TMI Blog2008 (10) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 1993-94, CIT(A) held that since the receipt of service charges was not directly connected or linked with the manufacturing activity carried out in the industrial undertaking of the assessee, the service charges received by the assessee from the said activity of producing Heavy Water cannot be considered as the profit derived from its industrial undertaking so as to qualify for deduction under Section 80-I of the Income Tax Act, 1961 (for short, "the 1961 Act"). For the said reasons, the CIT(A) disallowed the assessee's claim for deduction under Section 80-I. This view of CIT(A) has been affirmed by the judgment of the Tribunal as well as by the impugned judgment of Delhi High Court dated 15.11.2006 in ITA Nos. 1252/06, 1253/06 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Plant of the appellant. This is a brief process in the manufacturing of heavy water. At this stage, it may be mentioned that the appellant's plant is known as Ammonia Plant from which synthesis gas flows to HWP at Hazira owned by the Department of Atomic Energy and which is known as Hazira Ammonia Extension Plant ("HAEP"). HAEP is an extension of the Ammonia Plant. This aspect is important for deciding the present civil appeal as it indicates the inseverability between the two plants. According to the Department, receipt of service charges by the appellant accrued to the appellant only out of its own industrial activity and, consequently receipt of such service charges did not qualify as eligible profits under Section 80-I. It is this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the Board. Ownership of the HWP vested during the assessment year 1993-94 in the Board. However, if one reads the above three agreements, prima facie one finds that the HWP (Hazira Ammonia Extension Plant) owned by the Board is an extension of the Ammonia Plant of the appellant. The peculiar features emerging from the above three agreements are that, synthesis gas flows through the pipes of Ammonia Plant to HAEP. Similarly, synthesis gas which is produced inside the Ammonia Plant and which contains deuterium is taken to the HAEP where deuterium is extracted with the help of a solution and the balance gas is once again returned to the Ammonia Plant of the appellant. This indicates two things. Firstly, that HAEP cannot surv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operation and maintenance of HWP is by the Board to a very large extent (see clause 2.0 of the said Agreement dated 14.9.1994). Similarly, in the matter of construction of HWP, the funding is by the Board. One more aspect needs to be noticed. Under clause 10.0 of Agreement dated 14.9.1994, appellant is required to render to the Board accounts of expenditure incurred every month out of the funds placed at its disposal by the Board. Similarly, appellant is required to give details of assets created and liabilities incurred to the Board. Under clause 19.0, the Board absolves the appellant from any infringement of patent in connection with operational maintenance of HWP. Further, the fees for service charges is based on the quantity produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncluding, we may make it clear that the reasons given by us hereinabove are tentative observations made in the context of this case being a stand-alone case having no prior precedents. We have made tentative observations only to support our order remanding the case to the Tribunal. Therefore, we keep all contentions from both sides expressly open. As stated above, in this civil appeal the appellant has failed to produce relevant data before the authorities below. We permit the parties to do so. However, we direct the appellant herein to pay cost of Rs. 25,000/- as cost condition precedent to the hearing of the appeal by the Tribunal. The appellant herein to pay costs to the Department within eight weeks. Before concluding we may clar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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