Tribunal rules for assessee on plant purchase, partially allows Revenue's appeal on deduction.

The Tribunal ruled in favor of the assessee, dismissing the addition under Section 69 related to the purchase of plant and machinery. On the deduction claimed under Section 80-IA, the Tribunal partially allowed the Revenue's appeal, remitting the matter back to the AO for determining the quantum of deduction. The Tribunal emphasized adherence to the principles of natural justice and the clear law, ensuring compliance with the law and principles of natural justice.

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Issues Involved:
1. Addition under Section 69 for Rs. 411.98 lacs.
2. Deduction claimed under Section 80-IA for Rs. 253.43 lacs.

Issue-wise Detailed Analysis:

1. Addition under Section 69 for Rs. 411.98 lacs:
The first issue concerns an addition under Section 69 of the Income Tax Act, 1961, for Rs. 411.98 lacs related to the purchase of plant and machinery. The assessment order noted that the assessee failed to furnish purchase bills and vouchers and could not establish the source of payment. However, the Commissioner of Income Tax (Appeals) [CIT(A)] allowed the assessee's claim, noting that the bills and vouchers had been submitted online and the source of payment was reflected in the audited accounts. The Tribunal observed that if the bills and vouchers were not furnished, the consequence would be the disallowance of depreciation, not an addition under Section 69, as the investment was reflected in the accounts. The Tribunal found that the bills and vouchers were indeed submitted online, as verified by the assessee's counsel. The Revenue failed to substantiate its claim of non-submission. Consequently, the Tribunal ruled in favor of the assessee, clarifying that no case for an addition under Section 69 was made out, and the only possible consequence would be the non-allowance of depreciation, which was not pursued by the Revenue.

2. Deduction claimed under Section 80-IA for Rs. 253.43 lacs:
The second issue pertains to the maintainability of the deduction claimed under Section 80-IA for Rs. 253.43 lacs. The Assessing Officer (AO) disallowed the deduction based on the assessee's letter seeking approval for commissioning and trial run of the power plant, indicating no approval was granted. The assessee argued that it operated the power plant without the said approval for captive consumption due to non-receipt of approval despite repeated reminders. The CIT(A) allowed the deduction based on evidence provided by the assessee. The Tribunal agreed with the CIT(A) that the assessee was eligible for the deduction as the power plant was operated for captive consumption, but noted that the CIT(A) should have remitted the matter back to the AO for determining the quantum of deduction. The Tribunal highlighted that the revenue booked was at an incentivized rate proposed by the government, which did not materialize. The Tribunal emphasized that the market price should be considered for determining the quantum of deduction, not the incentivized rate. The Tribunal restored the matter to the AO for determining the quantum of deduction, ensuring compliance with the law and principles of natural justice. The Tribunal clarified that the discussion on the quantum of deduction should not prejudice either side and was aimed at facilitating the determination in accordance with the law.

Conclusion:
In conclusion, the Tribunal ruled in favor of the assessee on the first issue, dismissing the addition under Section 69, and partially allowed the Revenue's appeal on the second issue, remitting the matter back to the AO for determining the quantum of deduction under Section 80-IA. The Tribunal emphasized adherence to the principles of natural justice and the clear law impinging on the matter. The order was pronounced in open court on November 29, 2022.

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