MAHABIR INDUSTRIES Vs. PRINCIPAL COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) A short question of law arises for consideration in these appeals. All the appeals are filed by the same party, namely, Mahabir Industries (hereinafter referred to as the 'assessee') in which common respondent is Principal Commissioner of Income Tax (hereinafter referred to as the 'Department'). Before stating the question of law, it may be necessary to mention in brief the background under which the said question of law has arisen inasmuch as this background would be an enabling factor in understanding the true ambit and scope of the question of law.

(2.) Section 80-IA of the Act was originally introduced in the year 1991 by the Finance (No.2) Act, 1991 w.e.f. April 1, 1991. There were amendments in the Section from time to time. This Section was amended by the Finance Act, 1999 w.e.f. April 1, 2000. Along with this provision, Section 80-IB was also introduced for the first time by the same Finance Act, 1999. This provision allows deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings. Deduction from such profits and gains is of an amount equal to such percentage and for such number of Assessment Years as specified in Section 80-IB. Sub-section (4) of Section 80-IB provides for hundred per cent deduction for a period of five years and thereafter twenty-five per cent. First proviso thereto states that total period of deduction is not to exceed ten consecutive Assessment Years. Second proviso is a specific provision for industries in the North-Eastern Region to which we shall advert to at the appropriate stage. Sub-section (2) enumerates the conditions which are to be fulfilled by such industrial undertakings in order to qualify for deductions from profits and gains under that provision.

(3.) As mentioned above, for the Assessment Years 1998-99 and 1999-2000 (i.e. two Assessment Years), the assessee was allowed deduction under Section 80-IA. From the Assessment Year 2000-01 to Assessment Year 2005-06, the assessee claimed deduction under Section 80-IB.