Legacy Foods Pvt. Ltd. Vs DCIT & Anr. (Delhi High Court)
Conclusion: Enterprises claiming deductions under Section 80IC were not required to obtain government approval if they operate in notified special zones. Section 80IC did not mandate an agreement or approval from state or local authorities.
Held: Assessee-company had established a manufacturing unit in Himachal Pradesh within the prescribed period and sought deductions under Section 80IC. AO denied the claim, arguing that assessee did not comply with Rule 18BBB which mandated an audit report in Form 10CCB. AO argued that this form required proof of approval from local or state authorities for eligible businesses. Assessee challenged this interpretation, arguing that Rule 18BBB applied to multiple provisions, including Sections 80I, 80IA, 80IB, and 80IC. The approvals were necessary under Section 80IA for infrastructure projects but no such requirement existed under Section 80IC. Assessee argued that Tribunal misread the law by imposing an additional condition that the statute did not prescribe. It was held that Tribunal failed to recognize the fundamental distinction between Sections 80IA and 80IC, and wrongly applied conditions meant for infrastructure projects to industrial units in special zones. Section 80IC did not mandate an agreement or approval from state or local authorities. Tribunal’s reliance on Sections 80IA(8) and 80IA(10) was misplaced, as the issue of profit shifting was not raised by the Revenue at any stage. The court explained that tax authorities couldn’t not impose additional conditions beyond what was prescribed in the law. The court set aside an order by Tribunal and allowed the appeal.
