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2019 (5) TMI 781 - HC - Income TaxDeduction u/s 80IC - substantial expansion - whether an assessee is entitled to deduction @ 100% of its profits or @ 25% only, where the substantial expansion is carried out by it after initial period of five years from the date of setting up of the industrial unit? - HELD THAT:- In the assessment year 2011-12, the assessee carried out substantial expansion and claimed deduction @ 100% u/s 80IC for the assessment year 2012-13. The Assessing Officer allowed only 25% of deduction claimed u/s 80IC being the sixth year as a firm and disallowed 75% of the deduction claimed under Section 80IC of the Act. The CIT(A) confirmed the disallowance. The Tribunal allowed the appeal and directed the Assessing Officer to grant deduction of 100% of its eligible profits to the assessee following decision of Hon'ble Himachal Pradesh High Court in the case of M/s Stoverkraft India [2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT] . The matter is no longer res integra. The Apex Court has finally in M/S. AARHAM SOFTRONICS [2019 (2) TMI 1285 - SUPREME COURT] held that in case substantial expansion is carried out as defined in clause (ix) of sub-section (8) of Section 80-IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become ‘initial assessment year’, and from that assessment year the assessee shall been entitled to 100% deductions of the profits and gains. Such deduction, however, would be for a total period of 10 years, as provided in sub-section (6). - Decided in favour of assessee. Disallowance u/s 37 and 36(1)(iii) - HELD THAT:- Tribunal had held that the disallowances challenged in the additional grounds pertaining to interest and bad debts resulted in increasing the business profits of the assessee. Since the assessee was held entitled to claim deduction of its profits at the rate of 100%, therefore, the additions so made were entitled to deduction u/s 80IC as accepted by the Department also vide the Circular dated 2.11.2016 resulting in no addition to the taxable income of the assessee. No illegality or perversity could be pointed out by the learned counsel for the revenue in the aforesaid findings recorded by the Tribunal in the appeals which may warrant interference by this Court. No question of law, muchless a substantial question of law arises in these appeals - revenue appeals are dismissed
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