TMI Blog2016 (9) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... would therefore not be valid.- Decided in favour of assessee. Claim of deduction under section u/s. 80IA(4)(iv) of the Act in respect to sale of steam to its sister concern - Held that:- From the reply of the petitioner, it can be seen that the issue under discussion was precisely whether the petitioner was justified in claiming deduction on sale of steam. In this respect, the petitioner relied on a decision of Delhi bench of the Tribunal and contended that the word 'power' has to be given a meaning which in common parlance means energy and that therefore, steam produced by the petitioner would also be termed as power and therefore, qualify for deduction under section 80IA(4)(iv) of the Act. Undisputedly, the Assessing Officer did not disturb this claim in the final order of assessment. It may be that while doing so, she did not record separate reasons in the order of assessment. This would however be of no consequence as has been held by this Court in case of Gujarat Power Corporation Limited v. Asstt. Commissioner of Income Tax, reported in [2012 (9) TMI 69 - Gujarat High Court ]. Thus egarding the second ground also, therefore, it can be seen that there was no failure o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- after considering and debiting the expenditure of ₹ 1,88,41,214/- under the head exceptional items. On verification of the details under the head exceptional item, it was noticed that the assessee had debited these expenditure on account of loss of derivative transaction with ICICI bank namely mark to market loss. It is relevant to mention there that the investment in derivatives was made on 07/06/2007 with maturity date of 06/06/2014 and the loss on account of diminution in value of the derivatives was classified as Mark to Market loss amounting to ₹ 1,88,41,214/- as on 31/0/2010. The loss was not an actual loss but an unascertained liability in view of explanation 1(c) of section 115JB of the Act. Such sort of liability was required to be added back to the income as per the provisions of section 1(c) of section 115JB of the Act. 3. On perusal of statement of total income for the year under consideration it is noticed that the assessee had claimed deduction u/s. 80IA(4)(iv) of I.T.Act, 1961, deduction u/s. 80IA(4)(iv) is allowable to an undertaking which is setup in any part of India for the generation or generation and distribution of power if it begins to ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act, 1961. 4. Upon being supplied with copy of the reasons, the petitioner, under a letter dated 14.06.2016, raised objections to the notice of reopening. These objections were however rejected by the Assessing Officer by an order dated 23.06.2013. Hence, this petition. 5. Taking us through the reasons recorded by the Assessing Officer for issuing the notice, counsel for the petitioner raised following contentions: I. With respect to the first ground of the liability of mark to market loss of ₹ 1.88 crores (rounded off), the counsel submitted that such liability was ascertained and not contingent. The Assessing Officer committed an error in invoking explanation 1(c) of section 115JB of the Act. In any case, there was no failure on the part of the assessee to disclose full facts. II. Regarding ground no.2, counsel submitted that the claim of deduction under section 80IA(4)(iv) of the Act in respect of the sale of steam was examined by the Assessing Officer in the original assessment. Being satisfied that such claim was valid, she made no addition in the order of assessment. Merely because she did not record specific reasons in the order of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 115JB of the Act to contend that such expenditure was required to be added back to the income of the assessee for the purpose of computation of booked profit under section 115JB of the Act. Clause( c) of explanation 1 of section 115JB provides that for the purpose of the said section, booked profit would mean the net profit as shown in the profit and loss account as increased by (c) The amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities. 9. In this regard, as noted, the case of the petitioner is that the said sum of ₹ 1.88 crores does not represent a provision made for meeting the liabilities which was not ascertained liability. Counsel argued that the liability was an ascertained liability and in any case, it was not a mere provision made. Be that as it may, we are not concerned so much as to whether in law, the petitioner raised a correct claim or not. We are far more concerned about the question whether there was full and true disclosure in respect of such a claim. The answer would be available from the reasons recorded by the Assessing Officer itself. These reasons nowhere demonstrate that the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer had asked the assessee to supply various details. Multiple queries were raised, one of them, asking the assessee to justify the claim of deduction under section 80IA of the Act. In response to such query, the assessee under letter dated 01.12.2012, conveyed to the Assessing Officer as under: 10. Point No.22: Justification of claim u/s 80 IA: (A) The company has started separate industrial undertaking for captive power project. The activity is covered by Sec. 80IA(4) clause (IV) Industrial undertaking is located at Block No.398, Village Chharodi, Taluka Sanand, Dist. Ahmedabad (B) The Company has maintained separate records and books of accounts for the said undertaking. (C) The Company has complied with all the conditions laid down in Sec. 80IA of the act. (D) In view of Sub. Sec.2 of Sec.80IA, the company has obtained to avail the benefit U/S 80IA of the Act for the A.Y.2010-11. 12. It appears that while processing such reply in connection with the assessee's claim under section 80IA(4)(iv) of the Act, the Assessing Officer had further questions to raise. Though these questions are not on record, presumably since the queries were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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