TaxTMI 
TaxTMI 
2010 (1) TMI 939
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.... The learned AR submitted that similar additional grounds were raised in assessment year 2001-02, which have been admitted, however, on merits, the additional grounds of appeal were dismissed by ITAT vide ITA No. 4175/M/2005 order dated 18-2-2009. After hearing the learned DR, we find that on identical set of facts and issue, the ITAT has admitted the additional ground and on merit the same were dismissed. We respectfully follow the above order of ITAT and in the light of those additional grounds are admitted and on merit same are dismissed on same grounds and reasons given by the ITAT in assessment year 2001-02. 4. Now coming to regular grounds raised in the appeal. Ground No. A is in respect of disallowance on account of bad debts of Rs. 10,12,714. 5. Briefly, the facts of the case are that the assessee claimed bad debts, out of which the Assessing Officer disallowed the claim of the assessee in respect of the following parties:- 1. Chempro Expertise P. Ltd. Rs. 4,10,000 2. Indian Oil Corporation Ltd. Rs. 4,59,914 3. Kilburn Engineering Ltd. Rs. 1,42,800 5.1 The CIT(A) confirmed the disallowance made by the Assessing Office....
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....isdictional High Court in the case of CIT v. Pamwi Tissues Ltd. [2008] 215 CTR (Bom.) 150. However, before finalising this order it has come to our notice that there is judgment of Hon'ble Supreme Court in the case of CIT v. Alom Extrusions Ltd. [2009] 319 ITR 306 wherein the judgment of Hon'ble jurisdictional High Court in the case of Pamwi Tissues Ltd. (supra) has been reversed. Normally, after hearing if anything new is to consider in the order, opportunity of hearing is to be given to the parties but in this case, we rely upon the judgment of Hon'ble Supreme Court which is the law of land, we, therefore, respectfully follow the above judgment of Hon'ble Supreme Court in the case of Alom Extrusions Ltd. (supra) and remit this issue back to the file of the Assessing Officer with a direction to decide the issue in the light of judgment of Hon'ble Supreme Court in the case of Alom Extrusions Ltd. (supra) after verifying the dates and after providing reasonable opportunity of being heard to the assessee. 10. Ground No. C is against the addition of Rs. 1,93,66,791 on account of unutilized Modvat. The submission of the learned representatives of the parties on this issue is ....
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....v. Asstt. CIT [2006] 103 ITD 19 held that the assesses while calculating deduction under section 80-IA has taken market price at the rate of Rs. 3.96 per unit which includes 0.18 per unit electricity tax. The electricity tax is not part of the market price; therefore, the same is required to be reduced from the eligible profit for deduction under section 80-IA. The CIT(A), accordingly, enhanced the income by reducing the claim of the assessee under section 80-IA by Rs. 3,35,37,878 on this count. The CIT(A) was of the view that 25 per cent of indirect expenses is reasonable to allocate to C.P.P. unit for the purpose of calculation of eligible profit under section 80-IA of the Act. The CIT(A), accordingly, directed the Assessing Officer that the income of the assessee may be enhanced while giving effect to the order of CIT(A). The CIT(A) has also disallowed the claim of deduction under section 80-IA in respect of following items of income:- 1. Income from sale of sludge Rs. 10,09,593 2. Income from sale of steam Rs. 44,07,753 3. Misc. income Rs. 17,567 14. The learned AR submitted that the enhancement of the income by the CIT(A) is illegal and bad....
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....required to be disturbed. 14.3 As regards the allocation of indirect expenses, the learned AR submitted that there are no direct nexus between the C.P.P. unit eligible for deduction under section 80-IA and the expenses. The learned AR relied upon a decision of Authority for Advance Rulings, New Delhi in National Fertilizers Ltd., In re [2005] 142 Taxman 5. The learned AR drew our attention to page 57 where the details of expenses were mentioned. The same is reproduced as below:- 1. Vehicle maintenance Rs. 71,92,000 2. Other expenses Rs. 4,66,85,000 3. Auditors fees Rs. 10,89,000 4. Directors remuneration Rs. 1,53,72,000 5. Travelling expenses of Managing Director Rs. 1,20,02,000 14.4 The learned AR submitted that out of above expenses, 25 per cent of three items of expenses, Auditor Fee, Director's remuneration and Travelling expense of Managing Director were taken into consideration by the CIT(A) for allocation to the unit eligible for deduction under section 80-IA. The alternate submission of the learned AR is that 25 per cent of allocation to the eligible unit under section 80-IA by the CIT(A) is without any basis. He sub....
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....r Mills Ltd. (supra) wherein it was held that electricity tax is not part of the market price. The learned DR submitted that the judgment cited by learned AR in the case of P.R. Prabhakar (supra) does not help to assessee as the provision is very clear in this regard. He further submitted that the decision of IT AT in the case of Jindal Steel and Power Ltd. (supra) is also not applicable to the facts of the case under consideration, therefore, the same is distinguishable on facts. 15.2 As regards indirect expenses, the learned DR submitted that the expenses indirectly related to unit eligible for deduction under section 80-IA, therefore, the CIT(A) has rightly directed the Assessing Officer to consider for deduction under section 80-IA after considering indirect expenses. The learned DR has relied upon the order of CIT(A) in this regard. 15.3 As regards allow deduction under section 80-IA on steam, the learned DR submitted that deduction under section 80-IA is allowable only in respect of electric power and not other. The learned DR submitted that since the steam is not electric power, therefore, the CIT(A) has rightly disallowed the assessee's claim. He further....
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....he consumers on the bill raised. The CIT(A) was of the view that the electricity tax is a statutory and extraneous payment the same cannot form part of the market price. The CIT(A) heavily relied upon the decision of Mumbai Bench in the case of West Coast Paper Mills Ltd. (supra). The relevant section 80-IA(8) of the Income-tax Act reads as under:- "80-IA. Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.:- (1) to (7) ....... (8) Where any goods [or services] held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods [or services] held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods [or services] as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in....
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....aper Mills Ltd.'s case (supra) are that the assessee was engaged in the manufacture and sale of paper and paper boards, multilayer boards, etc., and in the business of power generation. The assessee had set up four DG Units to facilitate its power requirement in the paper plant at Dandeli in Karnataka. The assessee claimed deduction under section 80-IA on the ground that these DG Units were catering to the assessee's captive power requirement. The Assessing Officer was of the view that it was only an inter-division transfer and there was no revenue realized by it and consequently there was no derivation of profit or income in the business of industrial undertaking. The assessee adopted the rate at which the Karnataka Electricity Board supplied power to industrial users. According to the Assessing Officer, these rates were unrealistic as the Karnataka Electricity Board was not expected to purchase power from the assessee and it was also unrealistic to expect the Karnataka Electricity Board to purchase power from the assessee at a future date at the same rate at which it supplied power to the other industrial users and it was also not the fact that the assessee had sold any power to ....
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....sing Officer did not dispute the price taken by the assessee. The CIT(A) has taken action under section 251(1)(c) of the Act whereas the requirement of the section is that where any goods held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods as on that date. For this purpose, there must be opinion of the Assessing Officer, as proviso clearly provides that where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and ....
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....purpose of computation of income for deduction under section 80-IA of the Act. The order of CIT(A) on the issue is set aside. 18.7 3rd reason for disallowance of deduction under section 80-IA is in respect of miscellaneous income, income from sale of sludge Rs. 10,09,593, income from sale of steam Rs. 44,07,753 and misc. income Rs. 17,567, while deciding the issue related to allocation of indirect expenditure in Para No. 15.2 of this order in principle we held that for the purpose of deduction under section 80-IA only income derived from industrial undertaking that has to be reckoned in computation, as such the income which are not derived from industrial unit is to be ignored. In the light of this principle, on careful consideration, the nature of sludge, which is being generated out of consumed furnace oil and LSHS by diesel generator set. The diesel generating set is one type of plant and machinery and any sludge coming out from the plant and machinery, ie., diesel generating set does not amount to derive income from industrial undertaking. The receipt of sale of sludge is the income which is not derived from industrial undertaking. Therefore, even in accordance with t....
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.... CIT(A) on this issue and the claim, of the assessee is allowed. 19. Ground No. F is against the adjustment of book profits not justified of Rs. 49,86,183 and Rs. 3,00,000. 20. The Assessing Officer had added back the provisions of doubtful debts of Rs. 46,86,183 and leave encashment salary of Rs. 3,00,000 while working out profit under section 115JB being provision. The assessee has contested these disallowances to keep the issue alive. The action of the Assessing Officer has been confirmed by the CIT (A). There is amendment to section 115JB with effect from 1 -4-2001 which is against the assessee, therefore, order of CIT(A) is confirmed. 21. Ground No. G is in respect of levy of interest under sections 234A, 234B, 234C, and 234D of the Act. Charging of interest under the said sections is consequential in nature; therefore, the Assessing Officer is directed accordingly. ITA No. 394/M/08 - Appeal by Revenue:- 22. The assessee had contributed an amount aggregating to Rs. 22,88,000 as subsidy towards employees canteen and the same has been claimed as deduction from the total income. The Assessing Officer disallowed the same on the gro....
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.... the Assessing Officer not to include captive consumption in the total turnover while working out deduction under section 80HHC as the issue has decided by the ITAT in favour of the assessee hi assessment year 1990-91. 27. We have heard the learned representatives of the parties and record perused. The ground and submission in the chart filed by the assessee is not correct as the same is related to deduction under sections 80HHC and 80-IA(9) of the Act whereas the ground raised by the revenue is in respect of Rs. 31,43,39,117 excluding from the total turnover for the purpose of computation of deduction under section 80HHC. This issue has been decided by the CIT(A) in para 10.1 of his order following decision of ITAT in assessment year 1990-91. However, the learned AR filed a copy of order of ITAT in assessee's own case for assessment year 1991-92 vide ITA No. 2805/Mum./1996 and C.O. No. 82/Mum./2004 order dated 25-6-2004 wherein the ITAT had decided the related issue in paras 16 and 17, which are reproduced below:- "16. The next ground raised by the assessee in 5B is that the CIT(A) has erred in holding that in working out the deduction under section 80HHC the e....