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The Income Tax Officer Company Ward V (1) Chennai Versus M/s OPG Renewable Energy Pvt. Ltd

2015 (5) TMI 1019 - ITAT CHENNAI

Deduction claimed by the assessee u/s 80IA - Held that:- Section 80IA clearly says that 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 subsection( 4) shall be allowed deduction in computing total income of the assessee. Sub-section(4) of section 80IA says that an undertaking which was set up for generation or generation and distribution of power and begins to generate power at any time during .....

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t. Ltd. (2011 (10) TMI 641 - MADRAS HIGH COURT), the assessee is entitled for deduction u/s 80IA of the Act. - Decided in favour of assessee - I.T.A.No.2058/Mds/2013 - Dated:- 29-5-2015 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER] For the Appellant : Shri A.V.Sreekanth, JCIT For the Respondent : Shri V. Ravichandran, CA O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER This appeal of the Revenue is directed against the order of the Commissioner of Income-tax .....

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reement executed between one M/s Kanishk Steel Industries Ltd. and the assessee. As per this licence agreement, the assessee was authorized to operate the power generating unit owned by M/s Kanishk Steel Industries Ltd. Therefore, it is clear that the assessee has neither set up the power generating unit nor owns the same. Referring to the provisions of section 80IA of the Act, the ld. DR pointed out that two conditions are to be satisfied for claiming deduction un 80IA. The first condition is t .....

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plant. Therefore, according to the ld. DR, the assessee is not entitled for deduction u/s 80IA of the Act. The ld. DR placed his reliance on the judgment of the Madras High Court in the case of A.G.S Tiber and Chemical Industries Pvt. Ltd vs CIT, [1998]233 ITR 207, and submitted that on identical set of facts u/s 80J of the Act, the Madras High Court found that since the assessee had not invested its capital for running the industrial undertaking, it was not entitled for the benefit of section 8 .....

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er getting licence from another party, the assessee is entitled for deduction u/s 80IA of the Act. According to the ld. Representative, during the year under consideration, the assessee has taken on lease a new 10MW WHR plant from M/s Kanishk Steel Industries Ltd and the plant was commissioned on 23.9.2008. The assessee entered into an agreement on 26.4.2008 and supplementary agreement on 20.2.2009. According to the ld. Representative, copies of both the agreements are available in the paper boo .....

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ze the waste heat to generate electrical energy. M/s Kanishk Steel Industries Ltd. expressed its willingness to provide waste heat for the purpose of generation of electrical energy and the assessee entered into an agreement for the purpose of generating electrical energy from the waste heat generated by M/s Kanishk Steel Industries Ltd. As per the agreement, the assessee has to deposit an interest free deposit to M/s Kanishk Steel Industries Ltd. of the amount equal to 10% of the total value of .....

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assessee is engaged in the business of generating electrical energy, hence, it is entitled for deduction u/s 80IA of the Act. Referring to the contention of the Revenue that the assessee has neither set up power generating unit nor owns the same, the ld. Representative submitted that it is not necessary to own the power plant. Referring to section 80IA, more particularly, 80IA(4), the ld. Representative submitted that section 80IA applies to an enterprise carries on the business of operating and .....

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r claiming deduction u/s 80IA(4)(iv) of the Act. 5. Referring to the judgment of the Madras High Court in K.A. Infrastructure Pvt. Ltd. vs Director (ITA-I)CBDT and Another, Writ Petition No.11871 of 2011, dated 28.10.2011, the ld. Representative submitted that on identical circumstances, the Madras High Court examined the scope of section 80IA and section 10(23G)of the Act and found that as far as deduction un 80IA with regard to an undertaking for generation and distribution of power is concern .....

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in generation or generation and distribution of power. In the absence of any of the disqualification as given under sub section(3) of section 80IA, the assessee cannot be denied deduction u/s 80IA. Though this judgment was rendered in a writ proceeding, according to the ld. Representative, the findings of the Madras High Court is equally applicable to the assessee s case. 6. We have considered the rival submissions on either side and also perused the material available on record. The assessee-co .....

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it to use plant and equipment for the purpose of generating electricity. It is not in dispute that though the plant was owned by M/s Kanishk Steel Industries Ltd, the assessee was given the right to operate and generate electricity. The question arises for consideration is when the assessee is not owner of the plant and equipment and with licence from M/s Kanishk Steel Industries Ltd. it generates power, whether the assessee is entitled for deduction u/s 80IA of the Act or not. This issue was co .....

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nterprise engaged in generation or generation and distribution of power. The Madras High Court further found that sub section(3) of section 80IA says nothing about lease of the undertaking. The deduction is available to an undertaking engaged in generation or generation and distribution of power and in the absence of any of the disqualification given under sub section (3) of section 80IA, the Madras High Court found that the assessee cannot be denied deduction u/s 80IA. In fact, The Madras High .....

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ery used for any purpose to a new business. Thus an enterprise which is engaged in the generation or generation and distribution of power, qualifies for a deduction, subject to satisfying sub-clauses in the Section. Considering the fact that the deduction is with reference to the undertaking generating or generating and distributing power, the deduction would be available at the hands of the lessee assessee, which is engaged in the generation or generation and distribution of power and there is .....

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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 subclause (v) to sub-section (4) of Section 80IA, there is no qualification to be read into the term "undertaking" so as to b .....

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use by the lessor, which was now sought to be given on lease to the assessee. Thus, if the claim is to fall under clause (a) to subclause (iv) to Sub-section (4), so long as the windmill is one already set up from the qualifying date 1st April, 1993, and it has been in generation of power and distribution of energy thereon, I do not find any ground to reject the plea of the assessee for grant of approval under Section 1O(23G) of the Income Tax Act. 7. We have also carefully gone through the pro .....

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