2012 (10) TMI 1026

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....directing the Assessing Officer to allow deduction u/s. 80IA for the power generation plant treating the power generation plant as a new unit, when the plan had been formed from by mere splitting up of the existing business, reconstruction of an already operational power plant and some reorganisation of affairs." 3. After hearing both the parties, we are of the opinion that this issue was considered by this Tribunal in assessee's own case for A.Y. 2007-08 in ITA No. 931/Hyd/2011. The Tribunal vide order dated 10.2.2012 held as follows: "17. We have considered the rival submissions and perused the materials available on record. We find that the assessee company under license obtained from APERC commenced a distinct industrial und....

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....existing business but the expression 'not formed' was construed to mean that the undertaking should not be a continuation of the old but emergence of a new unit. Therefore, even if the undertaking is established by transfer of building, plant or machinery, it is not formed as a result of such transfer, in our considered view; the assessee could not be denied the benefit. We also find that a new undertaking for manufacture of power with steam as byproduct was formed out of fresh funds, in separately identifiable premises, under a separate license with manifold increase in capacity with new machinery and buildings without transfer of any portion of the old buildings or machinery which pre-existed. The power and steam produced earlier ....

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....the new industrial undertaking. In our opinion, generation of power unit is separate and distinct undertaking for which separate approval was obtained and recognised by the IREDA and it cannot be said that splitting of existing business structure. Therefore, in our considered opinion, the lower authorities are not correct in denying the deduction under section 80IA of the Act. Hence, we decide this issue in favour of the assessee company and against the Revenue." 4. Respectfully following the above order of the Tribunal, we are inclined to confirm the order of the CIT(A) on this issue. This ground by the Revenue is dismissed. 5. The next issue raised by the Revenue in ground Nos. 3 and 4 is as follows: 3. The learned CIT(A) e....

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....he earlier year but ignores the fact that in the absence of gross total income in the earlier year no exemption could have been claimed. Therefore, we direct that only Rs. 11.43 lakhs is to be treated as ineligible profits for the purpose of deduction under section 80IA of the Act and for the balance sale amount of steam to sugar division, the assessee company is eligible for deduction under section 80IA of the Act. For this proposition, we place reliance on the order of the Tribunal in the case of DCW Ltd.vs. Addl. CIT, ITA No. 126/Mum/2008, AY 2003-04 dated 29th January, 2010 reported in 42 DTR (Mumbai) (Trib.) 369 at page 383 para 18.8 which reads as under: "18.8 the next item of miscellaneous income is the income from sale of s....

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.... used for captive consumption by the assessee. CIT vs. Tanfac Industries Ltd., SLP(C) No. 18537 of 2009 (319 ITR 8 and 9). In the light of above discussion, we find that steam produced by the assessee is eligible unit is a by-product and income from sale of steam is the income derived from industrial undertaking, therefore, deduction under s. 80-IA is allowable. We, accordingly, set aside the order of CIT(A) on this issue and the claim of the assessee is allowed." 22. The ground raised by the assessee with regard to deduction u/s. 80IA in respect of sale of steam to the sugar unit is partly allowed." 7. In view of the above order of the Tribunal, in principle, we agree with the findings of the CIT(A). However, the calculation of....