The assessee has taken the claim 100% in first five years in Himachal pradesh. Now he has done substantial expansion. Can he claim 100% deduction for next 5 years or it will be restricted to 25% of profit only
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Are you talking about exemption under notification no. 50/2003
? The answer to your query is yes. You can enjoy the exemption period of 10 years even if substantial expansion of your unit. There is no restriction on expansion after commencement of exemption period. In fact, no government would like to restrict the progress or development therefore, more production would not dis-entitle you to avail the benefit of exemption for the remaining period.
thanks for ur reply. i m just asking about deduction u/s 80 IC that since the entitlement is for first 5 years 100% and next 5 years restricted upto 25%. Already assessee has claimed the deduction for 5 years 100%. Now he has done substantial expansion as per the definition of section 80 IC. Can he claim deduction upto 100% for next 5 years or it will be restricted to 25% only.
Yes, Dharmender Batra Ji, you are right, I have given reply under central excise instead of under Income Tax. But, the similar principal is applicable to Section 80IC of the Income Tax also. A unit availing exemption under section 80 IC, can not re-initiate the exemption period from the date of expansion. Total period of exemption shall be 10 years and exemption would be allowed strictly under section 80IC(3) i.e. 100% exemption upto 10 year in case of certain units and 100% exemption upto 5 years and 25% exemption for subsequent 5 years for the other units. Therefore, even if you expand your unit substantially after expiry of 5 years, your exemption shall be restricted to 25% for the remaining period of 5 years.
Thanks for your valuable reply
can you help us in one more thing i.e. revenue generated from expansion after 01.04.2012 will continue to qualify for deduction under 80IC as per time table available to it. As the 7 years is available after that. Is there any decided case law available from which reference can be drawn.