ITAT directs Recomputation of Deduction under sec. 80IA for Assessee

The ITAT allowed the Assessee's appeal, directing the Assessing Officer to recompute the profit and gains for the purpose of deduction under sec.80IA at the rate of Rs.3.60 per unit, based on the market value of the power generated.

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Issues:
Disallowance of deduction claimed under sec.80IA of the Act.

Analysis:
The case involved an appeal by the Assessee against the order of the CIT(Appeals) regarding the disallowance of a deduction claimed under sec.80IA of the Act. The Assessee, a firm producing wind mill energy, had claimed a deduction of Rs.69.90 lakhs under sec.80IA for income derived from the generation and sale of electricity to the Tamilnadu Electricity Board. The Assessing Officer restricted the deduction to Rs.53,87,918/-, resulting in a disallowance of Rs.16,02,235/-. The Assessee argued that the deduction should be computed at Rs.3.60 per unit, as it had been paying electricity charges to the TNEB at that rate. However, the CIT(Appeals) upheld the Assessing Officer's decision, leading to the appeal before the ITAT.

The main issue for adjudication was whether the rate per unit for the deduction claimed under sec.80IA should be Rs.2.70 as claimed by the Revenue or Rs.3.60 as adopted by the Assessee. The Assessee contended that the market value of the power generated should be considered as Rs.3.50 per unit based on the price the Assessee would have paid if the power was bought from the open market. The ITAT referred to relevant case law and held that the market value should indeed be treated as Rs.3.50 per unit, directing the Assessing Officer to recompute the profit and gains for the purpose of deduction under sec.80IA at the rate of Rs.3.60 per unit. The ITAT allowed the Assessee's appeal based on this analysis.

In conclusion, the ITAT accepted the Assessee's appeal, directing the Assessing Officer to recompute the profit and gains for the purpose of deduction under sec.80IA at the rate of Rs.3.60 per unit. The judgment was pronounced on a specific date in Chennai.

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