Search Results For: initial assessment year


CIT vs. Classic Binding Industries (Supreme Court)

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DATE: August 20, 2018 (Date of pronouncement)
DATE: August 23, 2018 (Date of publication)
AY: -
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CITATION:
S. 80-IC: An assessee who avails of deduction for a period of 5 years @ 100% of profits and gains is entitled to deduction on 'substantial expansion' for remaining 5 Assessment Years @ 25% (or 30% where the assessee is a company) and not @ 100% (Mahabir Industries v. PCIT 256 TM 201 (SC) distinguished)

As pointed out above, once the assessees had started claiming deduction under Section 80-IC and the initial Assessment Year has commenced within the aforesaid period of 10 years, there cannot be another initial Assessment Year thereby allowing 100% deduction for the next 5 years also when sub-section (3), in no uncertain terms, provides for deduction @ 25% only for the next 5 years. It may be asserted again that the assessees accept the legal position that they cannot claim deduction of more than 10 years in all under Section 80-IC

Mahabir Industries vs. PCIT (Supreme Court)

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DATE: May 18, 2018 (Date of pronouncement)
DATE: May 19, 2018 (Date of publication)
AY: 2008-09, 2009-10
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CITATION:
S. 80-IC: The fact that the assessee has earlier availed deduction u/s 80-IA & 80-IB is of no concern because deduction u/s 80-IC is available from the "initial year" i.e. the year of completion of substantial expansion. The inclusion of period for the deduction availed u/s 80-IA & 80-IB, for the purpose of counting ten years, is provided in sub-section (6) of s. 80-IC and it is limited to those industrial undertakings or enterprises which are set-up in the North-Eastern Region

If the assessee had earlier availed deduction under Section 80-IA and Section 80-IB, that would be of no concern inasmuch as on carrying out substantial expansion, which was carried out and completed in the Assessment Year 2006-07, the assessee became entitled to deduction under Section 80-IC from the initial year. The term ‘initial year’ is referable to the year in which substantial expansion has been completed, which legal position is stated by the High Court itself and even accepted by the Department as it has not challenged that part of the judgment. The inclusion of period for the deduction is availed under Section 80-IA and Section 80-IB, for the purpose of counting ten years, is provided in sub-section (6) of Section 80-IC and it is limited to those industrial undertakings or enterprises which are set-up in the North-Eastern Region. By making specific provision of this kind, the Legislature has shown its intent, namely, where the industry is not located in North- Eastern State, the period for which deduction is availed earlier by an assessee under Section 80-IA and Section 80-IB will not be reckoned for the purpose of availing benefit of deduction under Section 80-IC of the Act.

CIT vs. Hercules Hoists Ltd (Bombay High Court)

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DATE: June 14, 2017 (Date of pronouncement)
DATE: December 29, 2017 (Date of publication)
AY: 2009-10
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CITATION:
S. 80-IA(5): Only losses of the years beginning from the initial assessment year are to be brought forward for set-off against profits of the eligible unit. Losses of earlier years which are already set off against income cannot be brought forward notionally for set-off. The fiction in s. 80-IA(5) is created only for a limited purpose and cannot be extended

The eligible business were the only source of income, during the previous year relevant to the initial assessment year and every subsequent assessment years. When the assessee exercises the option, the only losses of the years beginning from initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of the assessee. Looking forward to a period of ten years from the initial assessment is contemplated. It does not allow the Revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though the same were set off against other income of the assessee and the set off against the current income of the eligible business. Once the set off is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally. A fiction created in subsection does not contemplates to bring set off amount notionally. The fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created

Stovekraft India vs. CIT (Himachal Pradesh High Court)

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DATE: November 28, 2017 (Date of pronouncement)
DATE: December 7, 2017 (Date of publication)
AY: 2005-06
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CITATION:
S. 80-IC: Entire law on concept of "initial assessment year" and "substantial expansion" explained. Also, law on interpretation of statutes which confer incentives for promoting development explained. Law on interpretation when there is doubt also explained. Law on whether CBDT Circulars are mere external aids in interpretation of a statute or more also explained

“substantial expansion” can be on more than one occasion. Meaning of expression “substantial expansion” is defined in clause [8(ix)] of Section 80-IC and with each such endeavour, if the assessee fulfills the criteria then there cannot be any prohibition with regard thereto. For what is important, in our considered view, is not the number of expansions, but the period within which such expansions can be carried out within the window period [7.1.2003 to 1.4.2012], and it is here we find the words “begun” or “begins” and “undertakes substantial expansion” during the said period, as stipulated under clause (b) sub-section 2 of Section 80- IC, to be of significance. The only rider imposed is by virtue of sub-section (6) of Section 80-IA, which caps the deduction with respect to Assessment Years to which a unit is entitled to

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