TMI Blog2004 (8) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits of industrial undertaking and the business of consultancy, sales and marketing is not an industrial undertaking. (b) that in an analogous situation, s. 80HHC is available only from export profits and not from profits of a composite business. 4. The order of the AO may be restored and the order of the CIT(A) may be set aside with respect to the above-mentioned grounds." 2. The assessee is a private limited company. The company during the previous year had installed wind turbines (wind-mills) and generated power. The electricity so produced were supplied to Tamil Nadu Electricity Board from which the assessee received an income of Rs. 22,92,245. The assessee had entered into an agreement with M/s Vestas Danish Wind Technology A/s, Denmark, by which they agreed to provide consultancy service to them. M/s Vestas Danish Wind Technology were pioneers in wind energy and the wind turbines manufactured by them were sold in India by the assessee. The assessee among other services would also install, erect, commission Vestas type wind electric generators or assist the principal's personnel in carrying out installation or commissioning, etc. In respect of consultancy services so pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11,593 Business promotion 5,722 54,34,273 5,722 54,34,273 ------------- ------------- 3,47,96,049 3,47,96,049 Less: Depreciation on assets not used in power generation plant as per IT Act 3,59,879 3,28,21,099 Income from power genera- tion 22,92,245 Dividend income 15,478 15,478 Sale of vehicle 10,126 26,77,728 10,126 3,28,46,703 ------------ ----------- 3,21,33,799 19,49,346 Income from dividend 15,478 15,478 Total Income 3,21,33,799 19,64,824 Income from power genera- tion 22,92,245 Less: Dep. as per IT Act 3,24,61,220 ----------- Unabsorbed depreciation 3,01,68,975 ------------ -------------------------------------------------------------- There is loss in respect of industrial undertaking producing electricity. Therefore, no deduction under s. 80-IA is possib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia) Ltd. (1956) 29 ITR 661 (SC) (iv) Punjab State Co-operative Supply Marketing Federation Ltd. vs. CIT (1980) 18 CTR (P H) 71 : (1981) 128 ITR 189 (P H). 8. We have considered the rival submissions. To appreciate the rival contentions we have to necessarily make a reference to the relevant provisions of s. 80-IA of the Act. "(1) Where the gross total income of an assessee includes any profits and gains derived from any business of an industrial undertaking or an enterprise referred to in sub-s. (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to......... (5) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-s. (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated and sold electricity was not primarily meant for such purpose and it was primarily meant only for the purpose of demonstrating to the prospective buyers of power turbines manufactured by the Danish company for which it acted as consultants and for marketing and sales of their products, cannot be accepted. If one were to act as a marketing and sales agent for manufacturer of a product it is only usual or normal to expect the principal to provide the necessary infrastructure to carry on the activities by an agent. There is no reference to any specific agreement between the principal and the assessee that the assessee would install wind turbines at their own cost to demonstrate to the prospective purchasers of the principal's product. It cannot be disputed that the wind turbines were used in the eligible business. There is no evidence on record to suggest that the wind turbines were used in the business of providing consultancy service or such use was necessary for the business of consultancy service. In any event, the use, if any, of these wind turbines in the other business of the assessee, viz., consultancy, marketing and sale of wind turbines in our view was only incidental ..... X X X X Extracts X X X X X X X X Extracts X X X X
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