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TMI Blog2005 (11) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... f Gujarat. (iv) in deleting the disallowance of Rs. 4,20,000 being effluent treatment expenses. (v) in directing to allocate admn. exp. Selling and distribution expenses as per specific figures given by the assessee with evidence while computing deduction under section 80-IA though he himself has upheld Assessing Officer's action of invoking provision of section 80-IA(10) and accordingly allocation was on the basis of turnover of each unit. (vi) in directing to allow depreciation @ 100 per cent of boiler." 3. The first ground of appeal relates to the direction by the learned CIT(A), vide para 8 of his order, relying on the decisions of the ITAT, Chandigarh and Mumbai Benches in 53 ITD 180 and 59 TTJ 95 (sic) respectively, to exclude, the amount of sales tax from the amount of total turnover for the purpose of computing the deduction exigible under section 80HHC of the Income-tax Act, 1961 ("Act" hereinafter). Before us, it was conceded by the learned D.R. that this matter stands covered and since settled by the decision of the Special Bench of the Tribunal in IFB Agro Industries Ltd. v. Dy. CIT [2002] 83 ITD 96 (Cal). Further, this matter has also travelled to various High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f discharge of effluent by the industries of the area, of which the assessee's is one, calculating the same at the rate of one per cent of the gross turnover for the financial year 1993-94 or 1994-95, whichever is more. 7. At the outset, it was pointed out by the learned A.R. that this matter stands since decided in favour of the assessee by the ITAT (Ahmedabad Bench "A') in the case of Mahalakshmi Fabric Mills Ltd, Ahmedabad dated 27-4-2005, which stands placed on record, through its gist in Ahmedabad Chartered Accountants Journal issue of May 2005. He, thus, pleaded the issue as fully covered by the said decision. The learned D.R., very fairly, concedes; the payment in the cited case being also in pursuance to the same order of the Hon'ble Gujarat High Court as in the present case. 8. We have heard the rival submissions and perused the material on record. In the cited case the ITAT was seized of the same issue, i.e., of the deductibility of the amount directed to be paid in lump sum by 756 industrial units to the Ministry of Environment, Government of Gujarat, for the socio-economic upliftment of the population of the affected villages (named therein) by the pollutants discharg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollution Control Law), the same could not be considered as revenue in nature by any score. He also urged the alternate ground taken by the Assessing Officer, i.e., of the said expenditure, even if held to be as of revenue nature, would not merit allowance, in view of the fact that the said facility, to be set-up under the auspices of GIDC, in Odhav industrial area, was not actually set up or put to use either during the year under consideration, or even for the subsequent two years, so that on account of principle of accrual of expenditure, the same cannot be considered to be relatable to the current year. 11. The learned A.R., on the other hand, was equally vehement in support of the assessee's claims. The total expenditure of Rs. 4,20,000, it was explained, comprises of a sum of Rs. 3,70,000 to be paid to AMC for setting-up of the conveyance facility, by installing a net-work by pipelines, of the effluent discharged by the polluting industrial units, and Rs. 50,000 paid to OEPL for setting-up of the common ETP. Both the payments stood discharged during the relevant year, in compliance with the directions of the Hon'ble Gujarat High Court, and being only an expenditure incurred b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wards the setting up of a common ETP, as also towards the cost of the facilities required for its conveyance, as, without the same being in place, no effective remedy of the malady would come into effect. It was in this background that the assessee, among others, contributed the impugned amount of Rs. 4,20,000 aforesaid to AMC and OEPL, the nature of which is presently in dispute. 14. We take up the matter of examination of Rs. 3,70,000 first. The obligation of the assessee, as an industrial unit, under the law, being only to treat the effluent to the required degree prior to its discharge in the public drainage, the contribution made by it, on the direction of the Hon'ble Gujarat High Court, to contribute towards the laying of the net-work of pipelines required for the conveyance of the discharge, in view of the high cost the project entails, being outside the financial capacity of the relevant authority, being AMC, Ahmedabad, is only an obligation that it assumes as a responsible citizen, as in its absence, the entire scheme, as sought to be put in place by the said court, to alleviate a continuing hardship/problem, would become unworkable/ unfeasible. That, it may have also bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charging the Gujarat Industrial Development Corporation (GIDC) as a Government agency to monitor the process, with OEPL acting as the agency for the actual execution of the work. In view of the same, we find this payment to be essentially as nothing more than the contribution by each individual member to the facility thus generated for the benefit of the smooth conduct of the business of the individual members who may otherwise, i.e., individually, not be in a position to install such a facility, or being even otherwise more economical. The consideration that the said units were statutorily obliged to do so, i.e., under law, though relevant, gets diluted in view of the order of the jurisdictional High Court, which the impugned units, of which the assessee's unit is one, can fail to comply with only at their own peril. Once the matter becomes subjudice, it is the writ of the court that shall hold the field, so that even as the assessee's primary obligation to treat its discharge may have been the factor weighing on the court's mind, the very fact that it directed the defaulting unit(s) to contribute also towards the pipeline, only goes to show that it looked at the larger picture, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mills for a short duration. The same was, under these circumstances, held to be an allowable business expenditure under section 37 of the Act. The facts as emanating in the said decision, cover the case of the assessee, insofar as the contribution to the pipeline net-work to be laid by the AMC is concerned, and which we have already, for the reasons afore-cited, held to be an allowable business expenditure, and which decision the said judgment only validates. 17. The second case cited is that of CIT v. Gujarat Mineral Development Corpn. [1981] 132 ITR 377 (Guj.). In that case the assessee incurred an expenditure of Rs. 204.46 lakhs, representing its 50 per cent share of the total amount spent by Gujarat Electricity Board for laying electric cables and electric supply transmission lines, etc. for a Beneficiation Plant, to enable the assessee to separate waste material from the useful material, as a part of its operations. The same was held to be revenue expenditure, as by its incurrence, the assessee only enabled itself to carryon its business more efficiently and profitably. We find that the facts of this case are akin to that of the assessee in respect of contribution to AMC for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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