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of <h1>Tribunal upholds CIT's order on section 263, includes EOU turnover for deduction, flags renewable energy depreciation for review.</h1> <h3>TATA BP Solar India Ltd. Versus Additional Commissioner of Income-tax, Rg. 7 (3), Mumbai</h3> TATA BP Solar India Ltd. Versus Additional Commissioner of Income-tax, Rg. 7 (3), Mumbai - [2011] 130 ITD 386 Issues Involved:1. Computation of deduction under section 80HHC of the Income-tax Act, 1961.2. Claim of depreciation on renewable energy devices.Issue-wise Detailed Analysis:1. Computation of Deduction under Section 80HHC:The assessee, engaged in the manufacture and sale of solar cells and related products, filed a return claiming deductions under sections 10B and 80HHC of the Income-tax Act, 1961. The primary issue was the computation of the total turnover for the purpose of deduction under section 80HHC. The assessee excluded the turnover of its Export-Oriented Unit (EOU) from the total turnover, arguing that the deduction under section 80HHC was claimed only for non-EOU business profits. The CIT, however, contended that the total turnover should include the EOU turnover, as per the Profit and Loss Account, leading to a higher deduction under section 80HHC and a loss to the revenue. The assessee argued that if the EOU turnover is included in the total turnover, it should also be included in the export turnover and profits of the business. The Tribunal upheld the CIT's view, stating that the total turnover should include all sales with an element of profit and that the turnover of the 10B unit cannot be excluded from the total turnover while computing deduction under section 80HHC.2. Claim of Depreciation on Renewable Energy Devices:The second issue involved the claim of depreciation at 80% on certain machineries, which the assessee classified as renewable energy devices. The CIT issued a show-cause notice under section 263, questioning the classification and the rate of depreciation. The assessee argued that the machineries were integral to the manufacturing process of solar products and thus qualified for higher depreciation. The CIT found that the Assessing Officer did not properly examine the technical aspects or seek expert opinion before allowing the depreciation claim. The Tribunal upheld the CIT's decision, stating that the failure to make necessary enquiries warranted the exercise of jurisdiction under section 263. The Tribunal cited the decision of the Hon'ble Supreme Court in Smt. Tara Devi Aggarwal v. CIT, emphasizing that lack of proper enquiry by the Assessing Officer rendered the order erroneous and prejudicial to the interest of the revenue.Conclusion:The Tribunal dismissed the appeal by the assessee, upholding the CIT's order under section 263 on both issues. The total turnover for the purpose of section 80HHC should include the EOU turnover, and the claim for depreciation on renewable energy devices required further examination by the Assessing Officer.
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