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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.

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DATE: December 5, 2017 (Date of pronouncement)
DATE: December 7, 2017 (Date of publication)
AY: -
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S. 80-IB: The incentive meant for small scale industrial undertakings cannot be availed by undertakings which do not continue as small scale industrial undertakings during the relevant period. Each assessment year is a different assessment year. The fact that the object of legislature is to encourage industrial expansion does not mean that the incentive should remain applicable even where on account of industrial expansion, the small scale industrial undertakings ceases to be small scale industrial undertakings. The fact that in the initial year eligibility was satisfied is irrelevant

The observations in the impugned order are that the object of legislature is to encourage industrial expansion which implies that incentive should remain applicable even where on account of industrial expansion small scale industrial undertakings ceases to be small scale industrial undertakings. We are unable to appreciate the logic for these observations. Incentive is given to a particular category of industry for a specified purpose. An incentive meant for small scale industrial undertaking cannot be availed by an assessee which is not such an undertaking. It does not, in any manner, mean that the object of permitting industrial expansion is defeated, if benefit is not allowed to other undertakings. On this logic, incentive must be given irrespective of any condition as the incentive certainly helps further expansion by reducing the tax burden. The concept of vertical equity is well known under which all the assessees need not be uniformally taxed. Progressive taxation is a well known element of tax policy. Higher slabs of tax or higher tax burden on an assessee having higher income or higher capacity cannot in any manner, be considered unreasonable

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DATE: September 2, 2016 (Date of pronouncement)
DATE: September 9, 2016 (Date of publication)
AY: 2003-04
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CITATION:
S. 80-IB: Fact that the AO allowed s. 80-IB deduction in the year of setting up does not disentitle him from examining the eligibility in subsequent years. As per the CBDT’s low tax effect circular, the tax effect has to be seen each year irrespective of the fact that a common issue arises over several years

An assessee must fulfill each of the conditions stipulated in Section 80-IB in each of the years in which the deduction thereunder is sought. The Assessing Officer would be entitled to ascertain in each of the assessment years whether or not the conditions of Section 80-IB remained fulfilled. In other words, even where an assessee is found to have fulfilled all the conditions of Section 80-IB in the initial assessment year and has on account thereof been granted the deduction thereunder, an Assessing Officer assessing the assessee’s income in subsequent years would be entitled to ascertain whether in that assessment year the conditions in Section 80-IB remained fulfilled or not. If not, he is bound to deny the deduction

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DATE: April 19, 2016 (Date of pronouncement)
DATE: July 7, 2016 (Date of publication)
AY: -
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Subsidy by way of refund of excise duty and interest for setting up a new industrial undertaking is a capital receipt & not taxable as income. Alternatively, such receipts are "derived" from the industrial undertaking and are deductible u/s 80-IB

The issue raised in these appeals is covered against the Revenue by the decision of this Court in “Commissioner of Income Tax, Madras Vs. Ponni Sugars and Chemicals Ltd.”, reported in (2008) 9 SCC 337, or in the alternate, in “Commissioner of Income Tax Vs. M/s Meghalaya Steels Ltd.“, reported in (2016) 3 SCALE 192 (383 ITR 217 (SC)). The appeals are, therefore, dismissed

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DATE: March 9, 2016 (Date of pronouncement)
DATE: March 12, 2016 (Date of publication)
AY: 2004-05
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CITATION:
S. 80-IB(4): Subsidies (such as transport subsidy, Interest subsidy and power subsidy) paid to the assessee with the object of reducing the cost of production constitutes "profits derived from the business of the industrial undertaking" and is eligible for deduction u/s 80-IB. Liberty India 317 ITR 218 (SC) is distinguishable on facts

In Liberty India v. Commissioner of Income Tax 317 ITR 218 (SC)/ 2009 (9) SCC 328, what this Court was concerned with was an export incentive, which is very far removed from reimbursement of an element of cost. A DEPB drawback scheme is not related to the business of an industrial undertaking for manufacturing or selling its products. DEPB entitlement arises only when the undertaking goes on to export the said product, that is after it manufactures or produces the same. Pithily put, if there is no export, there is no DEPB entitlement, and therefore its relation to manufacture of a product and/or sale within India is not proximate or direct but is one step removed. Also, the object behind DEPB entitlement, as has been held by this Court, is to neutralize the incidence of customs duty payment on the import content of the export product which is provided for by credit to customs duty against the export product. In such a scenario, it cannot be said that such duty exemption scheme is derived from profits and gains made by the industrial undertaking or business itself

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DATE: November 21, 2014 (Date of pronouncement)
DATE: December 3, 2014 (Date of publication)
AY: 2008-09 & 2009-10
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CITATION:
S. 80-IB: Excise duty refund is "derived" from the undertaking. Liberty India 316 ITR 218 (SC) is distinguishable

The AO has denied 80IB deduction on excise duty refund for the sole reason that it cannot be treated as income derived from eligible business of the undertaking. However, as can be seen from the facts brought on record, there …

DCIT vs. Coromandel International Ltd (ITAT Hyderabad) Read More »