Pr. CIT v. Aarham Softronics - Taxpublishers.in

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The Tax Publishers2019 TaxPub(DT) 1345 (SC) : (2019) 412 ITR 0623 : (2019) 307 CTR 0233 : (2019) 261 TAXMAN 0529

INCOME TAX ACT, 1961

Section 80-IC

In case substantial expansion is carried out as defined in clause (ix) of sub-section (8) of section 80-IC within the period of 10 years as provided in sub-section (6) the previous year in which substantial expansion is undertaken would become 'initial assessment year', and from that assessment year assessee would be 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).

Deduction under section 80-IC - Profits and gains derived from certain undertakings or enterprises in specified states - Substatial expansion during within period - Eligibility for 100% deduction for another terms of five years

Question arose for consideration was whether an assessee who set up a new industry of a kind mentioned in sub-section (2) of section 80-IC and started availing exemption of 100 per cent tax under sub-section (3) of section 80-IC (which is admissible for five years) could start claiming the exemption at the same rate of 100% beyond the period of five years on the ground that assessee had carried out substantial expansion in its manufacturing unit. Held: In case substantial expansion is carried out as defined in clause (ix) of sub-section (8) of section 80-IC within the period of 10 years, as provided in sub-section (6) the previous year in which substantial expansion is undertaken would become 'initial assessment year', and from that assessment year assessee would be 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). For example, if expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five years. On the other hand, if substantial expansion is undertaken, say, in 8th year, assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes 'initial assesment year' once again. However, this 100% deduction would be for remaining three years, i.e., 8th, 9th and 10th assessment years.

Relied:Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company and others (2018) 9 SCC 1, Punjab Land Development and Reclamation Corpn. Ltd. v. Labour Court [Punjab Land Development and Reclamation Corpn. Ltd. v. Labour Court, (1990) 3 SCC 682 : 1991 SCC (L&S) 71Not good law:Classic Binding Industries

REFERRED : Mahabir Industries v. Pr. CIT [Civil Appeal Nos. 4765-4766 of 2018 decided on 18-5-2018].

FAVOUR : In assessee's favour.

A.Y. :

IN THE SUPREME COURT OF INDIA