Supreme Court of India
Commissioner of Income Tax v. M/s. Classic Binding Industries
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What the Court ordered
We hold that after availing deduction for a period of 5 years @ 100% of such profits and gains from the ‘units’, the assessees would be entitled to deduction for remaining 5 Assessment Years @ 25% (or 30% where the assessee is a c ompany), as the case may be, and not @ 100%. The question of law is, thu s, answered in favour of the Revenue thereby allowing all these appeals.
Judgment, page 10
From the headnote
Income Tax Act, 1961: s.80-IC – Whether an assessee who sets up a new industry of a kind mentioned in sub-s ection (2) of s.80-IC of the Act and starts availing exemption of 100% ta x under sub-section (3) of s.80-IC (which is admissible for five years) can start claiming the exemption at the same rate of 100% beyond the period of five years on the ground that the assessee has now carried out substantial expansion in its manufacturing unit – Held: pragmatic and reasonable interpretation of s.80-IC is that once the initial Assessment Year commences and an assessee, by virtue of fulfilling the
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