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2015 (3) TMI 794 - AT - Income TaxAddition made on account of the sale value of exhaust steam supplied to SSL - not charging for steam supplied to SSL - transactions between holding and subsidiary company - Held that:- The entire project of sugar production plant of SSL as well as the power generation unit of the appellant was in fact part of some project owned by one company. The power generation unit was separated to get investment from French company Air-Liquide, which agreed to join as JV (joint venture) partner. Therefore the transaction of exchange of bagasse & water with power & steam is in fact between two limbs of same project. If the whole project was owned by one company (as in fact it was initially) only the net profit of the entire project would have been taxable. As can be seen in the last paragraph reproduced above from he letter of SSL, the appellant company proposed to be made a subsidiary of SSL (and in fact has already become so). Looked from this angle, the transaction is between the holding and subsidiary company. Therefore in my opinion action of the appellant company in not charging for steam supplied to SSL is quite justified and cannot be said to be deliberate or motivated. Moreover even if an assessee gives (sells) his goods free of cost to other, there is no provision in the IT Act to tax its sale value' as income on presumptive basis. Legally speaking since no income has accrued & neither any payment has actually been received by the appellant company, making addition in respect of estimate price of steam amounts to taxing of notional income which is not permissible. Thus addition deleted. - Decided in favour of assessee. Deduction u/s 80IA - 50% of receipts from UPSEB - whether are eligible for computation of deduction u/s 80-IA - CIT(A) holding that steam is one of the form of power and as is eligible for deduction u/s 80-IA - Held that:- Similar issue has been decided by the ITAT in favour of appellant in AY 99-00 and AY 01-02. In the said years, the ITAT has followed its order for AY 00-01 and has held that AO was not justified in reducing the amount received by appellant from the gross receipt eligible for deduction u/s 80- IA. However, because the entire addition in respect of sale of steam was deleted this alternate ground becomes infructuous and hence treated as dismissed for statistical purposes. Thus ground having become infructuous, is dismissed. - Decided in favour of assessee.
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