2023 (5) TMI 1002 - AT - Income Tax

Deduction u/s.80IA(4) - not doing activities as defined - proof of effluent treatment plant and process - AO has denied the claim holding that assessee is not doing activities as defined in Section 80IA(4) which includes carrying out infrastructure project of water treatment project or effluent treatment plant - HELD THAT:- The explanation below Sub-Section (4) to Section 80IA states that for the purpose of this clause “infrastructure facility” means “a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system”. As brought to our notice that CBDT vide Circular No.1/2006 dated 12/01/2006 have also clarified that effluent treatment plant shall be considered as part of water treatment plant and shall be eligible for tax u/s.80IA.

As explained that the assessee gets effluent water and this water contains Potassium Carbonate, Sodium carbonate, Potassium Hydroxide in dissolved form. This aqueous stream containing the dissolved salts is received by the assessee. Then this stream is concentrated in multi-effect evaporator to remove the water contents. The concentrated stream is then crystallized using cooling water. During crystallization process Potassium Carbonate and Sodium carbonate crystals are formed as mixture. The Crystallized slurry is filtered in centrifuge. The wet cake is dried in dryer generate Potassium Carbonate & Sodium carbonate mixture. The mother liquor and wash liquids sold as Potash Lye contains Potassium Hydroxide. Thus, it is purely effluent treatment plant and process. Apart from that the assessee has obtained consent to set-up/consent to operate from the Maharashtra Pollution Control Board (MPCB) for setting up the ETP/WTP

Thus, assessee’s effluent water treatment plan categorically falls within the ambit and scope of Section 80IA(4) as misinterpreted by the AO so as to deny the claim of deduction u/s.80IA(4).

Nowhere the AO has pointed out as to what are the conditions laid down in Section 80IA(7) has not been fulfilled because assessee had filed and obtained the audit report alongwith revised return on 19/02/2018. Nowhere the AO has held that revised return is invalid.

In any case, the reason which was given before the ld. AO was that Form No.10CCB and working of 80IA was though obtained before the date, however, inadvertently it was deleted for the A.Y.2017-18 and once assessee realizes his mistake in Form 10CCB together with working of 80IA(4) were then correctly filed electronically alongwith revised return of income. In these circumstances, it cannot be held that there is any violation of any provisions of law and in any case, if the claim and audit report was there before the ld. AO during the course of assessment proceedings and no fault has been pointed out therein; the same cannot be the ground for denial of deduction u/s.80IA. Decided in favour of assessee.