TMI Blog2012 (7) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC)] - in favour of revenue. Eligibility for deduction on under Section 80-IA - Held that:- The profit derived from eligible unit is to be computed as if such eligible unit were the only source of income of the assessee during the relevant year,the assessee and CIT(A) has taken only a part of the revenue of the eligible undertaking whereas AO has taken as part of the revenue of the eligible undertaking and entire depreciation and interest ignoring the other expenses of the undertaking, for computing the profit derived from the eligible undertaking - as everybody ignored the value of power generated by the eligible undertaking used by the assessee in its other undertaking where activity of publishing of books were carried out as well as ignoring other expenses incurred for the eligible business except depreciation and interest,it shall be fair and in the interest of justice that the issue should be restored back to the file of the Assessing Officer for proper computation of profit derived from the eligible business. - ITA No.125 to 128/Mds./2011 - - - Dated:- 31-5-2012 - SHRI N.S.SAINI, SHRI CHALLA NAGENDRA PRASAD, JJ. Department by : Shri K E B Rengarajan Jr.Standing C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne with regard to reopening is also allowed as the apt has rightly submitted that the change of opinion would not constitute valid information for assumption of jurisdiction u/s 147 of the Act. The decision of Delhi High Court reported in 256 ITR 1 affirmed by the Apex Court in 320 ITR 561 and decision of the Madras High Court reported in 287 ITR 25 would clearly support the view and argument of the Appellant and prayer for quashing of the assessment proceedings initiated to disallow the claim of deduction under Section 80-IA of the Act. The argument by the apt that another decision of the Jurisdictional High Court reported in 289 ITR 37 would fortify and strengthen the prayer for quashing the re-assessment proceedings, especially in the absence of fresh materials is also well founded. The further argument that that there was no failure to disclose truly and correctly the facts relating to the claim of deduction under Section. 80-IA of the Act is also acceptable. Accordingly, the ground objecting to the reassessment for Assessment Year 2005-06 is allowed. 6. After considering the rival submissions and perusing the orders of the lower authorities and materials available on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me derived from an eligible undertaking is only allowable as deduction. The gross receipts cannot be held as income derived from the undertaking. Further, the issue is squarely covered by the decision of the Hon ble Supreme Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers Pvt Ltd. 291 ITR 550 wherein it is held that as no opinion is formed by the Assessing Officer while accepting the return under Section 143(1), the issue of notice under Section 148 in such a case cannot be held as issued on the basis of change of opinion. Therefore, in our considered opinion, the Commissioner of Income Tax(Appeals) was not justified in holding that issuance of notice in the instant case was on the basis of change of opinion when it is an admitted fact that no assessment under Section 143(3) was made in the instant case, on the date of issue of notice under Section 148. Keeping in view the facts of the case as discussed above, in our considered opinion the issue of notice under Section 148 cannot be held as invalid or on the basis of change of opinion. We ,therefore, set aside the order of the Commissioner of Income Tax(Appeals) and hold that the initiation of reassessment proceeding was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sec.80-IA(5) of the Act, it is clear that computation of deduction under Section.80-IA(1) is to be made as if the eligible business is the only source of income of the assessee. Accordingly, he computed the eligible deduction of undertaking under Section.80-IA as under: (for A.Y. 2005-06) Income from Windmill 6,31,000 Less: Depreciation 1,20,80,000 Loss from windmill (-) 1,14,49,000 Thus, the Assessing Officer observed that as there is no profit from the undertaking, the question of allowing deduction under Section.80IA does not arise. Therefore, the assessee s claim of deduction of Rs. 6,31,000/- under Section 80IA is hereby rejected. Similarly the Assessing Officer computed the deduction under Section.80IA as under: (for A.Y. 2006-07) Income from Windmill 46,08,882 Less: Depreciation 2,49,45,321 Loss from windmill (-) 2,5336,439 Similarly the Assessing Officer computed the deduction under Section.80IA as under: (for A.Y. 2007-08) Income from generation of power 83,00,511 Less: Depreciation 88,64,278 Loss from windmill (-) 5,63,767 Similarly the Assessing Officer computed the deduction under Section.80IA as under: (for A.Y. 2008-09) Income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50% of the Matriculation School students. There was acute power shortage during the years in question. The fuel prices which are the normal source for generating power alternatively have also shot up abnormally. Ecologically also, the Government was not encouraging such fuel usage. It was under such circumstances that Wind Energy generators were becoming popular in Tamil Nadu. With a motive to reduce the energy expenses in the process of publishing and printing text books to make them available to the school going children at an affordable price, and that too in time, the assessee had installed the wind mills. It was not the case of the assessee that there was an establishment of a separate undertaking of wind mills. The assessee claimed that its motive was only to pursue its only business of manufacturing, publishing and printing text books and the wind mills installed were only part of its main business. It is therefore submitted that the Assessing Officer s presumption that there was a separate source of income in the consideration of the claim of deduction under Section.80-IA(5) of the Act is wrong, incorrect, unjustified, erroneous and not sustainable on both facts and in law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. Thus, it was submitted that it could be seen that the above sub-section is not applicable for determining the quantum of deduction in the first year. 12. After considering the submissions of the assessee, Commissioner of Income Tax(Appeals) held as under:- The submissions made by the Counsel for the appellant relating to the four Assessment Years are considered carefully. As stated earlier the only issue to be decided is whether under the facts and circumstances of the case discussed supra, the appellant is eligible for claim for deduction under Section 80 IA of the Act on its wind power income. In the appellant counsel s arguments there is much emphasis to hold that the Wind Energy Generators need not be considered to be a separate undertaking but only are new assets acquired during the course of it s existing business. From the foregoing facts submitted and discussed it appears that the appellant s Counsel has taken so much pain to emphasis that the wind energy generators, set up by the Appellant cannot be categorized as a separate undertaking but they form part of the existing business only. In the Act, the word undertaking is not properly defined and under such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be achieved in sustaining the orders of the Assessing Officer. The theory of captive consumption is no more valid in view of the recognition grant by the statute in the form of sub-section (8) to section 80-IA of the Act. In any event as rightly pointed out by the Counsel the view favourable to the tax payer as propounded by the Apex Court in the case referred to and cited earlier should be adopted especially on the consideration of rival interpretation of the provisions of section 80-IA of the Act and I agree with the Counsel s stand. 13. The Departmental Representative fully justified the action of the Assessing Officer. He submitted that the assessee has claimed the entire receipt from generation of power as deduction under Section 80-IA without reducing the bank interest and depreciation. If the bank interest and depreciation was not reduced, there was no profit left and hence, the Assessing Officer has rightly disallowed the claim of deduction under Section.80-IA of the Act to the assessee. 14. On the other hand, Ld. Authorised Representative of the assessee fully justified the order of the Commissioner of Income Tax(Appeals). He submitted that if the Bench was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made. Thus, in our considered opinion, the profit derived from eligible unit is to be computed as if such eligible unit were the only source of income of the assessee during the relevant year. We find that the assessee and the Commissioner of Income Tax(Appeals) has taken only a part of the revenue of the eligible undertaking and considered the same as income derived from the eligible undertaking whereas the Assessing Officer has, on the one hand, taken as part of the revenue of the eligible undertaking and entire depreciation and interest ignoring the other expenses of the undertaking, for computing the profit derived from the eligible undertaking. Every person ignored the value of power generated by the eligible undertaking, which was used by the assessee in its other undertaking where activity of pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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