M/s Aqua Vitoe Laboratories, Baddi v. DCIT, Circle , Parwanoo

ITA 1138/CHANDI/2017 | 2014-2015
Pronouncement Date: 28-11-2017 | Result: Dismissed

Appeal Details

RSA Number 113821514 RSA 2017
Assessee PAN AAMFA1630L
Bench Chandigarh
Appeal Number ITA 1138/CHANDI/2017
Duration Of Justice 4 month(s) 16 day(s)
Appellant M/s Aqua Vitoe Laboratories, Baddi
Respondent DCIT, Circle , Parwanoo
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 28-11-2017
Last Hearing Date 16-11-2017
First Hearing Date 16-11-2017
Assessment Year 2014-2015
Appeal Filed On 12-07-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHA CHANDIGARH BEFORE SMT. DIVA SINGH JUDICIAL MEMBER AND DR. B.R.R. KUMAR ACCOUNTANT MEMBER ITA NO.1138/CHD/2017 (ASSESSMENT YEAR : 2014-15) M/S AQUA VITOE LABORATORIES VS. DY. CIT VILL KUNJHAL NEAR JHARMAJRI PARWANOO BADDI SOLAN PAN/TAN: AAMFA1630L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMITOZ SINGH KAMBOJ DEPARTMENT BY : SHRI GULSHAN RAJ DATE OF HEARING : 16.11.2017 DATE OF PRONOUNCEMENT : 28/11/2017 O R D E R PER DR. B.R.R. KUMAR A.M. : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) SHIMLA DATED 22/02/2017. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW LD. CIT (APPEALS) SHIMLA HAS ERRED IN: I. AFFIRMING THE ORDER OF LD. DY. COMMISSIONER OF I NCOME TAX PARWANOO IN RESTRICTING THE CLAIM OF APPELLANT OF DEDUCTION U/S 80-IC OF THE INCOME TAX ACT 1961 AT 25% INSTEAD OF 100% CLAIMED BY THE APP ELLANT IN THE SEVENTH YEAR OF OPERATION OF NEW INDUSTRIAL UNDERTAKING OF THE APPELLANT WHEREIN SUBSTANTIAL EXPANSION WAS CARRIED OUT IN SUCH NEW I NDUSTRIAL UNDERTAKING BY THE APPELLANT. II. MISINTERPRETING THE PROVISIONS OF SECTION 80-IC OF THE ACT WHICH PROVIDE FOR SUBSTANTIAL EXPANSION TO BE UNDERTAKEN DURING THE P ERIOD BEGINNING ON 7TH JANUARY 2003 AND ENDING BEFORE 1ST APRIL 2012 AND ERRONEOUSLY UPHOLDING THAT THE BENEFIT OF 100% DEDUCTION U/S 80-IC OF THE ACT FOR FIRST FIVE YEARS IN CASE OF SUBSTANTIAL EXPANSION IS AVAILABLE ONLY TO THE UNITS THAT EXISTED AND WERE OPERATIONAL AS ON 07.01.2003 AND SUCH BENEFIT IS NOT AT ALL MEANT FOR THE UNITS THAT CAME INTO BEING ON OR AFTER THE INTRODUC TION OF THE SCHEME OF SUCH DEDUCTION. 2 III. UPHOLDING THAT ONCE AN 'INITIAL ASSESSMENT YEA R' IS DETERMINED IN CASE OF AN UNDERTAKING CLAIMING BENEFIT U/S 80-IC OF THE AC T IT CANNOT BE CHANGED EVEN IF SUCH UNDERTAKING COMPLETES SUBSTANTIAL EXPANSION AND AGAIN QUALIFIES FOR DEDUCTION UNDER THE SAID SECTION ON THE BASIS OF 'Q UALIFYING EXPANSION'. IV. MAKING A NARROW INTERPRETATION OF THE PROVISION S OF SECTION 80-IC OF THE INCOME TAX ACT. 1961 WHICH WAS INTRODUCED AS A WELFARE LEG ISLATION FOR PROVIDING STIMULUS TO THE ECONOMY OF INDUSTRIALLY BACKWARD STATES SUCH AS HIMACHAL PRADESH. 2. THAT THE LD. CIT(A) HAS ERRED IN MAKING AN ADDIT ION OF RS. 27 61 384/- ON ACCOUNT OF INTEREST INCOME BY DISALLOWING THE DEDUC TION U/S 80IC TO THAT EXTENT OWING TO THE FACT THAT THE INTEREST INCOME DOES NOT HAVE ANY DIRECT NEXUS WITH MANUFACTURING ACTIVITIES OF THE BUSINESS. 3. THE ISSUE INVOLVED IN THE PRESENT APPEAL PERTAIN S TO RESTRICTION OF DEDUCTION CLAIMED UNDER SECTION 80IC AT THE RATE O F 100% ON ACCOUNT OF SUBSTANTIAL EXPANSION UNDERTAKEN. 4. BRIEF FACTS RELEVANT TO THE CASE ARE THAT THE AS SESSEE STARTED ITS MANUFACTURING ACTIVITY/OPERATION ON 29/06/2007 AND INITIAL ASSESSMENT YEAR FOR CLAIM OF DEDUCTION U/S 80IC OF THE ACT WAS A.Y. 200 809. THE ASSESSEE CLAIMED DEDUCTION U/S 80 IC TO THE EXTENT OF 100% OF THE EL IGIBLE PROFITS FOR 5 YEARS PERIOD STARTING FROM A.Y.200809 TO A.Y. 201213. DURING A SSESSMENT PROCEEDINGS FOR THE IMPUGNED YEAR THE AO NOTICED THAT THE ASSESSEE FIRM HAD AGAIN CLAIMED HUNDRED PERCENT DEDUCTION OF ITS ELIGIBLE PROFITS ON ACCOUNT OF HAVING CARRIED OUT SUBSTANTIAL EXPANSION IN F.Y. 2007-08. THE ASSE SSING OFFICER FOR DETAILED REASONS MENTIONED IN THE ASSESSMENT ORDER HELD THA T THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80IC ONLY AT THE RATE OF 25% AS AGAINST THE CLAIM OF 100% MADE BY THE ASSESSEE. 5. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(APPEAL) WHO DISMISSED THE ASSESSEES APPEAL AND RESTRICTED THE DEDUCTION CLAIMED TO 25% OF THE PROFITS RELYING UPON THE JUDGEMENT OF THE CHAN DIGARH BENCH OF THE ITAT IN THE CASE OF M/S HYCRON ELECTRONICS VS ITO IN ITA NO . 798/CHD/2012 AND OTHER RELATED CASES. 6. AGGRIEVED BY THE SAME THE ASSESSEE HAS NOW COME UP IN APPEAL BEFORE US. 7. DURING THE COURSE OF HEARING BEFORE US LD. COUN SEL RELIED ON THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) WHILE THE SR . DR ARGUED THAT THE ISSUE WAS COVERED AGAINST THE ASSESSEE BY THE DECISION O F THE CHANDIGARH BENCH OF 3 THE ITAT IN THE CASE OF M/S HYCRON ELECTRONICS VS ITO IN ITA NO. 798/CHD/2012 AND OTHER RELATED CASES. 8. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW. FACTS EMERGING IN THE PRESENT C ASE AND WHICH ARE RELEVANT FOR ADJUDICATING THE ISSUE AT HAND ARE THAT THE ASS ESSEE CAME INTO EXISTENCE AND COMMENCED ITS MANUFACTURING ACTIVITY/OPERATION ON 29.06.2007 WAS ELIGIBLE TO CLAIM DEDUCTION OF 100% OF ITS PROFITS U/S 80IC OF THE INCOME TAX ACT 1961 AND HAD CLAIMED THE SAME FOR FIVE YEARS F ROM A.Y 2008-09 TO A.Y 2012- 13. FURTHER IT IS NOT DISPUTED THAT THE ASSESSEE UN DERTOOK SUBSTANTIAL EXPANSION OF ITS UNDERTAKING IN F.Y. 2007-08 AND ON ACCOUNT OF THE SAME CLAIMED DEDUCTION AGAIN @ 100% OF ITS ELIGIBLE PROFITS WHICH HAS BEEN DENIED TO IT RESTRICTING THE SAME TO 25% OF THE PROFITS WHICH HAS BEEN CHALLE NGED BEFORE US. 9. WE HAVE GONE THROUGH THE ORDER OF THE LD CIT(A) AND FIND NO INFIRMITY IN THE SAME. THE ISSUE OF QUANTUM OF DEDUCTION AVAILAB LE TO NEW UNDERTAKINGS WHICH CAME INTO EXISTENCE AFTER 01.07.2003 AND WHI CH HAVE ALREADY CLAIMED DEDUCTION OF 100% OF THEIR ELIGIBLE PROFITS FOR THE STATUTORILY SPECIFIED PERIOD OF FIVE YEARS ON SUBSTANTIAL EXPANSION OF THE SAID UN DERTAKING HAS BEEN DEALT WITH BY THE ITAT CHANDIGARH BENCH IN THE CASE OF M/S HYC RON ELECTRONICS (SUPRA).THE HONBLE BENCH IN THE SAID ORDER AFTER DEEPLY ANALY ZING THE PROVISIONS OF SECTION 80IC HAS CATEGORICALLY HELD THAT THE BENEFIT OF C LAIMING 100% DEDUCTION OF PROFITS ON UNDERTAKING SUBSTANTIAL EXPANSION IS NOT AVAILABLE TO NEW UNDERTAKINGS SET UP AFTER 01.07.2003. IT HAS BEEN CATEGORICALLY HELD BY THE ITAT THAT THERE CAN BE ONLY ONE INITIAL ASSESSMENT YEAR FOR THE PURPOSE OF CLAIMING DEDUCTION @ 100% OF PROFITS U/S 80IC OF THE ACT. IT HAS ALSO B EEN HELD THAT AS PER SECTION 80IC ELIGIBLE UNDERTAKINGS SET UP IN SPECIFIED AR EAS OF THE STATE OF HIMACHAL PRADESH ARE NOT ENTITLED TO CLAIM DEDUCTION @ 100% OF THE PROFITS BEYOND A PERIOD OF FIVE YEARS. 10. THE LD CIT(A) WE FIND HAS CORRECTLY APPRECIATE D THE FACTS OF THE PRESENT CASE AND APPLIED THE AFORESAID DECISION OF THE ITA T TO RESTRICT THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IC @ 25% OF THE PROFI TS SINCE UNDISPUTEDLY THE ASSESSEE COMMENCED BUSINESS OPERATIONS AFTER 01.07. 2003 I.E. ON 29.06.2007 AND HAD ALREADY CLAIMED DEDUCTION OF 100% OF ITS PR OFITS FOR FIVE YEARS FROM A.Y 2008-09 TO A.Y 2012-13 . THE LD CIT(A) HAS CORRECTLY HELD THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION @ 100% OF ITS PROFI TS IN THE IMPUGNED YEAR ON ACCOUNT OF HAVING UNDERTAKEN SUBSTANTIAL EXPANSION IN F.Y 2007-08 IN VIEW OF THE 4 DECISION OF THE CO-ORDINATE BENCH OF ITAT CHANDIGA RH IN THE CASE OF M/S HYCRON ELECTRONICS (SUPRA). 11. IN VIEW OF THE SAME WE FIND NO MERIT IN THIS GR OUND OF APPEAL RAISED BY THE ASSESSEE AND THE SAME IS THEREFORE DISMISSED. 12. GROUND NO.2 RELATES TO THE DISALLOWANCE OF DEDU CTION UNDER SECTION 80IC ON ACCOUNT OF INTEREST INCOME. 13. DURING THE YEAR THE ASSESSEE HAS RECEIVED ON IN TEREST OF RS. 27 61 384/- AND CLAIMED THIS INTEREST AS A DEDUCTION UNDER SECT ION 80IC. 14. BEFORE THE AO THE ASSESSEE RELIED ON THE JUDGME NT OF CIT VS. KARNAL SUGAR MILLS 161 CTR 241 SUPREME COURT AND ALSO CLAIMED TH AT THE NET INTEREST BEING THE PROFITS AND GAINS OF BUSINESS IN ACCORDANCE WITH LA W. IT WOULD BE ADMISSIBLE FOR DEDUCTION UNDER SECTION 80IC. THE AO HAS DISALLOWE D THE DEDUCTION BASED ON THE JUDGMENT IN THE CASE OF M/S LIBERTY INDIA LTD. VS. CIT 317 ITR 218. 15. THE LD. CIT(A) HAS CONFIRMED THE ADDITION ON TH E GROUNDS THAT THERE WAS NO NEXUS OF FIRST DEGREE BETWEEN THE INTEREST INCOM E AND THE MANUFACTURING INCOME. 16. THE CIT(A) HAS RELIED ON THE JUDGMENT OF THE CO ORDINATE BENCH WHILE DECIDING THE SIMILAR ISSUE OF DEDUCTION UNDER SECTI ON 80IC IN THE CASE OF HYCRON ELECTRONICS AND OTHER GROUP OF CASES IN ITA 374/CHD /2014. 17. BEFORE US THE LD. AR RELIED ON THE SUBMISSIONS MADE BEFORE THE AO AND THE CIT(A). 18. THE LD. DEPARTMENTAL REPRESENTATIVE DR. GULSHAN RAJ ARGUED THAT THE SIMILAR MATTER HAS BEEN COVERED BY THE ORDER OF THE COORDINATE BENCH OF ITAT CHANDIGARH IN CASE OF HYCRON ELECTRONICS & OTHRS. I N ITA NO. 374/CHD/2014 FOR THE AY 2010-11 AND RELIED ON THE ORDERS OF LOWER AU THORITIES. 19. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THIS ISSUE HAS BEEN A LREADY EXAMINED EARLIER BY THE COORDINATE BENCH OF ITAT CHANDIGARH. HONBLE SUPREME COURT IN THE CASE OF PANDIAN CHEMICALS LTD. VS. CIT(SUPRA) AND THE JU DGMENT IN CASE OF LIBERTY INDIA LTD. VS. CIT CLEARLY EXPLAINED THE MEANING OF THE EXPRESSION DERIVED FROM 5 WHICH IS APPLICABLE FOR CLAIMING DEDUCTION UNDER SE CTION 80IC AS WELL AS DEDUCTION U/S 80HH. 20. THUS FOLLOWING THE EARLIER ORDER OF THE TRIBUNA L ON THE SIMILAR ISSUE AND THE JUDGMENTS QUOTED ABOVE THIS GROUND OF THE ASSESSEE IS HEREBY DISMISSED. 21. THE APPEAL OF THE ASSESSEE THEREFORE STANDS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28/11/2017 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR