In Brief
An assessee who sets up a new manufacturing unit in Himachal Pradesh under Section 80-IC and claims 100% tax deduction for five years may undertake substantial expansion of that unit thereafter. The Supreme Court held that substantial expansion (involving 50% or more investment in plant and machinery) triggers a new 'initial assessment year' under Section 80-IC(8)(v), entitling the assessee to 100% deduction again for the remaining assessment years, subject to a maximum of 10 assessment years total from the first initial assessment year. The High Court's decision was affirmed; the Revenue's appeals were dismissed and assessees' appeals were allowed, reversing an earlier Supreme Court judgment that had wrongly applied a different definition of 'initial assessment year'.
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