Year of substantial expansion is initial Assessment Year within 10 years for claiming Deduction u/s 80-IC: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench held that there can be two initial assessment years and the year in which there was substantial expansion that year is the initial assessment year within the period of 10 years for the purpose of claiming deduction under section 80-IC of the Income Tax Act, 1961.

The appeal has been preferred by the assessee, M/s. A. G. Peripherals has been preferred against the orders of the Commissioner of Income Tax (Appeals), in confirming the action of the Assessing Officer in disallowing deduction under section 80-IC of the Income Tax Act, 1961.

The Counsel appearing for the Revenue submitted that, the CIT (Appeals) sustained the disallowance of deduction claimed by the assessee under section 80-IC of the Act following the decision of the Supreme Court in the case of Classic Binding Industries wherein the Apex court held that once the assessee had started claiming deduction under section 80-IC of the Act and the initial assessment year has commenced within the period of 10 years there cannot be any initial year thereby allowing 100% deduction in the next 5 years on the basis of substantial expansion of the unit.

Since the Supreme Court in the case of Pr. CIT Vs. Aarham Softronics held that the decision of Classic Binding Industries is no more good law the ratio laid down by the Apex court in its latter judgement i.e. Pr. CIT Vs. Aarham Softronics applies to the facts of the assessee’s case.

A Coram consisting of Challa Nagendra Prasad, Judicial Member and Pradip Kumar Kedia, Accountant Member observed that “Thus respectfully following the decision of the Hon’ble Supreme Court we hold that the assessee is entitled for deduction under section 80-IC of the Act for the assessment years 2012-13 and 2015-16 which are under consideration. We reverse the order of the CIT (Appeals) and direct the Assessing Officer to allow the claim of the assessee under section 80-IC of the Act.”

To Read the full text of the Order CLICK HERE

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