MAHABIR INDUSTRIES versus PRINCIPAL COMMISSIONER OF INCOME TAX

Citation: [2018] 4 S.C.R. 484 · Decided: 18-05-2018 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2018] 4 S.C.R.
MAHABIR INDUSTRIES
v.
PRINCIPAL COMMISSIONER OF INCOME TAX
(Civil Appeal Nos. 4765-4766 of 2018)
MAY 18, 2018
[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]
Income Tax Act, 1961:
s.80-IC – Deduction under – Entitlement for – To the industrial
undertakings which completed substantial expansion – The assessee-
industrial undertaking in question started availing deduction u/s.
80-IA from the assessment year 1998-99 for two assessment years –
From the assessment years 2000-01 to assessment year 2005-06,
the assessee availed deduction u/s. 80-IB – After s. 80-IC came into
effect, the assessee having carried out substantial expansion in the
assessment year 2006-07, claimed exemption u/s. 80-IC for
assessment years 2006-07 onwards – Deductions for assessment
years 2006-07 and 2007-08 were allowed by Assessing Officer –
However, deductions for assessment years 2008-09 and 2009-10
were rejected on the ground that the years 2008-09 and 2009-10
being 11th and 12th years of deduction cannot be permitted in view
of s.80-IC(6) – The order of Assessing Officer was upheld by
appellate authority as well as appellate Tribunal – High Court also
held that ten years period to be counted from the assessment year
1998-99 i.e. when the assessee had claimed deduction for the first
time u/s. 80-IA and hence deductions for the years 2008-09 and
2009-10 not to be allowed – On appeal, held: The purport behind
three types of deductions u/ss.80-IA, 80-IB and 80-IC is different –
Therefore, the deductions u/ss.80-IA and 80-IB would be of no
concern so far as deduction for carrying out substantial expansion
u/s.80-IC is concerned – The assessee became entitled to deduction
u/s.80-IC from the initial year i.e. the year in which substantial
expansion was completed – The inclusion of period of deduction
u/ss.80-IA and 80-IB for the purpose of counting 10 years as
provided in s. 80-IC (6) is limited to those industries which are set-up
in North-Eastern region – Therefore, period of deduction u/ss. 80-IA
and 80-IB not to be reckoned for the purpose of benefit of deduction
u/s.80-IC to the assessee.
  [2018] 4 S.C.R. 484
484
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Allowing the appeals, the Court
HELD: 1. It was wrong on the part of the Assessing Officer
not to allow deduction to the assessee under Section 80-IC for
the Assessment Years 2008-09 and 2009-2010. [Para 14][495-C]
2. As per the provisions of sub-section (6) of Section 80-IC
no deduction is allowed to any undertaking or enterprise under
this Section, where the total period of deduction inclusive of the
period of deduction under this Section, or under the second
proviso to sub-section (4) of Section 80-IB or under Section 10C,
as the case may be, exceeds ten assessment years.  The total
period of ten years, thus, is to be counted in the three
circumstances: (a) When the deduction has been given under
Section 80-IC for a period of ten years, no further deduction is
admissible. (b) When the deduction is given under second proviso
to sub-section (4) of Section 80-IB. This provision pertains to
those industries which are in the North-Eastern Region. (c) When
the deduction is claimed under Section 10C. It is again a special
provision in respect of certain industrial undertakings in North-
Eastern Region. [Para 10][492-D-H]
3. The assessee in the instant case has not got deduction
under Section 80-IC for a period of ten years as he started claiming
deduction under this provision w.e.f. Assessment Year 2006-07.
Situation Nos. (b) and (c) mentioned above would not apply to
the assessee as it’s undertaking/enterprise is not established in
North-Eastern Region.  It is, thus, clear that the High Court has
failed to appreciate that the provisions of Section 80-IC(6) of the
Act state that the total period of deduction under Section 80-IC
and Section 80-IB cannot exceed ten assessment years only if
the manufacturing unit was claiming deduction under second
proviso to Section 80-IB(4) of the Act i.e. units located in the
North-Eastern State.  [Para 11][492-A-C]
4. The purport behind the three types of deductions
specified in Section 80-IA, Section 80-IB and Section 80-IC is
different.  Section 80-IC stipulates the period for which hundred
per cent deduction is to be given and then deduction at reduced
rates is to be given.  If the assessee had earlier availed deduction
under Section 80-IA and Section 80-IB, that would be of no concern
MAHABIR INDUSTRIES v. PRINCIPAL COMMISSIONER OF
I

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