TaxTMI 
TaxTMI 
2016 (7) TMI 1239
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....the extent of actual payment to the ONGC, disregarding the fact that the whole liability was in dispute before the Supreme Court and, being a disputed contractual liability, it was a contingent liability and the real character of payment was that of advance or deposit and not of an expenditure under the mercantile system of accounting followed by the assessee? (B) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in directing to reduce the deduction u/s. 80-HHC was to be computed based on book profit for the purpose of section 115JB? (C) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law and on facts in not considering the decision of the Appellate Tribunal, Chennai rendered in the case of Chettinad Cement Corporation Ltd., in ITA No. 1026 (MDS)/2005 for A.Y. 2001-02, brought to its notice vide the additional ground raised by the Department, according to which the deduction u/s. 80-IA(4) is not allowable to the assessee for generating power for captive consumption? (D) Whether the Appellate Tribunal was right in law and on facts in not appreciating that deduction u/s. 80IA(4) is....
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.... 5. Since we have elaborately considered and decided identical issue in Tax Appeal No. 1097 of 2006 where we answered the question in favour of the assessee, we are of the opinion that the Tribunal is justified in allowing deduction of payment to ONGC. In that view of the matter, we answer the question (A) in favour of the assessee and against the revenue. 6. So far as question No. (B) is concerned, learned counsel for the revenue has contended that the Tribunal has failed to appreciate that the amount of profit eligible for deduction under section 80-HHC of the Act is subject to the conditions specified in that section. Since the claim of the assessee was not as per the provisions of section 80-HHC of the Act, the Assessing Officer has not allowed the assessee to compute deduction under section 80-HHC for the purpose of section 115JB of the Act. In that view of the matter, the larned counsel for the revenue has contended that the Tribunal has committed serious error in allowing deduction under section 80-HHC of the Act. Considering the material on record, the Tribunal ought not to have allowed the same. 7. The learned counsel for the assessee has submitted that the Tribunal has ....
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.... cannot be reduced to 80 per cent by relying on section 80- HHC(1b). Thus, for computing `book profits' in the above example, the downward adjustment, would be Rs. 100 crores and not Rs. 90 crores, the idea being to exclude `export profits' from computation of book profits under section 115JB which imposes MAT on deemed income. The above reasoning also gets support from the Memorandum of the Explanation to the Finance Bill 2000. The department, however, contended that as per clause (iv) of the Explanation to section 115JB, it is clear that book profits shall be reduced by the amount of profits eligible for deduction under section 80-HHC as computed under clause (a) or clause (b) of sub-section (3) or sub-section (3A), as the case may be, of that section and subject to the conditions specified in that section, thereby meaning that the deduction allowable would be only to the extent of deduction computed in accordance with the provisions of section 80-HHC. Thus, according to the department, both `eligibility' as well as `deductibility' of the profit have got to be considered together for working out the deduction as mentioned in clause (iv) of the Explanatin to section 115JB. There....
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....ised the additional ground for the first time before the Commissioner of Income-tax (Appeals) claiming deduction under section 80IA(4) of the Act. Therefore, learned counsel for the revenue contended that the Assessing Officer would not have a chance to meet with the same. Therefore, the Tribunal has committed error in allowing the claim of the assessee. Regarding eligibility and rate for the purpose of granting benefit, he has contended that it should be the actual rate on which the Gujarat Electricity Board purchases electricity from market i.e. the Power Grid or other supply agencies and not the market rate of electricity supplied by the Gujarat Electricity Board. In that view of the matter, he has contended that the Tribunal has committed error in granting deduction under section 80-IA(4) by holding that the assessee is entitled to market price of electricity supplied by the Gujarat Electricity Board. 10. The learned counsel for the assessee has supported the order of the Tribunal and contended that the Tribunal has not committed any error in allowing the claim of the assessee. So far as the raising additional ground before the appellate authority is concerned, he has relied o....
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....cision of Delhi High Court in the case of Commissioner of Income-tax v. Orient Abrassive Ltd., reported in (2014) 49 taxmann.com 174 (Delhi) where it is held as under: "Profit and gain from captive consumption of electricity supplied only to assessee by power plant of assessee will qualify for deduction under section 80- IA". 10.4 Further reliance has been placed on the decision in the case of Commissioner of Income-tax v. Cethar Ltd., reported in 228 Taxman 139 (Madras) (Mag.) where it is observed as follows: "Assessee was entitled to claim deduction under section 80-IA in respect of income relatable to power generated by its own wind mill that was consumed by assessee." 10.5 Lastly, the learned counsel for the assessee has relied on the decision of Madras High Court in the case of Tamilnadu Petro Products Ltd. v. Assistant Commissioner of Income-tax reported in 338 ITR 643 where it is held as under: "The revenue's contention had no application to the case on hand. Inasmuch the issue was to be dealt with in the light of section 80-IA and in particular subclause (iv) of the said section which provides for the benefit even in respect of electricity generation plant est....
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....claim of the assessee. 13. The learned counsel for the assessee has submitted that the Tribunal has not committed any error in allowing the claim of the assessee. In this regard he has relied on the decision of this court in the case of Deputy Commissioner of Income-tax, Circle 1(2), Baroda vs. Inox Leisure Ltd., reported in 351 ITR 314 (Gujarat) where this court held that "provision for gratuity liability made on basis of actuarial valuation cannot be stated to be an uncertained liability so as to add it back in terms of clause (c) to Explanation (1) to section 115JB.". He has further relied on the decision of the Bombay High Court in the case of Commissioner of Incometax v. Echjay Forgings (P) Ltd., reported in 251 ITR 15 (Bombay). So far as the claim of ONGC is concerned, he has submitted that the claim is allowable. In this regard he has relied on the decision of the Apex Court in the case of Apollo Tyres Ltd. v. CIT (255 ITR 273 (SC) ). As regards provision for diminution in value of investments under section 115JB is concerned, relying on the decision of the Apex Court in the case of Commissioner of Income-tax, Delhi v. HCL Comnet Systems & Services Ltd., reported in 305 ITR....