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2016 (3) TMI 743 - ITAT CHENNAI

2016 (3) TMI 743 - ITAT CHENNAI - TMI - Deduction u/s 80IA - whether it is not a case of works contract - Held that:- In the case before us, the entire power plant was established by M/s Kanishk Steel Industries Ltd. The assessee was given the licence to operate and generate electricity by an agreement dated 26.4.2008. The consideration of the agreement is supply of 9 million units of power generated in every financial year. If the production of electricity is less than 9 million units in any fi .....

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ssessee may use the electricity generated over and above 9 million units in any financial year in accordance with its discretion. The agreement for licence does not provide for payment of any commission to the assessee by M/s Kanishk Steel Industries Ltd. In those facts and circumstances, this Tribunal is of the considered opinion that it is not a case of works contract as contended by the ld. DR. It is a simple case of a licence to operate the power plant set up by M/s Kanishk Steel Industries .....

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TANT MEMBER For The Appellant : Dr. Milind Madhukar Bhusari, CIT For The Respondent : Shri V. Ravichandran, CA ORDER PER N.R.S.GANESAN, JUDICIAL MEMBER These appeals of the Revenue are directed against the common order of the Commissioner of Income-tax (Appeals)-8, (I/c- 3), Chennai, dated 17.6.2015 for assessment years 2010-11 and 2011- 12. Since common issue arises for consideration in both the appeals, we heard them together and disposing of the same by this common order. 2. The only issue ar .....

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l Industries Ltd. for operating the power plant. The Assessing Officer found that the assessee is not the owner of the power plant, therefore, it is not eligible for deduction u/s 80IA of the Act. However, the CIT(A) by placing reliance on the order of this Tribunal in assessee s own case for assessment year 2009-10 in I.T.A.No. 2058/Mds/2013 dated 29.5.2015, found that the assessee is entitled for deduction u/s 80IA of the Act. 4. Referring to Explanation to sec. 80IA of the Act which was intro .....

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rks contract, hence, the assessee is not eligible for deduction u/s 80IA of the Act. 5. On the contrary, Shri V. Ravichandran, ld. Representative for the assessee submitted that this Tribunal in the assessee s own case for assessment year 2009-10, placing reliance on the judgment of the Madras High Court in the case of M/s K.A Infrastructure Pvt. Ltd. vs Director (ITA-I)CBDT and Another, Writ Petition No.11871 of 2011, dated 28.10.2011, found that deduction u/s 80IA is available to an undertakin .....

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ase of operating the power plant for generation of electricity. The power plant was set up by M/s Kanishk Steel Industries Ltd. and there is no work remains to be executed by the assessee in respect of formation of the power plant. According to the ld. Representative, the term works contract means a work has to be executed by utilizing the raw material supplied by a third party. The resultant product has to be handed over to the person who is supplying the raw material. The person who is manufac .....

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adu Electricity Board. By producing a copy of the agreement dated 26.4.2008, the ld. Representative submitted that the assessee was given a licence to operate the power plant for a consideration of 9 million units of power to be supplied to M/s Kanishk Steel Industries Ltd. in every financial year. Therefore, it is not a case of works contract as claimed by the ld. DR. 6. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, there .....

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the judgment of the Madras High Court in the case of M/s K.A Infrastructure Pvt. Ltd. (supra), this Tribunal found that the assessee is entitled for deduction u/s 80IA of the Act. In fact, the CIT(A), after reproducing the observation made by this Tribunal in assessee s own case for assessment year 2009-10, allowed the claim of the assessee for deduction u/s 80IA of the Act. 7. Now for the assessment years under consideration, the ld. DR is raising an additional ground with regard to works contr .....

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and executed by the undertaking or enterprise referred to in sub-section(1)] In view of this Explanation, when the business referred to in sec. 80IA is in the nature of works contract awarded by any person, then the provisions of sec. 80IA of the Act may not be applicable at all. As rightly clarified by the ld. Representative for the assessee, works contract means execution of a work by using the raw material supplied by a third party on payment of a commission. The manufactured goods shall be .....

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