INCOME TAX ACT, 1961

Section 80-IE

Deduction under section 80-IE - Allowability - Substantial expansion/modernization of existing industrial unit - AO denied deduction on the ground of assessee having availed of exemption under section 80-IB and 10C in earlier periods

Assessee claimed deduction under section 80-IE on account of substantial expansion and modernisation of existing industrial unit by way of increase in capital outlay by 133% of initial capital outlay in financial year 2008-09. AO denied assessee's claim on the ground that assessee has already availed of exemption under section 80-IB and 10C in earlier periods prior to assessment year 2010-11 for 10 years. Held: Purpose of section 80-IE was to establish business of nature specified in said provision in specified States. This provision was, thus, aimed at encouraging undertakings or enterprises to establish and set up such units in concerned States to make them industrially advanced States as well. Hence, assessee was entitled to claim deduction under section 80-IE from Financial year 2008-09 and onwards due to modernization of its plant & machinery by infusing additional capital investment by more than 25 % of initial investment in plant & machinery as envisaged in clause (iii) of sub-section 7 of section 80-IE.

Relied:Aarham Softronics (2019) 412 ITR 623 (SC) : 2019 TaxPub(DT) 1345 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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