TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 171
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....omputing the profits of the undertakings by adjusting the sales value of the power produced and supplied by the undertakings. iii. The learned CIT(A) erred in fact and in law in confirming the action of the AO in disallowing the claim on the ground that profit of COGEN units is unreasonable and on a higher side. iv. The learned CIT(A) erred in fact and in law in confirming the action of AO in charging interest u/s.234D of the Act. v. The learned CIT(A) erred in fact and in law in confirming the action of the AO in initiating penalty proceeding u/s 271(l)(c) of the Act. 3. The relevant facts as culled out from the materials on record are as under:- In this case, assessee company is engaged in the business of Manufacture of aluminium Extruded Section and carrying out job work for others. 3.2 Assessee, in its computation of income claimed deduction u/s.80IA(A) of Rs. 41,22,107/- in respect of Captive Power Corporation Plant (750KV). During the course of assessment proceedings the assessee was asked to substantiate its claim for deduction u/s.80IA(4) in respect of Captive Power Plant. The assessee was asked to furnish the reasons with working of price of unit to determining th....
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....The assessee has filed audited books of account along with above report obtained from Chartered Accountants certifying the correctness of claim of deduction. For your kind reference audited accounts of the said undertakings along with notes to accounts and report in Form No.10CCB is enclosed marked as Annexure - 11. 4. Based upon the above we submit that the assessee has fulfilled all the necessary and applicable conditions for claim of deduction u/s.80IA and we therefore request your office to allow the said claim. 5. Vide Para No.22(i) your office has asked us to submit whether the sale or profit of captive power plant are included in the gross total income or not before deduction U/s.80-IA(4) of the Act. In this respect we submit that the gross total income includes the profit of two Captive Power Generation units as discussed in the above paras. Your office may note that all these units are engaged in the business of generation of electricity. Such electricity is consumed by the other unit of the assesses. Each of such units is separate undertaking under the Act The assesses has maintained separate books of account of each of such undertakings and the same is audited under ....
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....ection 801A(8) and accordingly computed the selling price. 7. Vide Para No.27(iii) your office has asked us why the salable market price should not be taken in our case for determining the claim of deduction U/s.80IA of the Act. In this respect, we first invite your kind attention to Section 80IA(8) which prescribes the concept of "market price" for transfer of goods or services from eligible business to other businesses of the assessee. As per Section 801A(8) of the Act "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 either case, had been made at the market value of such goods or service....
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....costs and taxes (net of taxes for which the rebate or set of is available); 12. We further submit that it is essential that the comparison has to be for the transaction between the seller [power producer/dealer] and the consumer of the power and not that of producer and the dealer / distributor. In the second scenario the dealer would then be incurring the entire cost of transmission, distribution and attendant losses. Whereas when the sale is made to ultimate consumer, all the costs so incurred are included in the selling price and therefore is actually the representative price for comparison purposes. 13. At the end we invite your kind attention to recent decision of Hon'ble ITAT, Ahmedabad in the case of Alembic Ltd. Vs. ACIT, Circle- 1(1), Vadodara ITA No.3594/Ahd./2007 dated 6th June 2009 (Now referred as "the order"). Vide the order ITAT has decided the identical issue against the order passed by your office and confirmed by CIT (A) in the case of Alembic Ltd in A.Y.2003-04 in respect of the above issue. In the order, Hon'ble ITAT has discussed the above issue in detail and also considered the applicability of provision of Section 80IA(10) for computing profit of....
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....n. 7.1. On the contrary, ld. counsel for the assessee submitted that the issue has already been decided by the Tribunal (ITAT "D" Bench Ahmedabad) in favour of assessee in the case of groupconcern M/s.Aluminium Ltd.- Revenue's appeal for AY 2007-08 in ITA No.1106/Ahd/2010 dated 25/10/2012. He drew our attention towards page Nos.175 to 180 of the paper-book. 8. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that in this case also, the ld.CIT(A) in para-6 of his order has given an elaborate finding and followed the decision(s) of the Coordinate Bench (ITAT Mumbai Bench) rendered in case of West Coast Paper Mills vs. ACIT (103 ITD 19) and ITAT Chennai Bench rendered in the case of Mohan Breweries & Distilleries Ltd. vs. ACIT (114 TTJ 532) and other case-laws. Therefore, we do not any infirmity in the finding of the ld.CIT(A), same is hereby upheld. 49. In view of the decision of the Co-ordinate Bench as noted above and also the issue being pari materia with ground no.3(i) in ITA No.1411/Ahd/2014 (supra), we do not find any merit in the grievance of the Revenue on this score. 6. In v....
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....N units are not required to be set off against income of the current year before allowing deduction u/s.80IA of the Act. 11. In this case, addition on account of capitalization out of revenue expenses: Capitalization out of Dies and Tools On verification of details it is observed that an amount of Rs. 218.53 lakhs has been claimed in the profit and loss account in the name of stores, dies and tools consumed during the year. The details of stores, Dies and Tools were called for an verified. Some of the items from tools & Dies as listed below with narration, which were claimed as revenue expenditure, is found to be of nature of capital expenditure. Date Name of Supplier Voucher Ref. Description Amount 30/04/2010 Sandeep Enterprises PU-184 STEEL BARS 387,310 31/05/2010 Sandeep Enterprises PU-267 STEEL BARS 462,003 30/06/2010 Sagar Alloy & Metal Industries PU-351 ALLOYS STEEL FORGED BAR 111,320 30/06/2010 Sagar Alloy & Metal Industries PU-350 ALLOYS STEEL FORGED BAR 118,320 30/06/2010 Sagar Alloy & Metal Industries PU-349 ALLOYS STEEL FORGED BAR 238,201 30/06/2010 Sagar Alloy & Metal Industries PU-551 FORGED ROUND STEEL BAR 299,888 30/06....
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....es, tools and dies consumed of Rs. 2,18,53,523/- to the Profit & Loss account. The said expenses of the company. They are intended to the benefit the current expenditure only. These expenses are charged against the operation of the company and therefore we have treated the same as revenue expenditure. 11.4 Assessee further stated that we inform your kind office that the said issue raised by your office in earlier assessment year 2009-10 and had made addition with respect to dies and tools by considering it as capital in nature. However, the CIT(A) has deleted the addition made in earlier assessment year 2009-10 vide his order dated 23/08/2012 by considering it as revenue in nature. And on the basis of the same assessee has correctly claimed the expenses of dies and tools as revenue in nature. 12. We have gone through the relevant record and impugned order. So far Ground No.1 has already been decided in favour of the assessee in ITA No.1411/Ahd/2014 For A.Y.2010-11. Therefore, we dismiss this Ground of department. 13. So far Ground No.2 regarding deleting the addition of Rs. 25,41,611/- on consumption of spares to machinery holding is concerned. Identical issue was taken by the d....