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2015 (7) TMI 677 - AT - Income TaxDeduction u/s 80IA to assessee on the power generation plant - CIT(A) allowed claim - Held that:- The issue in dispute is squarely covered by the decision of the ITAT in assessee’s own case for preceding AYs 2007-08 to 2009-10 [2012 (2) TMI 483 - ITAT HYDERABAD] wherein observed that the Tribunal while considering the issue of disallowance of assessee’s claim of deduction u/s 80IA by AO on the allegation that the power generation unit is a continuation of the old business and has been set up by splitting up of business in existence, negatived the finding of AO and allowed assessee’s claim of deduction observing that even if the undertaking is established by transfer of building, plant or machinery, it is not formed as a result of such transfer, in our considered view; the assessee could not be denied the benefit. We also find that a new undertaking for manufacture of power with steam as by-product was formed out of fresh funds, in separately identifiable premises, under a separate license with manifold increase in capacity with new machinery and buildings without transfer of any portion of the old buildings or machinery which pre-existed. To constitute reconstruction, there must be transfer of assets of the existing business to the new industrial undertaking. In our opinion, generation of power unit is separate and distinct undertaking for which separate approval was obtained and recognised by the IREDA and it cannot be said that splitting of existing business structure. Therefore, in our considered opinion, the lower authorities are not correct in denying the deduction under section 80IA of the Act. - Decided in favour of assessee. Deduction u/s 80IA claimed by assessee on cost of steam sold to sugar unit - Held that:- Similar issue came up for consideration in AY 2007-08 and 2008- 09 in assessee’s own case wherein held that lower authorities did not dispute that the profit credited to Profit and Loss Account in respect of steam is only ₹ 11.43 Lakhs. Thus, even assuming that steam is not power as held by the Assessing Officer, at best the department could have treated only ₹ 11.43 lakhs as ineligible profits for the purpose of claiming the deduction under section 80IA of the Act. To hold otherwise, would be a gross error as the expenditure debited to the profit and loss account of the power unit is still being retained by the department while making the computation. The CIT [A] also agrees that steam has no value as no price was charged for the same in the earlier year but ignores the fact that in the absence of gross total income in the earlier year no exemption could have been claimed. Therefore, we direct that only ₹ 11.43 lakhs is to be treated as ineligible profits for the purpose of deduction under section 80IA of the Act and for the balance sale amount of steam to sugar division, the assessee company is eligible for deduction under section 80IA of the Act. However, the calculation of value of the steam produced by the power plant has to be determined after considering the cost and production record of respective unit and thereafter quantification of deduction has to be done in accordance with the order of the Tribunal cited supra. This issue is remitted back to the file of the Assessing Officer with a direction to the assessee to furnish necessary records for the purpose of determining the value of the steam produced and transferred to sugar unit. - Decided in favour of assessee. Reduction in power charges - Held that:- This particular issue has also been dealt by the ITAT in assessee’s own case for AY 2007-08, thus following the said decision of the Tribunal, though we uphold the power tariff rate at ₹ 2.69 per unit as adopted by AO instead of ₹ 3.48 per unit as adopted by assessee, but, at the same time, we direct that in the event the tariff rate gets revised either by virtue of judgment of Hon’ble Supreme Court or any other judicial forum, AO should consider the same and decide accordingly. - Decided partly in favour of revenue.
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