TaxTMI 
TaxTMI 
2013 (9) TMI 443
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....blic limited company, engaged in the business of providing infrastructural facilities to industries. It runs an industrial park at Kakkanad, Kochi. The assessee was granted licence by the Government of Kerala for distribution of power within the industrial park area. Accordingly, during the financial year 2004-05, the assessee laid a network of new distribution lines and allied equipments to facilitate power distribution to the units located in the park. During the year under consideration, the assessee claimed deduction u/s. 80IA(4)(iv)(b) of the Act in respect of income generated from the activity of distribution of power. Both the tax authorities rejected the claim of the assessee, though for different reasons, which are discussed infra in a subsequent paragraph. The assessee received a sum of Rs.82,31,289/- as interest from bank deposits and security deposits. The assessee treated the same as its business income and accordingly claimed deduction u/s. 80IA of the Act. The Assessing Officer, by relying on the following case laws, held that interest is assessable under the head income from other sources and assessed accordingly. (a) Collis Line (P) Ltd. vs. ITO (135 ITR 390). ....
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....e in the plant and machinery in the network of transmission or distribution lines by at least fifty per cent of the book value of such plant and machinery as on the 1st day of April, 2004". 5. The case of the assessee is that it is covered by clause (b) of sec. 80IA(4)(iv), since it is transmitting or distributing electricity by laying a net work of new transmission or distribution lines. There is no dispute with regard to the fact that that the assessee has laid the net work of transmission or distribution lines during the time period specified in the above said section. The assessing officer took the view that the assessee has to cumulatively comply with clauses (a) to (c) of sec. 80IA(4)(iv) in order to become eligible for deduction u/s 80IA of the Act. Since the assessee is not generating power as specified in clause (a), the has taken that view that the assessee becomes ineligible to claim deduction u/s 80IA of the Act, since there is a failure on the part of the assessee to comply with clause (a). Accordingly, the assessing officer rejected the claim made by the assessee. The Ld CIT(A), however, held that the clauses (a) to (c) of sec. 80IA(4)(iv) are mutually exclusive an....
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....on'ble ITAT in the case of DCIT Vs. Maharaja Shree Umaid Mills Ltd., reported in (2009) 29 SOT 278, wherein the has observed as under:- "These three types of undertakings referred to in the said sub-clauses (a), (b) and (c) are different and independent of each other. Thus while dealing with one sub-clause, inference need not and cannot be drawn from the other sub- clause." Accordingly, we uphold the view taken by Ld CIT(A) that clauses (a), (b) and (c) of sec. 80IA(4)(iv) are mutually exclusive. 7. The next issue relates to the interpretation of clause (b) of sec. 80IA(4)(iv) of the Act. The Ld CIT(A) has taken the view that the said clause provides exemption only to the profit derived from laying a network of new transmission or distribution lines. Since the assessee was deriving income from sale of electricity, the Ld CIT(A) has held that the assessee is not eligible for deduction u/s 80IA in respect of profit derived from distribution of power. For arriving such a conclusion, the Ld CIT(A) has placed reliance on the proviso to clause (b) of sec. 80IA(4)(iv) of the Act. 8. At the cost of repetition, we extract below clause (b) and the proviso there under to sec. 80IA....
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....tax Act. The deduction shall be confined to the profits derived from transmission or distribution of power through the new network". As per the Circular, the intention of the proviso is to restrict the deduction u/s 80IA only in respect of profit derived from transmission or distribution of power through the new network of transmission or distribution lines. 10. We shall also try to understand the meaning of the proviso to clause (b), extracted above. Sub-sec. (1) of sec. 80IA provides that the profits and gains derived by an undertaking referred to sub-section (4) are eligible for deduction u/s 80IA of the Act. Clause (iv) of sub-section (4) of sec. 80IA includes an undertaking which starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the time period specified in that clause. Hence profits and gains derived by such kind of undertaking are eligible for deduction under sub-sec. (1) of sec. 80IA of the Act upon satisfying the main condition that the transmission or distribution was carried out by laying a network of new transmission or distribution lines. The proviso, however, states that the deduction shall be al....
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....he profits derived from distribution of power though the new network. 14. During the course of hearing, the ld D.R submitted that the assessee was not entitled to charge more than the rates prescribed by the KSEB and accordingly expressed the view that the possibility of making profit from distribution of power is remote. The Ld A.R, in response thereto, filed an extract of the financial statement showing following details:- Sale of Electricity 135048010 Electricity connection charges 455351 135503361 Purchase of power 104639853 Electricity Duty 5869037 Operation & Maintenance 935068 111443958 Net income 24059403 The ld D.R pointed out that the assessing officer did not examine the above said workings, since he took the view that the assessee is not eligible for deduction u/s 80IA of the Act. We find force in the submissions made by Ld D.R. As pointed out by Ld D.R, there was no occasion for the AO to verify the computation made by the assessee, since he had rejected the claim of the assessee outright. We notice that there was no occasion for the Ld CIT(A) also to examine the workings made by the assessee. Accordin....