Case Law Details
Brief of the case:
Punjab & Haryana High Court held in CIT Vs M/s Sunder Forging that to claim the deduction u/s 80IB for consecutive 10 years all the relevant conditions should be required to be fulfilled only in the initial assessment year, it is not necessary to continue that conditions get fulfilled in all the 10 years of deduction.
Moreover it held that even if in any of the 10 years of deduction u/s 80IB, the assessee failed to fulfill any of the condition required for deduction u/s 80IB then the assessee would not be denied the deduction u/s 80IB. It would continue to qualify for the deduction because in the initial assessment year the assessee had fulfilled all the required conditions.
Facts of the case:
The assessee had claimed deduction u/s 80IB in the initial A.Y 2002-03 to 2005-06 claiming it to be Small scale industry as it was registered under the IDR act but after few years with the notification issued by IDR the assessee did not remain any more SSI so he had not claimed the deduction u/s 80IB for that Assessement year 2006-07 . But again after few years with the notification issued by IDR the assessee became eligible to claim the deduction u/s 80IB so he claimed the same in that particular year which revenue disagree on the basis that once the link for claiming the deduction had broken the assessee was not entitled to claim the deduction.
Contention of the assessee:
Assessee was of the view that the main purpose of the govt. to bring in the deduction u/s 80IB was that the industry should grew and employment opportunities should also be generated which would generate wealth for the country. If the industry got stabilized earlier, made good profits and made more investment due to which it goes out of the definition of the Small Scale Industry then it would not be denied the benefit of deduction u/s 80 IB.
So as the assessee was a SSI in the initial year so it had claimed the deduction and after notification when it ceases to be SSI it should not be declined of the deduction. It should be allowed the deduction for consecutive 10 years starting form initial assessment year.
Contention of the revenue:
Revenue was of the view that once the link of deduction had been broken the assessee was not entitled to claim the deduction. So in this case in the initial assessment year assessee was eligible for SSI so it claimed the deduction but after the notification assessee ceased to be SSI so it would not be entitled to deduction u/s 80IB. He had to fulfill all the required conditions for claiming deduction u/s 80IB in each and every year of deduction.
Held by High Court:
High Court relied on the judgment of Ace Multi Axes Systems Ltd vs DCIT(2014) 367 ITR 266 (kar) in which it was held that once the assessee got eligible by fulfilling all the required conditions for claiming deduction u/s 80IB for consecutive 10 years then it was not required to fulfill all the required conditions
for deduction in all the 10 years. In other words fulfillment of required conditions for deduction u/s 80IB was to be fulfilled only in the initial assessment year not in all the 10 years of deduction. So the assessee was eligible for claiming the deduction u/s 80IB. With this appeal of revenue got dismissed.
