LI Network
Published on: 01 September 2023 at 12:30 IST
The Calcutta High Court recently ruled in favor of a taxpayer’s claim for a 100% deduction under Section 80-IC of the Income Tax Act and set aside a revision order passed under Section 263.
The court’s decision rested on the principle that if a 100% deduction under Section 80-IC had been granted for the initial assessment year (AY), which marked the first year of substantial expansion, after thorough investigation and document examination, the tax authority had no authority to re-examine the claim in subsequent years.
The Division Bench, comprising Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya, emphasized that “as long as the benefit granted under Section 80IC for the first year of substantial expansion remains unaltered, the assessing officer would have no jurisdiction to revisit the same issue in the subsequent assessment years.”
The case involved the taxpayer’s deduction claim under Section 80-IC for the AY 2013-14, which was the second year of substantial expansion.
The Revenue court initially allowed the deduction but later, the Principal Commissioner of Income Tax (PCIT) issued a revision order under Section 263, arguing that the assessment order was erroneous and prejudicial to the revenue’s interest.
The PCIT limited the deduction to 30% under Section 80-IC(3)(ii), citing the taxpayer’s failure to file Form 10CCB for the relevant AY.
The Income Tax Appellate Tribunal (ITAT) upheld the revisional order, noting that the Form 10CCB was not filed during the assessment or revision proceedings.
Upon examination, the High Court found that the ITAT’s decision was solely based on the absence of Form 10CCB without considering that the revenue did not request the form during the assessment process.
The court also pointed out that the ITAT overlooked a crucial fact: the deduction claim for the first year of substantial expansion (preceding AY 2012-13) was granted by the Revenue after thorough inquiry and document analysis.
In conclusion, the Calcuuta High Court sided with the taxpayer’s argument, stating that once the benefit under Section 80-IC for the first year of substantial expansion remains unchanged, the revenue authorities have no jurisdiction to revisit the issue during assessments for subsequent AYs.