100% Deduction u/s 80IC allowable when Industry undergone Substantial Expansion after expiry of 5 years of its Incorporation: ITAT [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that 100% deduction under section 80IC is allowable when an industry underwent a substantial expansion after the expiry of 5 years of its incorporation.

The appellant, Spinks Impex is a partnership firm carrying business of manufacturing printing machines, and their parts, printing plates, blades, and injection molded parts and mold. The appellant claimed a 100% deduction of Profits and gains of the undertaking under section 80IC in its return.

The revenue disallowed the 100% deduction under section 80IC alleging that as it is the 6th year of claiming of 100% deduction, whereas as per Income Tax Act, 1961, 100% deduction will be given for the first 5 years and thereafter 25% deduction is allowed.

On appeal, by relying on the verdict of the ITAT Delhi Bench in the case of Triputi LPG Industries Limited the counsel for the appellant submitted that the appellant completed a second substantial expansion consequently eligible for deduction increased to 100%.

The Coram of Mr. A.D. Jain, Vice President, and Dr. B. R. R. Kumar, Accountant Member by relying on the decision of Apex court in the matter of PCIT vs. Aarham Softronics has observed that an assessee availing exemption of 100% tax on setting up of a new industry, which is admissible for 5 years, and either on the expiry of 5 years or thereafter (but within 10 years) from the date when these assessees started availing exemption, they carried out the substantial expansion of its industry, from that year the assessees become entitled to claim exemption at 100% again.

The Tribunal has held that “keeping in view, the latest judgment of the Hon’ble Supreme Court allowing 100% deduction u/s 80IC on substantial expansion of the unit, the appeals of the assessee are hereby allowed”.

Mr. K.A. Manu appeared on behalf of the revenue.

To Read the full text of the Order CLICK HERE

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