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2012 (2) TMI 483 - ITAT HYDERABADDeduction under section 80IA - Held that:- 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. Addition made towards income in respect of sugar division for value of bagasse not accounted for in that division - Held that:- Separate books are maintained and scrutilized by the assessomg officer in respect of three divisions of the assessee company. There is no evidence that instead of cane trash bagasse has been consumed. Since it is the assessee case that the profits of the power division are exempt under section 80IA of the Act, it does not make sense for the assessee company to reduce profits of the power division by recording spurious purchases of cane trash. Non recording of expenditure actually goes to increase exempted profits. This clearly points to the genuineness of the assessee’s case. The method of accounting followed by the assessee in respect of the sugar and power divisions are the same from year to year. In fact, the sugar division is subject to Central Excise supervision and records are maintained under the Central Excise and Salt Act, 1944. Further the sugar and cement divisions are statutorily required to maintain records under the cost accounting/Audit rules as applicable. Therefore the records should be complete according to all statutory requirements and hence there is no warrant for the department to make any addition without considering the evidence produced by the assessee on this count. After considering the totality of the facts and circumstances, we feel it appropriate to re-examine the issue on the basis of evidence and records maintained by the assessee. Accordingly, we set aside this issue to the file of the Assessing Officer to reconsider the same in the light of our above observations. This ground raised by the assessee is partly allowed. We are inclined to hold that the power tariff rate should be considered at ₹ 2.67 per unit instead of ₹ 3.48 per unit as decided by the Tribunal in the case of Shri Balaji Bio-Mass Power Project Ltd. (2011 (1) TMI 1405 - ITAT HYDERABAD). Accordingly, we allow the ground taken by the Revenue. However, in the event of tariff rate reached finality by the judgement of higher judicial forum, the Assessing Officer is directed to consider the same and decide accordingly.
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