In Brief
Mahabir Industries, which manufactures polythene in Himachal Pradesh, claimed income tax deduction under various sections of the Income Tax Act. After completing substantial expansion in 2006-07, it sought deduction under Section 80-IC for Assessment Years 2008-09 and 2009-10. The Income Tax Department rejected the claim, and the High Court upheld the rejection, treating the ten-year deduction limit in Section 80-IC(6) as counting from the assessee's first deduction claim under Section 80-IA in 1998-99. The Supreme Court allowed the appeal, holding that Section 80-IC(6)'s ten-year ceiling applies only to North-Eastern Region industries claiming deduction under the second proviso to Section 80-IB(4). For Himachal Pradesh units like the assessee, the initial assessment year for the ten-year period commences from completion of substantial expansion, and earlier deduction periods are not counted.
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