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DCIT Circle-5 (1) New Delhi Versus Sh. Shyam Sunder Khemka Delhi

Deduction u/s 80IC - Held that:- As for the year under consideration the assessee is eligible for claim of deduction under section 80IC of the Act at the rate of 100% in view of substantial expansion made in assessment year 2008-09. - ITA No. 5378/Del/2013 - Dated:- 29-7-2016 - SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant : Smt. Anima Barnwal, Sr.DR For The Respondent : Dr. Rakesh Gupta & Sh. Somil Aggarwal, Advocates ORDER PER O.P. KANT, A.M.: This .....

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onal evidence under Rule 46A of the IT Act without giving an opportunity to the A.O. for representing revenue s view on it ? iii. That the order of the Ld. CIT(A) is erroneous and is not tanable on facts and in law. iv. That the grounds of appeal are without prejudice to each other. v. That the appellant craves leave to add, alter, amend or forgo any ground(s) of the appeal raised above at the time of the hearing. 2. Briefly stated facts of the case are that the assessee, an individual, was enga .....

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The case was selected for scrutiny and during the course of scrutiny proceedings, the assessee revised its return of income on 28/09/2011, declaring total income at ₹ 16,29,213/-. In the original return of income deduction under section 80IC of the Act was claimed at the rate of 25% of the profit of the unit, whereas in the revised return filed the assessee claimed deduction under section 80IC of the Act at the rate of 100% of the profit of the unit. The Assessing Officer did not consider .....

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ispute directed the Assessing Officer to allow hundred percent deduction under section 80IC of the Act. Aggrieved, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above. 3. In ground No. 1, the Revenue has challenged the direction of the learned Commissioner of Income-tax (Appeals) in allowing 100% deduction under section 80IC of the Act by considering the return of income which was filed after the due date under section 139(5) of the Act. 3.1 Before us, the learne .....

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nce to law. 3.2 On the contrary, learned counsel of the assessee supporting the findings of learned Commissioner of Income-tax (Appeals), submitted that the assessee has been allowed similar claim in proceedings under section 263 of the Act by the principal Commissioner of income tax in assessment year 2010- 11. In assessment year 2012-13, also the Assessing Officer in assessment completed under section 143(3) of the Act has allowed 100% deduction in respect of the profit of the unit under secti .....

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of Hon ble Apex Court, Hon ble jurisdictional High Court and various courts and Tribunal on the issue in dispute. 3.3 We have heard the rival submissions and perused the material on record including the paper book filed by the assessee. The Assessing Officer has denied the hundred percent deduction under section 80IC of the Act on the ground that the revised return in which the claim for hundred percent deduction was made, is not valid revised return. On this issue learned Commissioner of Incom .....

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evised return can be allowed to the assessee. 3.4 As regard to the first issue of admissibility of the claim is concerned, the fact are that it is the sixth year of the operation of the unit of the assessee in respect of which claim of deduction is made. As per the section 80IC(3) of the Act, enterprise or the undertaking referred in Section 80IC(2)(b)(ii) of the Act shall be allowed deduction at the rate of hundred percent of eligible profit for 5 assessment year commencing with initial assessm .....

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rd to deduction allowable to the assessee u/s 80IC of the Act, as the same has been allowed to the appellant in the earlier assessment years and also even in the subsequent assessment years. There is also no dispute with regard to expansion carried out by the appellant in FY 2007-08, as the AO himself has allowed 100% deduction in AY 2008-09 and AY 2010-11. It is seen from the details available on record, that the total value of plant and machinery as on 31.3.2007 (before depreciation) in the sa .....

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t is covered as per clause (ix) of sub section (8) of Section 80IC of the Act, and appellant is entitled for deduction @ 100% from the Asstt. Year under which substantial expansion has taken place. Thus, the first assessment year after substantial expansion was AY 2008- 09, for which appellant was allowed deduction @ 100% of the profit derived from his above unit, and appellant is therefore, entitled for 100% deduction of profits for further four assessment years including AY 2009-10. I have als .....

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the records of the case. In the case of M/s. Tirupati LPG Industries Ltd. in which one of us was party to the said decision we have held as under:- 10.1 As per sub-section (2) of section 80 IC deduction under this section is available to any undertaking or enterprises in the following two categories:- i. The undertaking or enterprises has begun or begins to manufacture or produce any article or thing during the period 7.1.2003 to 1.4.2012; ii. The undertaking which manufacture or produce any ar .....

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units. 10.2.1 In the second category, the deduction is allowed in case of expansion by the existing units which undertake substantial expansion during the specified period of7.1.2003 to 1.4.2012." 10.3 There is no dispute on the fact that (a) the assessee is entitled to exemption U/S 80 IC of the Act ie. that the assessee has satisfied all the conditions specified in the section; (b) that there is substantial expansion during the year as per requirement of the section 10.4 The only dispute .....

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unambiguous. A plain reading of Sec.80-IC(8)(v) which defines the term "initial assessment year" read with Sec.80- IC(8)(ix) which defines the term "substantial expansion" makes it clear that there is no restriction or bar on more than one substantial expansion being undertaken by an assessee. In our view, a unit can undertake any number of substantial expansions, in the absence of any specific restriction in the Section There is no suggestion in the language of the section .....

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ment in plant & machinery exceeding at least 50% of the book value of plant and machinery ie. gross value before taking depreciation into account. If such substantial expansion is completed, then, for the purpose of this section, the Assessment Year relevant to the P.Y. in which such substantial expansion is completed becomes the initial assessment year. Once it becomes the initial Assessment Year consequently under sub section (3) the assessee would be entitled to 100% deduction of profits .....

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tial expansion will me "initial year". If the literal meaning of the term "initial assessment year" is to be taken, then there is no requirement of defining this term in the section. We have to go by the language of the section. 10.6 The CIT(A) denies the deduction on the ground that it would amount to evergreening of an incentive provision. Sub section (6) of S. 80-IC reads as follows. "(6) Notwithstanding anything contained in this Act, no deduction shall be allowed to .....

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Thus there is no evergreening of the provisions. The assessee cannot claim the said deduction fur a total period exceeding 10 years. The deduction could be allowable only for the balance period of 5 years including this Assessment Year 2009-10. Only the rate of deduction goes up. 10.7 The Chandigarh 'B" Bench of the Tribunal in the case of S.R. Paryavaran Engineers Circle 5(1) (P.) Ltd. (supra) was considering a case where the assessee originally claiming deduction u/s 80 IB(iv) of the .....

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title the assessee to claim the above said deduction. To our mind this case law is not directly on the point. 11. In view of the above discussion, as on a plain reading of the section and interpretation of the term initial Assessment Year, we conclude that the claim of the assessee is admissible. Even if a view is taken that there is some ambiguity in the language of the section, then, being an incentive provisions, the ratio of the decisions of the Hon'ble Supreme Court in the case of Bajaj .....

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herefore is allowed. 3.6 We also find that learned Commissioner of Income Tax while disposing the proceedings under section 263 of the Act for assessment year 2010-11 has given finding that during the financial year 2007-08, corresponding to the assessment year 2008-09, the assessee made substantial expansion. The relevant finding of the Commissioner of Income Tax is reproduced as under: 2. Assessing Officer's proposal for rejecting the claim of 100% deduction u/s 80 SC of the IT Act on the .....

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of the previous year in which the substantial expansion is undertaken. It has been noticed that during the financial year 2007- 08 the assessee has made investment in the plant and machinery of ₹ 1,14,42,802/- which is more than 50% of the gross block value at the beginning of the previous year in which substantial expansion undertaken i.e. as at 01.04.2004 which is ₹ 1,80,36,875/ (before depreciation), such, it is substantial expansion. Specific definition of substantial expansion .....

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dify the assessment order to the extent of claim made by the assessee u/s 80IC of the IT Act as proposed by the Assessing Officer u/s 263 of the IT Act. 3.7 Thus, we find that in subsequent assessment years, the Department itself has accepted the admissibility of the hundred percent deduction under section 80IC of the Act for five assessment years from assessment year 2008-09 on account of substantial expansion. Hence, the rule of consistency demands that the Department should have allowed the c .....

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re us is whether the claim for deduction in a revised return which is filed after the statuary period prescribed under section 139(5) of the Act, can be allowed? 4.1 The learned Commissioner of Income-tax (Appeals) after referring to various decisions on the issue in dispute given his finding as under: ………..Now the only issue and grievance of the appellant is that the Assessing Officer has not allowed 100% deduction u/s 80IC of the Act, on the basis of revised claim u/s. 80I .....

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d return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier: Provided that where the return relates to the previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year.] A plain reading of the above section expla .....

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le filing the return. Assessee can revised the same by filing a revised return as per provisions of Section 139(5) of the Act. Further, if there was some wrong statement of fact in the return filed earlier, it can also be revised by way of filing a revised return u/s 139(5) of the Act. But, in case the assessee has made some wrong claim under any provisions of the Act, or has under claimed or excess claimed any deduction, which has not been revised by the assessee by way of filing a revised retu .....

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parately assessed in those status, that just because assessee has inadvertently declared some income which was not taxable, statute does not empower the AO to punish by way of putting tax on such income declared, just because assessee has inadvertently declared in his return of income, and had not revise the same by way of filing of a return u/s 139(5). Such a wrong declaration, or any inadmissible claim Or wrong claim even if not revised by the assessee by way of filing a revised return, cannot .....

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e being assessed by him as per provisions of the Act. The question remains whether the assessee is entitled to deduction u/s 80IC or not and if deduction is allowable u/ 80IC to the Assessee, then whether the same was to be allowed at 25% or 100%. As discussed supra, it is not the case of the AO that assessee had not carried out substantial expansion during the FY 2007-08. Therefore, even if the assessee would not have revised the claim or would not have revised the return, AO was duty bound to .....

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; Haryana High Court in the case of Commissioner of Income Tax Vs. RAMCO INTERNATIONAL (2009) 221 CTR (P&H) 491 while adjudicating the issue with regard to claim of the assessee for deduction u/s 80IB held that even if claim has not been made in the return by the assessee, and Assessee furnished the documents and Form No. 10CCB during assessment proceedings, claim for deduction under s. 80-IB was admissible-There was no requirement for filing any revised return-No substantial question of law .....

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that year even though legally such income was not taxable as per law. In the case of CIT vs. JAI PARABOLIC SPRINGS LTD. 306 ITR 42 (Del), the issue before the Hon ble Delhi High Court was whether the Tribunal was right in law in allowing relief of ₹ 15,58,500 in the assessment year under consideration when no such claim was made by the assessee in the return of income ? Hon ble High Court held that Tribunal had power to allow deduction for expenditure to assessee to which it was otherwise .....

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to apply the relevant provisions of the Indian Income-tax Act for the purpose of determining the true figure of the assessee's taxable income and the consequential tax liability. Merely because the assessee fails to claim the benefit of a set-off, it cannot relieve the Income-tax Officer of his duty to apply section 24 (set off of loss etc) in an appropriate case. Hon ble Bombay High Court held in the case of Central Provinces Manganese Ore 112 ITR 734 held that the mere fact that such a de .....

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A. It filed return claiming under s.10(23C). Later, it filed a revised return claiming exemption under s. 11, along with the requisite audit report and is entitled to exemption under section 11 and that exemption was the statutory exemption available to the assessee. The assessee was legally entitled to exemption under s. 11. The exemption could not be denied for the reason that originally it was claimed under s.!0(23C). S.11 and s.lO(23C) of the Income Tax Act 1961. The Assessing Officer has tr .....

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e duty of the Assessing Officer to ask information from the assessee at the time of scrutiny but he has not asked any information before completing the assessment under section 143(3) of the Act. Hon ble ITAT, Mumbai held in the case of EMERSON NETWORK POWER INDIA (P) LTD. vs. ACIT 122 TTJ 67 (MUM) that AO was obliged to give due relief to assessee or entertain its claims if admissible as per law even though the assessee had not filed revised retum- Legitimate claim of assessee should not be rej .....

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various other Courts, and more particularly, when the AO himself has allowed the claim of the appellant in subsequent assessment year and earlier assessment years, I do not find and reason for not allowing the claim of the appellant, even if no revised return was filed within the meaning of section 139(5) of the Act, but claim was made during the course of assessment proceedings, as the duty of the Assessing Officer is to assessee the true and correct income of the assessee, and to allow admissi .....

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