The Hon’ble Supreme Court In Principal Commissioner Of Income-Tax v. Aarham Softronics [2019] 412 Itr 623 (Sc

IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLAON THE 23[rd] DAY OF DECEMBER, 2021 BEFOREHON’BLE MS. JUSTICE SABINA & HON’BLE MR. JUSTICE SATYEN VAIDYA INCOME TAX APPEAL No.14 of 2017 Between:- M/S PARK PHARMACEUTICALS, VILLAGE KALLUJHANDA,TEHSIL KASAULI, DISTRICTSOLAN, THROUGH ITS PARTNERSH. HARISH KUMAR SWAHNEY. ….APPELLANT (BY MR. VISHAL MOHAN, ADVOCATE) ANDPRINCIPAL COMMISSIONER OF INCOME TAX, INCOME TAX OFFICE, RAILWAY BOARD BUILDING, THE MALL, SHIMLA. ….RESPONDENTS (BY MR. VINAY KUTHIALA,SENIOR ADVOCATE WITH MR. DIWAN NEGI, ADVOCATE) This petition coming on for orders this day, Hon’ble Ms. Justice Sabina, passed the following: O R D E R Appellant has filed the appeal under Section 260-A of theIncome Tax, Act 1961, challenging the order passed by the Income TaxAppellate Tribunal, Chandigarh in ITA No.523/CHD/2016 on 30[th]November, 2016. 2.Vide order dated 18[th] May, 2017, the appeal was admittedon the following substantial questions of law:- a) Whether the Ld. Income Tax Appellate Tribunal isright in law in holding that benefit of deduction underSection 80IC are allowable to only those units whichwere existing prior to the year 2003 on account of theirsubstantial expansions and the units which were set upafter 2003 were ineligible in respect of the same? b) Whether the Ld. Income Tax Appellate Tribunal isright in law and facts in holding that undertaking whichhas been claimed deduction under Section 80IC isdebarred from claiming further deduction though thefactum of substantial expansion is not in dispute? c) Whether the Ld. Income Tax Appellate Tribunal isright in law and facts in holding that the circular bearingNo.7 of 2003 could be relied upon while interpretingprovisions of Section 80IC of the Income Tax Act, 1961? d) Whether the Ld. Income Tax Appellate Tribunal isright in law and facts in holding that definition of initialassessment year does not allow the undertaking toclaim deduction under Section 80IC of 100% upon theirsubstantial expansion? e) That whether the orders of the Ld. Income TaxAppellate Tribunal is perverse as the same is based onincorrect application of the provisions of law ? 3.Learned counsel for the appellant has submitted that the present appeal is liable to be allowed, in terms of the decision given by the Hon’ble Supreme Court in Principal Commissioner of Income-Tax versus Aarham Softronics [2019] 412 ITR 623 (SC). 4. Learned counsel for the respondent has not controverted the submission made by learned counsel for the appellant to the effectthat the appeal is covered by the decision of the Hon’ble SupremeCourt in Aarham Softronics’s case supra. 5.Hon’ble Supreme Court in Aarham Softronics’s case supra has held as under:- “24.The aforesaid discussion leads us to thefollowing conclusions: (a) Judgment dated August 20, 2018 in ClassicBinding Industries case omitted to take note of thedefinition "initial assessment year" contained in section80-IC itself and instead based its conclusion on thedefinition contained in section 80-IB, which does notapply in these cases. The definitions of "initialassessment year" in the two sections, viz., sections 80-IB and 80-IC are materially different. The definition of"initial assessment year" under section 80-IC has madeall the difference. Therefore, we are of the opinion thatthe aforesaid judgment does not lay down the correctlaw. (b)An undertaking or an enterprise which had set upa new unit between January 7, 2003 and April 1, 2012 inthe State of Himachal Pradesh of the nature mentionedin clause (ii) of sub-section (2) of section 80-IC, wouldbe entitled to deduction at the rate of 100 per cent. of (b)An undertaking or an enterprise which had set upa new unit between January 7, 2003 and April 1, 2012 inthe State of Himachal Pradesh of the nature mentionedin clause (ii) of sub-section (2) of section 80-IC, wouldbe entitled to deduction at the rate of 100 per cent. of the profits and gains for five assessment yearscommencing with the "initial assessment year". For thenext five years, the admissible deduction would be 25per cent. (or 30 per cent. where the assessee is acompany) of the profits and gains. (c) However, in case substantial expansion is carriedout as defined in clause (ix) of sub-section (8) of section80-IC by such undertaking or enterprise, within theaforesaid period of 10 years, the said previous year inwhich the substantial expansion is undertaken wouldbecome "initial assessment year", and from thatassessment year the assessee shall be entitled to 100per cent. deductions of the profits and gains, (d)Such deduction, however, would be for a totalperiod of 10 years, as provided in sub-section (6). Forexample, if the expansion is carried out immediately, onthe completion of first five years, the assessee would beentitled to 100 per cent. deduction again for the next fiveyears. On the other hand, if substantial expansion isundertaken, say, in the eighth year by an assessee suchan assessee would be entitled to 100 per cent.deduction for the first five years, deduction at 25 percent. of the profits and gains for the next two years andat 100 per cent. again from the eighth year as this yearbecomes "initial assessment year" once again.However, this 100 per cent. deduction would be for theremaining three years, i.e., eighth, ninth and tenthassessment years.” 6.The substantial questions of law, framed in this case, standanswered accordingly. Consequently, the appeal is allowed and theimpugned order dated 30[th] November, 2016, is modified, in terms of theorder of Hon’ble Supreme Court in Aarham Softronics’scase supra. (Sabina)Judge December 23, 2021(ps/vh) (Satyen Vaidya) Judge