TMI Blog2011 (5) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... unting to ₹ 35,08,420/-. It has been noted by the A.O. on page-5 of the assessment order that after reducing 90% of export incentives and other income, profit of business of the assessee-company is negative. The A.O. has worked out loss of ₹ 30.63 lakhs. It is also noted by the A.O. that the total turnover of the assessee-company is 100.26 crores. The A.O. has considered the provisions of section 80HHC after its amendment in 2005 and has held that the assessee is not eligible for deduction u/s. 80HHC in view of negative profit. Being aggrieved, the assessee carried the matter in appeal before the Ld. C.I.T. (A). The CIT (A) has noted in his order that in the preceding year i.e. in Assessment Year 2003-04 his predecessor has noted that the assessee accounts for the DEPB entitlements on accrual basis in due compliance with the Accounting standards prescribed by the Institute of Chartered Accountants of India and when the DEPB entitlements are sold, the assessee offers only difference between the sale value and the income accounted already on accrual basis treating the same as cost, as profit arising from the transfer of DEPB. It is also noted by the CIT (A) that in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal for Assessment Year 2004-05 and ground No.1 of appeal for A.Y. 2005-06 is identical and the issue involved is as to whether the assessee is eligible for deduction u/s. 80IA. Both sides agreed that facts in both years are identical and hence this issue in both years may be decided as per facts in A.Y. 2004-05. 7. Brief facts are that it is noted by the A.O. in paragraph 6.1. of the assessment order in A.Y. 2004-05 that during this year, the assessee has claimed deduction u/s. 80IA (iv)(a) of the Act amounting to ₹ 61,62,543/- in respect of power project engaged in generation/transmission/distribution of power. It is also noted by the A.O. that the assessee has submitted report of Chartered Accountant in form No.10CCB along with return of income. It is also noted that it has been stated in the report that the generation of power started on 16-1-2003. It is also noticed by the A.O. that the assessee has not claimed deduction u/s. 80IA (iv) (a) for the Assessment Year 2003-04 and for the first time, assessee has claimed deduction in A.Y. 2004-05. The A.O. has mentioned that in the Chartered Accountant s report, complete addresses of enterprise and undertaking has not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his issue in favour of the assessee and now the Revenue is in appeal before us for both the assessment years. 8. The Ld. D.R. of the Revenue supported the Assessment order whereas the A.R. of the assessee supported the order of the Ld. CIT (A). Reliance was placed on the following judgments:- (a) West Coast Paper Mills Ltd. vs. JCIT 100 TTJ 833 (Mum) (b) DCW Ltd. vs. Addl. C.I.T. (2010) 132 TTJ 442 9Mum.). Reliance was also placed on some other judgments which are not being taken note of at this stage and if we find that the issues did not covered by these two tribunal decisions, we will consider those judgments also. He also submitted that the report of the Dev consultant is available on pages 85 to 86 and 95 to 96 of the paper book. It is also submitted that the power plant is captive power plant and hence assessee is eligible for deduction u/s. 80IA. 9. We have considered rival submissions, perused the material available on record and gone through the orders of the authorities below and the judgments cited by the Ld. A.R. of the assessee as noted above. 10. We find that at page 95 of the paper book in the certificate of the consultant, it has been stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llation of 1250 KVA captive power plant from Chief Electrical Inspector and had filed profit and loss account for power plant and also inspection report of the Chief Electrical Inspector, Gandhinagar carried out on 11-1-2003 and account of electricity duty paid for units generated in CPP. It is further, noted by the Ld. CIT (A) that adequate time had been given to the A.O. since 1-3-2007 when the papers were given to the A.O. for his comments and the A.O. has not given any adverse comments. The order has been passed by the Ld. CIT (A) on 7-9- 2007. Hence, this objection of the A.O. is also not valid that the assessee has not obtained approval from Govt. authority because no specific requirement of section 80IA has been pointed out by the A.O. in this regard. We also did not find any sub-section of section 80IA which requires that the Power Plant has to be approved by any specific authority. The Ld. D.R. of the Revenue has also not pointed any such provision u/s. 80IA. Hence, we feel that this objection is also not valid. Fourth objection of the A.O. is that no books of accounts have been maintained by undertaking or enterprise. In this regard, we have noted that it is stated by lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence on the basis of this objection, the claim of the assessee cannot be rejected. 12. Now, we fid that in the case of West Coast Paper Mills Ltd. vs. JCIT (supra) it was held by Bombay Bench of the Tribunal that when the assessee is generating power even from captive consumption of power, there is no fetter against deduction under section 80IA. In that case, the Assessing Authority was directed to work out the profit o the basis of the price of the power generated by the assessee at the average of the annual landed cost of electricity purchased by the State Electricity Board during the impugned previous year. In the present case, assessee had duly submitted the Profit and loss account of the new unit as has been noted by the Ld. CIT (A) on page-7 of his order but we find that in the Paper book filed before us, copy of such Profit and Loss account of the assessee-company is not available and what has been submitted in the paper book for the Financial Year ending 31-3-2004 i.e. Profit and loss account of the entire unit of the assesseecompany and not of power plant. Since the veracity of the Profit and loss account of the relevant unit of the assessee-company was not examined by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT (A) in both the year and the ground was deleted by Ld. CIT (A) for both the years. Now the Revenue is in appeal before us for both the years. 16. The Ld. D.R. of the Revenue supported the assessment order. Reliance was placed by him on the decision of special bench of the Tribunal rendered in the case of Cheminvest Ltd. vs. ITO reported in 124 TTJ 577. As against this, Ld. A.R. of the assessee supported the order of the Ld. CIT (A). It is also submitted by him that balance sheet is available at page-69 70 of the paper book. It is also submitted that investment in shares was made in the preceding year i.e. in A.Y. 2003-04 and in that year, there is no disallowance on account of interest expenditure and hence, there is no disallowance on account of interest expenditure and hence in the present years, the disallowance is not justified. Reliance was placed on behalf of the assessee on the following judgments :- a) CIT vs. Reliance Utilities Power Ltd., (2009) 313 ITR 340 b) S. A. Builders vs. CIT 288 ITR 1 (SC) 17. We have considered the rival submissions, perused the material avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in shares in that year is only of ₹ 352 lakhs. Similarly in the year ending as on 31-3- 2004 profit after tax is ₹ 214.25 lakhs and the depreciation in this year is ₹ 195.16 lakhs and hence total generation of funds is ₹ 309.41 lakhs whereas the investment in shares in this year is of only ₹ 55.25 lakhs. In the light of this fact, we feel that, it is not justified to make any disallowance of interest claimed by the assessee u/s. 36(1)(iii) I the absence of any direct nexus between the investment in shares and interest bearing borrowed funds We also find that it is also not brought on record by the A.O. that such funds generated from operations has been otherwise used by the assessee and was not available with the assessee for investment in shares. Hence, we feel that no interference is called in the order of the Ld. CIT (A). We confirm the orders of the Ld. CIT (A) in both the years. 19. The ground No. 3 of A.Y. 2004-05 and ground No.2 of A.Y. 2005-06 are rejected. 20. As per ground No.4 in A.Y. 2004-05 and Ground No.3 in A.Y. 2005- 06, the issue involved is that of deleting the disallowance made by the A.O. out of house keeping charges u/s. 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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