Summary
In these appeals concerning Himachal Pradesh units already claiming deduction under Section 80-IC, the Supreme Court held that substantial expansion did not restart a further five-year period of one-hundred-per-cent deduction. It allowed the Revenue’s appeals and held the remaining five years subject to deduction at twenty-five per cent, or thirty per cent for a company.
Issues
- Whether substantial expansion entitled a unit already enjoying Section 80-IC deduction to restart one-hundred-per-cent deduction after the first five assessment years.
Provisions considered
- Section 80-IC(3)(ii) and (6), Income-tax Act, 1961For the units concerned, the Court construed the scheme as one-hundred-per-cent deduction for the first five assessment years and twenty-five per cent thereafter, or thirty per cent for companies, within the ten-year overall limit; expansion did not create another initial assessment year. (¶¶ 15, 16, 17, 19, 20, 22)
Held
- For these units, which had claimed deduction under Section 80-IC from inception, substantial expansion could not create another initial assessment year within the ten-year period and continue the one-hundred-per-cent rate for a second five years. The specified reduced rate applied after the first five assessment years. (¶¶ 19, 20, 22)
- Mahabir Industries was distinguished because deduction there had initially been claimed under Sections 80-IA and 80-IB, before first claiming under Section 80-IC on satisfaction of its conditions. The present assessees had availed deduction under Section 80-IC alone. (¶ 21)
Result
Revenue’s appeals allowed and the question answered in its favour: deduction for the remaining five assessment years was twenty-five per cent, or thirty per cent for companies, rather than one hundred per cent. No costs.