandigarh has erred in law and facts in upholding the addition of Rs. 1,10,31,182/- on account of disallowance of deduction u/s 80IC of the Income-tax Act, 1961 whereas the same was allowable @ 100% in accordance with the provisions of section 80IC of the Income-tax Act, 1961 as the appellant has carried out substantial expansion during the assessment year 2010-11.
3. The sole issue raised in this appeal relates to the action of the CIT(A) in disallowing the claim of deduction @ 100% us 80IC of the Income-tax Act, 1961 (in short ?the Act?) on account of substantial expansion of the Unit.
4. During the course of hearing before us, it was brought to our notice that the issue involved in this appeal has already been adjudicated by the Hon’ble Himachal Pradesh High Court vide their order dt. 28 November 2017 in the group of cases with the lead case titled as M/s Stovekraft India vs. Commissioner of Income Tax, ITA No.20 of 2015, and it was pointed out that the Hon’ble High Court had decided the issue in favour of the assessee, holding that there is no bar in the said section denying the benefit of hundred percent deduction to new units undertaking substantial expansion. Our attention was drawn to the relevant conclusions of the Hon’ble High Court in this regard at para 55 of the order as under:
“55.Thus, in view of the above discussion, these appeals are allowed and orders passed by the Assessment Officer as well as the Appellate Authority and the Tribunal, in the case of each one of the Assesses, are quashed and set aside, holding as under:
(a) Such of those undertakings or enterprises which were established, became operational and functional prior to 7.1.2003 and have undertaken substantial expansion between 7.1.2003 upto 1.4.2012, should be entitled to benefit of Section 80-IC of the Act, for the period for which they were not entitled to the benefit of deduction under Section 80-IB.
(b) Such of those units which have commenced production after 7.1.2003 and carried out substantial expansion prior to 1.4.2012, would also be entitled to benefit of deduction at different rates of percentage stipulated under Section 80-IC.
(c) 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 7.1.2013 upto 4.2012, an undertaking or an enterprise can be entitled to deduction @ 100% for a period of more than five years.
(f) All this, of course, is subject to a cap of ten [Section 80-IC(6)J.
5. Ld. DR fairly admitted that the issue is squarely covered by the above decision of the Hon’ble jurisdictional High Court. 1t was, however, submitted that the issue be restored to the file of the Assessing officer for verification as to whether the assessee has actually carried out the substantial expansion to be entitled to claim deduction u/s 801C of the Act.
6. We do not agree to the above contention raised by the Revenue at this stage. A perusal of the order of the Assessing officer reveals that the Assessing officer has not disputed that the assessee unit has carried out substantial expansion as provided under clause (b) of sub section (2) read with clause (ix) of sub section (7) of section 801C of the Act. Almost similar view has also been taken by the Hon’ble Himachal Pradesh High Court in the case of ‘M!s Stovekraft India vs. Commissioner of Income Tax’ (supra) in the following concluding para of the order:-
“58. On facts, we may clarify that the Revenue has not disputed, (a) the units having carried out substantial expansion within the definition of the Section, (b) their entitlement and extent of deduction would be dependent upon interpretation of the relevant provisions.”
We, therefore, do not find any justification at this stage to give the Assessing officer a second innings to re-examine undisputed facts.
7. In view of the above discussion, the impugned order of the CIT(A) is set aside and the AO is directed to grant to the assessees deduction at the rate of hundred percent of its eligible profits, as per the ruling of the jurisdictional High Court in this regard in the case of ‘M/s Stovekraft India vs. Commissioner of Income Tax’ (supra).
8. In the result, the appeal of the assessee, therefore, stands allowed.
Order pronounced in the Open Court