TMI Blog2011 (10) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the Statute. As the law then stood, given the definition of an eligible business under the provisions of Section 80IA and the fact that the assessee has taken on lease the windmill, which is infrastructure facility, I have no hesitation in allowing the Writ Petition, thereby quashing the order passed by the Central Board of Direct Taxes. Touching on the scope of Section 84 as it originally stood, later on substituted as Section 80J before its repeal, the Central Board of Direct Taxes, vide F.No15/5/63-IT (AI) dated 13.12.1963, pointed out that "the benefit of Section 84 of the Income Tax Act 1961 (now Section 80J) attaches to the undertaking and not to the owner thereof. The successor will be entitled for the unexpired period of five years provided the undertaking is taken over as a running concern". As far as the present case is concerned, the reasoning of the Board went on the aspect of lease, a fact which does not stand in the way of the assessee claiming approval under Section 10(23G) or the relief under Sec 80IA(4). - Writ Petition No.11871 of 2011 & M.P. No.1 of 2011 - - - Dated:- 28-10-2011 - MRS. JUSTICE CHITRA VENKATARAMAN For the Petitioner : Dr.Anita Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave the approval under Section 10(23G) of the Act. 3. Before going into the contentions raised by the petitioner challenging the said order, few facts have to be noted herein: The petitioner herein is a company engaged in the business of development, operation and maintenance of Wind Turbine Generators (WTG) and setting up and operation of wind electric farms. Admittedly, the petitioner had had the benefit of approval under order dated 07.12.2000 given under Section 10(23G) of the Income Tax Act for the assessment years 2000-2001, 2001-2002 and 2002-2003 in respect of the windmills set up at Perungudi Village, Radhapuram Taluk, Tirunelveli District. In the context of the upgradation and modernisation of technology, after getting expert opinion, the petitioner decided to go for a windmill project at Pazhavoor Village in the first phase and Karungulam Village in the second phase. 4. Under the financial lease method of funding, the petitioner undertaking entered into lease agreements on 28.03.2003, 30.03.2003 and 16.03.2002 with M/s.Khivraj Motors Ltd. and set up an undertaking to generate wind energy. The undertaking was in operation in Pazhavoor and Karungulam Village, Radh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der in the said writ petition, setting aside the order dated 14.07.2010, with a direction to the Central Board of Direct Taxes to take up the application of the petitioner along with further reply and grant the petitioner an opportunity to place its objection and then pass orders. This Court directed the petitioner to make a fresh application within a period of four weeks from the date of receipt of a copy of the order and after giving an opportunity of hearing to the petitioner, to pass orders finally, within a period of six weeks thereafter. 7. Immediately thereafter, the petitioner filed its representation enclosing the copy of the original application dated 13.03.2003 and reiterated its stand that there was no change in any of the applicable parameters for granting approval under Section 10(23G). The petitioner pointed out that Section 80IA(iv) made no distinction between the owner and a lessee. There was no change in the provision of law under Section 80IA(iv) since the grant of the approval for the assessment years 2000-01 to 2002-03. The effect of the amendment to Section 80 IA with effect from 01.04.2002 was by way of substitution of the term 'industrial undertaking& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of developing, maintaining and operating an infrastructure facility, owned by the company registered in India or a consortium of such companies. Sub-clause (v) is with reference to an undertaking owned by an Indian company and set up for re-construction or revival of a power generating plant. Thus unlike other sub-sections, sub-clause (iv) to sub-section (4) makes the deduction available to an undertaking set up in any part of India for generation or generation and distribution of power etc. Thus in the context of the marked difference in the language used, learned counsel submitted that there is a fundamental fallacy in the reasoning of the Board as regards the scope of Section 80 IA(4)(iv). Referring to Section 10(23G), she submitted that given the fact that Section 10(23G) contemplated exemption even to a case of an infrastructure capital company, meaning thereby, such company which makes investments by way of acquiring shares or providing long-term finance to any enterprise or undertaking wholly engaged in the business referred to in sub-section (4) of section 80-IA or sub-section (3) of Section 80-IA, there being no restriction to a business taking a power generation plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... straight deduction from the total income itself, thus making tax calculation comparatively easy. Part A (Section 80A to 80B) contains general provisions on deduction applicable to the whole of the Chapter and the definition of certain terms and expression occurring in the Chapter. Part B containing Section 80C to 80GGC provide for deduction in respect of certain payment made by the assessee in the computation of total income. Part C (Sections 80 H to 80 RB as of today) deals with deduction in respect of certain income in computation of total income. Part D (Section 80 U) deals with other deductions. A reading of the deductions and rebates shows that there have been periodical changes in Chapter VIA with new reliefs, apart from the relief already given, extended or removed. 14. The deduction in respect of newly established industrial undertakings and hotels, was originally considered under 1922 Act under Section 15C. With the introduction of 1961 Act, Section 84 was introduced, that an assessee deriving profits from a newly set up industrial undertaking and an Indian Company deriving profits from a hotel or a ship satisfying certain conditions was entitled to a rebate of tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80-IA or a housing project referred to in sub-section (10) of section 80-IB or a hotel project or a hospital project and which has been approved by the Central Government on an application made by it in accordance with the rules, made in this behalf and which satisfies the prescribed conditions. Explanation 1 ... Explanation 2 ... Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (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 of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years. (2) ... (3) This Section applies to an undertaking referred to in clause (iv) of sub section (4) which fulfils all the following conditions, namely:-- (i) it is not formed by sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed only in relation to the profits derived from laying of such network of new lines for transmission or distribution. 17. Section 80 IA, appearing in Chapter VA, deals with straight deduction to be made in computing total income. A reading of the provisions of Section 80IA of the Income Tax Act shows that it grants deduction from the total income of the assessee, an amount equal to 100% profit and gains derived from the business engaged in the infrastructure development for ten consecutive assessment years. Sub-section (3) gives the qualification of the undertakings which are eligible to have the benefit under Section 80IA. 18. A reading of the said provision shows that the benefit under Section 80IA available to industries, covered under sub clause (iv) of sub section (4), is not available to companies, which are formed by splitting up, or the re-construction, of a business already in existence and new business, which is formed by the transfer of the plant and machinery already in use for any purpose. Explanation (1) thereunder states that machinery used outside India by any person other than the the assessee shall not be regarded as machinery or plant previously used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng about lease of the undertaking. As already pointed out by the learned counsel appearing for the petitioner, the Section itself being very clear that the qualification for deduction is available to an undertaking engaged in the generation or generation and distribution of power, in the absence of any of the disqualification as given under sub section (3) present here, the petitioner cannot be denied of the relief. 20. I agree with the submission made by the learned counsel appearing for the petitioner that in contradistinction to sub-clause (v) to sub-section (4) of Section 80IA, there is no qualification to be read into the term undertaking so as to be restrictive of an assessee to be a owner alone to claim the benefit under Section 80IA. Contrary to the assertion of the learned standing counsel appearing for the Revenue, I do not find anything in sub-section (3) of Section 80IA, which would go against the claim of the assessee herein; that the mere fact that the assessee is a lessee, per se, does not result in any disqualification to reject the deduction claim falling under Section 80IA. The facts herein are that the windmill was already in use by the lessor, which was now ..... X X X X Extracts X X X X X X X X Extracts X X X X
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