TMI Blog2017 (12) TMI 1396X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, the Assessing Officer has to allege specifically that there a failure on the part of the assessee to disclose fully and truly all material facts necessary for completing the assessment. We find that there is no such specific finding given by the Assessing Officer in the reasons recorded. Insofar as adoption of unit rate at ₹ 4.50 ps. is concerned, in the reasons recorded, Assessing Officer after considering the submissions made by the assessee accepted the rate adopted by the assessee that the rate on which per unit paid by the assessee to the AP Transco i.e. ₹ 4.5 per unit. Therefore, it is not correct to say that the Assessing Officer has completed assessment without considering the relevant material. The assessee has submitted the relevant material to the Assessing Officer i.e. bills paid by the assessee to the AP Transco and after considering the same, the Assessing Officer allowed, therefore it is not correct to say that there is an escapement of income. We also find that after considering all the details filed by the assessee in paper book at page Nos. 20 to 25, in respect of claim of 80IA as well as adoption of rate per unit after considering the same as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment was completed under section 143(3) of the Act on 30/12/2010. Subsequently, a notice under section 148 was issued to the assessee on 10/01/2014 for reopening of the assessment. When the assessee has asked the Assessing Officer for furnishing reasons to reopen the assessment, a copy of the reasons recorded, is submitted on 05/03/2014. The assessee, after receiving reasons for reopening, has submitted a detailed note to the Assessing Officer on 27/03/2014 that we were informed that we have not filed profit loss, balance sheet of power generation undertaking, which is part and parcel of the assessee company along with rice mill unit, but only Form No. 10CCB filed. There is no truth in saying that our company has not filed profit loss account, balance sheet and other relevant financial statements of power generation unit along with Form No.10CCB as all the statements including profit loss account, balance sheet, month-wise power units produced, month-wise consumption of husk and other relevant information was filed. Moreover, during the assessment proceedings, the books of account maintained separately for power generation are produced before the Assessing Officer for veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible deduction under section 80-IA. Accordingly, he calculated excess deduction claimed and allowed ₹ 91,15,062/- and assessment is completed by allowing deduction under section 80-IA of ₹ 1,71,82,206/-. 5. On being aggrieved, assessee carried the matter in appeal before the ld. CIT(A). 6. It was submitted before the ld. CIT(A) that during the course of original assessment proceedings, all the details were filed before the Assessing Officer and the Assessing Officer after considering the details filed by the assessee, assessment is completed. Therefore, notice issued under section 148 is not valid and submitted that the assessment passed by the Assessing Officer may be quashed. However, ld. CIT(A) after considering the explanation of the assessee, he upheld reopening of the assessment by observing that the assessee company failed to furnish profit loss account, balance sheet and other relevant statements of power generation, therefore, assessee is not eligible for deduction under section 80-IA of the Act. 7. So far as merits of the case is concerned, i.e. assessee adopted the rate at ₹ 4.50 ps. per unit, which is paid by the assessee to the AP Tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative relied on the order of the Assessing Officer. 11. We have heard both the sides, perused the material available on record and orders of the authorities below. 12 In this case, original assessment is completed under section 143(3) read with section 153A of the Act on 30/12/2010. Subsequently, a notice under section 148 is issued on 10/01/2014 on the ground that there is an escapement of income within the meaning of section 147 of the Act. Subsequently, the reasons for reopening are furnished which are reproduced as under:- For the assessment year 2007-08, the assessment was originally completed u/s. 143(3) r.w.s. 153 A on 30/12/2010. a) As seen from the computation of total income, it is noticed that the assessee company has admitted total income of ₹ 1,09,41,511/- after claiming deduction under chapter VIA i.e., deduction u/s. 80IA at ₹ 2,62,97,269/-. As per sub-section (7) to section 80IA r.w.r. 18BBB of I.T. Rules, in order to claim the deduction u/s. 801 A, a separate report is to be furnished by each undertaking or enterprise of the assessee claiming deduction u/s.80IA and shall be accompanied by the Profit and Loss Account and Balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Unit Further, from the reasons recorded (b) above, it is evident that the assessee-company has claimed excess deduction u/s.80lA of ₹ 90,90,062/- if at all the such deduction is to be allowed. Therefore, the income chargeable to tax has escaped assessment for the A. Y. 2007-08. 13 From the above, it appears to us that one of the reasons for reopening is the assessee company failed to furnish profit loss account, balance sheet and other relevant financial statements of power generation unit and therefore the assessee is not eligible for 80-IA deduction. In the paper book at page No. 20, the Assessing Officer asked the assessee to file all the details before passing the assessment order, such as books of account of the power plant, number of employees, raw-material consumption quantity-wise and quality-wise, month-wise break up etc. In response to that, paper book at page No. 22, assessee has given a detailed reply along with all the details, such as books of account for power plant giving the details of material consumption, expenditure incurred and power units generated along with its bye products like steam. The details of employees employed in power plant unit, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the original assessment proceedings, in response to the notice issued dated 03/09/2010, the assessee has submitted a detailed reply on 04/11/2010 wherein at question No.18, it is submitted that the company is paying an amount of ₹ 4.50 ps. per unit to AP Transco for utilization of power from state government is taken as sale figure for arriving profit as per the provisions of section 80IA and the bills paid to AP Transco evidencing the payment of above herewith enclosed. The Assessing Officer after considering the submissions made by the assessee accepted the rate adopted by the assessee that the rate on which per unit paid by the assessee to the AP Transco i.e. ₹ 4.5 per unit. Therefore, it is not correct to say that the Assessing Officer has completed assessment without considering the relevant material. The assessee has submitted the relevant material to the Assessing Officer i.e. bills paid by the assessee to the AP Transco and after considering the same, the Assessing Officer allowed, therefore it is not correct to say that there is an escapement of income. We also find that after considering all the details filed by the assessee in paper book at page Nos. 20 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of claiming deduction under section 80IA of the Act. Further, he was asked to show-cause as to why ₹ 3.25 ps. per unit price should not be considered as the APEPDCL is paying the same amount for the power purchased by it. The assessee has submitted a detailed note before the Assessing Officer as follows:- It is to inform you that while arriving the deduction to be claimed u/s.80IA in case of Unit-1, we have adopted ₹ 4.50 per unit which was the rate that the company has been paid to APTRANSCO for consumption of electricity during the year under consideration. Our company's power plant is a captive power plant meaning the entire power that is both electricity and steam produced to be utilized by the company itself and hence selling the power to outsider does not arise as we cannot sell the same. The company, being an industrial consumes, the AP TRANSCO is supplying power to our company at the rate of ₹ 7.36 per unit for the year under consideration and we have adopted ₹ 4.50 per unit which was the rate adopted of out 1st year of 80IA claim that is Asst. year 2004-05. Since then we are adopting the same rate in spite of the incre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AP Transco to taken as market price but not the price paid by board to the assessee. 19. The Assessing Officer after considering the detailed explanation filed by the assessee observed that even though the cost of production of power for both the units is same, it has been found that the assessee is valuing power from both the units at different rates. The power from unit-1 is used totally for captive power and unit-2 is partly used for captive power and the excess is sold to Electricity board. For the power sold to Electricity Board it is getting ₹ 3.40 ps. per unit. As the same power from one single unit when it is sold to two persons cannot be valued at two different prices. The assessee company valued the total units produced from unit-2 at the rate of ₹ 3.40 ps. per unit. But the parent company i.e. Rice Mill is receiving power from two different power units at two different prices i.e. at 4.50 ps. per unit from unit-1 and ₹ 3.40 ps. per unit from unit-2. If unit-1 is not completely captive, he would have valued it at ₹ 3.40 ps. per unit only. Accordingly, the Assessing Officer is of the opinion that the assessee has adopted ₹ 4.50 ps. per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of computing the profits windmills of the assessee, has to be taken at ₹ 2.70 or at ₹ 3.50. ₹ 2.70 was the price given by Electricity Board to the assessee for electricity generated by the windmills but, such electricity when supplied by the Electricity Board to the yarn manufacturing unit of the assessee, they had charged from the assessee ₹ 3.50 per unit. There is no dispute that the power manufactured by the assessee from its windmills though meant for the use of captive consumption in its yarn manufacturing unit, was not physically the same as was actually used by the yarn manufacturing units. The windmills were disparately situated vis-a-vis the yarn manufacturing unit. Assessee was left with no go other than supply the electricity to the Electricity Board. It is not that the same power that was produced by the assessee was supplied by the Electricity Board to its yarn manufacturing unit. The adjustment in the bills as a barter arrangement was, therefore, only for the convenience of the Electricity Board. Sub-section (8) of Section 80-IA provides that where an assessee, which is eligible for 80-IA benefits, transferred its goods or service to its bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee undoubtedly is an industrial consumer and the Board supplies power to such industrial consumers at the rate of ₹ 3.50 per unit. Had the assessee not been saddled with the restrictions of supplying surplus power to the State Electricity Board, it would have supplied the power to ultimate customers at a price not less than ₹ 3.50 per unit, being the rate charged by the Board from its industrial consumers. Thus, under the given circumstances, it would appropriate to hold that the consideration recorded by the assessee for transfer of power for captive consumption, which is at the rate of ₹ 3.50 per unit, corresponds to the market value of such power Jindal Steel And Power Ltd. (2007) (16-SOT 509), we are of the opinion that this decision better supports the case of the assessee. In taking this, we are also roboranted by the decision of Bombay Bench of this Tribunal, in the case of West Coast Paper Mills Ltd. v. JCIT 100 TTJ (Mumbai) 833. We are, therefore, of the opinion that assessee has to succeed in its appeal and profits of eligible undertaking has to be determined on the basis of annual landing cost of electricity purchased by the assessee from TNEB. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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