COMMISSIONER OF INCOME TAX Vs. MEDICAPS LTD

JUDGEMENT

(1.) This order will also govern disposal of I. T.A. No. 97 of 2009 and I. T. A. No. 98 of 2009.

(2.) These two appeals have been filed against the common order dated June 19, 2009 passed by the Income-tax Appellate Tribunal, Indore Bench, Indore in I. T. A. No. 784/Ind/2007 assessment years 2003-04 and 2004-05. I. T. A. No. 97 of 2009 relates to the assessment year 2003-04 and I. T. A. No. 98 of 2009 relates to the assessment year 2004-05.

(3.) The respondent is a manufacturer of empty hard gelatine Capsules. For the assessment years in question the respondent claimed deductions under Section 80IA of the Income-tax Act, 1961. The case of the respondent is that it had undertaken expansion programme during the financial years 1995-96 and 1997-98. The expansion was defined as unit 2 which started commercial production in the year 1997-98. The DIC, Pithampur had granted the certificate indicating the increase in capacity from 750 to 2750 million units. A separate building was constructed for the unit 2. The deduction was claimed for the first time in the assessment year 2003-04. In the earlier years deduction could not be claimed due to inadequacy of profit. Since the unit 2 was set up in the financial year 1997-98 and it was situated in backward area, therefore, claim under Section 80IA(2) was admissible.