Summary
The Supreme Court allowed Mahabir Industries’ Section 80-IC deductions for assessment years 2008–09 and 2009–10. Its Himachal Pradesh unit had completed undisputed substantial expansion in 2006–07. Earlier deductions under Sections 80-IA and 80-IB could not be counted against the ten-year Section 80-IC limit as the Revenue had done. The statutory aggregation referred specifically to the North-Eastern deduction provisions, which did not cover this unit.
Issues
- Whether earlier Section 80-IA and Section 80-IB deduction years had to be counted against this Himachal Pradesh unit’s Section 80-IC period following substantial expansion.
- Whether the Revenue could contest substantial expansion by relying on reconstruction jurisprudence under the 1922 Act.
Provisions considered
- Section 80-IC(6), read with the second proviso to Section 80-IB(4), Income-tax Act, 1961The aggregation provision referred specifically to deductions under Section 80-IC, the North-Eastern second proviso to Section 80-IB(4), and Section 10C. It did not aggregate this unit’s earlier ordinary Section 80-IA and 80-IB years as the Revenue had done. (¶¶ 5, 10, 11, 12)
Held
- The assessee first claimed Section 80-IC relief in 2006–07 after substantial expansion and had not exhausted ten assessment years under that section. It was not located in the North-Eastern Region, so the other specified aggregation categories did not apply. (¶¶ 4, 5, 10, 11)
- For this unit, the earlier deduction years under Sections 80-IA and 80-IB did not shorten the Section 80-IC period. The accepted initial year was the year of completed substantial expansion; the Department had not challenged that part of the High Court’s reasoning. (¶¶ 10, 11, 12)
- Textile Machinery’s interpretation of reconstruction under Section 15C of the 1922 Act did not determine the distinct substantial-expansion issue. Moreover, the Department had already accepted the expansion and allowed deductions for 2006–07 and 2007–08; only computation of the period was in controversy. (¶ 13)
- The refusal of deductions for 2008–09 and 2009–10 on the asserted combined ten-year limit was therefore erroneous. (¶ 14)
Result
Appeals allowed; High Court judgment on the disputed deduction-period issue set aside. Assessee entitled to Section 80-IC deductions for assessment years 2008–09 and 2009–10.