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Case Law Details

Case Name : Anand Food And Dairy Products Vs. ITO (Gujarat High Court)
Appeal Number : Tax Appeal Nos. 174- 176 of 2016
Date of Judgement/Order : 30/03/2016
Related Assessment Year :
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Anand Food And Dairy Products Vs. ITO (Gujarat High Court)

Appellant assessee having fulfilled the requirements for being eligible to deduction under section 80IB(11A) of the Act, the assessing officer held that the assessee is entitled to the benefit there under. Insofar as undertakings deriving profits from the business of processing, preservation and packaging of fruits and vegetables are concerned, the same came to be included for the benefit of deduction under sub-section (11A) of section 80IB of the Act, only with effect from 1-4-2005. Therefore, prior thereto, the appellant was not entitled to the benefit thereof.

In the present case, the appellant had commenced its business with effect from 2nd June, 2001, which is relevant to the assessment year 2002-03. Section 80IB(11A) of the Act provides for the benefit of deduction of profits and gains of an undertaking deriving profit from the business of processing, preservation and packaging of fruits and vegetables for ten consecutive years beginning with the initial assessment year. “Initial assessment year” has been defined under section 80IB(14)(c)(iv) of the Act to mean in the case of an undertaking engaged in the business of processing, preservation and packaging of fruits or vegetables or in the integrated business of handling, storage and transportation of foodgrains, the assessment year relevant to the previous year in which the undertaking begins such business. Thus, in terms of the definition of initial assessment year as defined under section 80IB(14)(c)(iv) of the Act, the initial assessment year is the assessment year relevant to the previous year in which the undertaking begins such business. Therefore, the appellant assessee would be entitled to the benefit of deduction under section 80IB(11A) of the Act with effect from initial assessment year namely, the assessment year relevant to the year in which it commenced its business, that is, assessment year 2002-03.

However, during assessment year 2002-03, the provisions of section 80IB(11A) of the Act did not cover units like the assessee and hence, the assessee was not entitled to the benefit thereof. The assessee came to be entitled to the benefit of deduction under section 80IB(11A) of the Act only with effect from 1-4-2005, when the words “an undertaking engaged in the business of processing, preservation and packaging of fruits or vegetables” came to be introduced in sub-section (11A). Section 80IB(11A) of the Act provides for a total period of deduction not exceeding ten consecutive years. In other words deduction under section 80IB(11A) of the Act can be availed of for a maximum period of ten years. Section 80IB(11A) of the Act also provides that such deduction shall be hundred percent of the profits and gains derived from such undertaking for five assessment years beginning with the initial assessment year and thereafter 25% of the profits and gains derived from the operation of such business.

However, the fact that the units like the assessee came to be included for entitlement to the benefit of deduction section 80IB(11A) of the Act only with effect from 1-4-2005 would not change the “initial assessment year” which has been clearly defined under section 80IB(14)(c)(iv) of the Act to mean the assessment year relevant to the year in which the assessee commenced its business. Thus, an undertaking like the assessee, which derives profits from the business of processing, preservation and packaging of fruits or vegetables would be entitled to deduction under section 80IB(11A) of the Act from the initial assessment year, viz. the assessment year relevant to the previous year in which it begins such business.

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One Comment

  1. Yash Garg says:

    If i have 2 warehouses and 5 years has been lapsed after availing 100% deductions and i constructed new warehouse (That is 3rd warehouse) whether i will be available for 100% deduction for next 5 years due to new warehouse or only 25% deduction is available please advice

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