TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 59
X X X X Extracts X X X X
X X X X Extracts X X X X
....in short "the Act"). 4. In this appeal, the Revenue has impugned the order of the CIT(A) by raising the following Grounds of Appeal :- "[1] On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax[Appeals], Kolhapur erred in allowing the appeal of the assessee claiming deduction u/s 80IA(5) of the LT. Act, on the profits earned from generation & sale of electricity from Satara Unit, in the process ignoring the fact that the assessee company had incurred losses from generation and sale of electricity from Tamil Nadu, Rajasthan and Karnataka Unit which were required to be first set off against the profits earned at Satara Unit in terms of provisions of Section 70 of the I.T. Act and resultant profits was to be allowed as deduction in terms of the provisions of Section 80IA(1) of the I.T. Act, 1961. [2] On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax[Appeals], Kolhapur erred in holding at Para No. 6 of his order that, 'every unit constitutes a separate undertaking engaged in the eligible business and losses from one unit cannot be set off against profits of another unit engaged in the sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Karnataka. It was observed by the Assessing Officer that the assessee has claimed deduction under section 80IA in respect of profits of Rs. 33,14,205/- derived from one of its windmill unit situated at Satara. It was further observed by the Assessing Officer that in respect of other windmills situated at other part of the country there is a total loss of Rs. 3,64,05,153/- and thus there is a resultant net loss from the windmill business on consolidated basis. Therefore, the Assessing Officer held that the assessee is not entitled to deduction under section 80IA of the Act in respect of profits arising from eligible unit at Satara. The Assessing Officer took a view that profit/loss in respect of particular industry is required to be considered as a whole separately and if the particular industry has a number of undertakings, the loss incurred by one undertaking is required to be set-off against the income of the another undertaking of the same industry and thereafter if any balance profit is left, the same is eligible for deduction under section 80IA of the Act to the extent of remaining balance. In view of the above, the Assessing Officer held that since the windmill business in to....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the issue is squarely covered by the judgement of the Hon'ble Supreme Court in the case of Synco Industries Ltd. vs. ACIT, (2008) 299 ITR 444 (SC) and CIT vs. Canara Workshops P. Ltd., 161 ITR 320 (SC) and the decision of the Coordinate Bench of the Tribunal in the case of M/s J-Sons Foundry Pvt. Ltd. vs. DCIT in ITA No.815/PN/2011, order dated 30.01.2013 relied upon by the Ld. Authorized Representative for the assessee. 10. The reliance placed by the Ld. Departmental Representative for the Revenue on the decision of the Hon'ble Gujarat High Court in the case of Sintex Industries Ltd. vs. ACIT, (2013) 37 taxmann.com 217 (Guj.) is misplaced and distinguishable on facts. In the present case before us, losses of other units have not been ignored for the purpose of arriving at 'Gross Total Income'. It has been ignored only for the determination of quantum of deduction from the positive 'Gross Total Income' in accordance with the provisions of the Act. Thus, decision in the case of Sintex Industries Ltd. (supra) has no application. In the light of the decisions cited above, wherein it has been held that every unit constitutes a separate undertaking engaged in the eligible business, lo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se be deleted. 2.3 The learned A.O. may be directed to allow the expenditure as claimed. 3.1 The learned CIT(A) erred in confirming addition of Rs. 24,660/- u/s 41(1) as cessation of liability. 3.2 The learned CIT(A) failed to appreciate that the addition u/s 41(1) is legal issue and cannot be decided on the consent of the appellant. 3.3 The addition of Rs. 24,660/- under sec. 41(1) be deleted. 4.0 The appellant craves right to add, later, delete, modify all or any of the grounds of appeal." 16. The first Ground relates to disallowance of depreciation on windmill of Rs. 25,64,925/-. 17. The relevant facts concerning the issue are that the assessee company has claimed escalated depreciation @ 80% on the entire cost of windmill including civil work, expenses of erection and commissioning work, etc.. The Assessing Officer held that the assessee is not entitled to the higher rate of depreciation in respect of foundation and civil work and erection and commissioning work, which is applicable to the windmill itself. He accordingly restricted the depreciation @ 10% on foundation and civil work for windmill and 15% for erection and commissioning work of windmill as agains....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of the Co-ordinate Bench of Pune Tribunal in the case of M/s D.J. Malpani vs. ACIT in ITA Nos.1148 to 1154/PN/2013, order dated 30.10.2015. Accordingly, we hold that the Revenue is misdirected itself in law in making the impugned disallowance of depreciation." In the result, Ground No.1 of the assessee's appeal is allowed. 19. Ground No.2 of the assessee's appeal relates to disallowance of Rs. 3,00,000/- out of foreign tour and travelling expenses. 20. The Assessing Officer observed that assessee inter-alia claimed at Rs. 8,69,350/- on foreign tour and travelling expenses of the Directors and Rs. 82,500/- on employees totaling to Rs. 9,51,850/-. It was noticed by the Assessing Officer that the Directors, Shri Shahji R. Jagdale visited Italy, Germany and London while Shri Vikas S. Jagdale visited China, Algeria, South Korea, USA and Malaysia. It was observed that the assessee company could not furnish any evidence of business purpose involved in respect of visits to Algeria, Malaysia and Germany. After considering the tour programmes, purpose of visit and achievements made in respect of these visits, the Assessing Officer found that all the visits have not been justified by the....