NDLI: Pr. Commissioner of Income Tax Shimla Vs. M/s Aarham Softronics

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Income Tax Act 80-IB 1961 80-IC ss.80-IA Initial Assessment Year'
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Finance Act, 2003 (32 of 2003) Income Tax Act, 1961 (43 of 1961)
Case(s) Referred	Referred Case 0
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Disposed Off
Headnote	Income Tax Act, 1961 – ss.80-IA, 80-IB, 80-IC – ‘Initial Assessment Year’ u/s.80-IC – U/s.80-IC an undertaking or enterprise,in certain special category states, which has inter alia, begun or begins to manufacture or produce any article or thing by setting upa new factory in the area specified therein, is allowed, deduction from profits and gains u/sub-s.(3) of s.80-IC– Sub-s.(3) of s.80-ICinter alia states that a category of undertakings or enterprises(present cases belong to this category) are allowed exemption @100% of profits and gains for five assessment years commencing with the initial assessment year and @ 25% of profits and gains for the next five years, thus deduction being for a total of 10 years –Deduction was also provided to existing units if substantial expansion thereof was carried out – Assessees set up new industrial units and availed 100% deduction for 5 years and after carrying out“substantial expansion” claimed deduction @ 100% instead of 25%for another 5 years – If entitled to – High Court answered in affirmative – Held: Sub-sec.(6) of s.80-IC puts a cap of 10 years,which is the maximum period for which the deduction can be allowed to any undertaking or enterprise under this section, starting from the initial Assessment Year – Clause (v) of sub-sec.(8) of s.80-IC provides definition of ‘initial assessment year’, for the purpose ofthis very section, i.e.s.80-IC – As per this definition, there can be‘initial assessment year’, relevant to previous year, in any of the following contingencies:(i) the previous year in which the undertaking or the enterprise begins to manufacture or produce article or things; or (ii) completes substantial expansion – Thus,benefit of s.80-IC is admissible not only when an undertaking or enterprise sets up new unit and starts manufacturing or producing article or things but, is also accrued to those existing units, if they carry out “substantial expansion” of their units by investing required capital, in the assessment year relevant to the previous year – Thus,definition of ‘initial assessment year’ contained in clause (v) of sub-sec.(8) of s.80-IC can lead to a situation where there can be more than one “initial assessment year” within the period of 10 years –Judgment in Classic Binding Industries holding that there cannot be two assessment years within a span of 10 years u/sub-sec.(6) ofs.80-IC does not lay down correct law – No reason as to why 100%deduction of the profits and gains be not allowed to even thoseunits who availed this deduction on setting up a new unit and have now invested huge amount with substantial expansion of those units.Income Tax Act, 1961 – ss.80-IB(14) and 80-IC –Held: s. 80-IB(14) starts with the words ‘for the purpose of this section’ – Thus, ‘initial assessment year’ defined therein is relatable only to the deductions that are provided under the provisions ofs.80-IB – s.80-IB is materially different from s.80-IC. Income Tax Act, 1961 – s.80-IC – Purpose of – Explained..
Judge	Hon'ble Mr. Justice Arjan Kumar Sikri
Neutral Citation	2019 INSC 231
Petitioner	Pr. Commissioner Of Income Tax Shimla
Respondent	M/s Aarham Softronics
SCR	[2019] 4 S.C.R. 409
Judgement Date	2019-02-20
Case Number	1784

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