TaxTMI 
TaxTMI 
2012 (10) TMI 1150
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....,83,968/- on COGEN -I Unit and COGEN - II Unit at the market rate of ₹ 4.86 per unit of power relying on the decision of Hon. ITAT in the case of Alembic Ltd. for A.Y. 2003-04 bearing ITA No. 3594/Ahd/2007 dated 06.06.2008 wherein the Hon. ITAT allowed the appeal of the assessee in respect of claim of the assessee u/s. 80IB(4) by taking the price of electricity supplied by GEB. 2(b). On the facts and circumstances of the case, the ld. CIT(A) as well as the Hon. ITAT erred in not considering the decision of the Appellate Tribunal, Chennai rendered in the case of Chettinad Cement Corporation Ltd. in ITA No. 1026(MAD)/2005 for A.Y. 2001-02, according to which the deduction u/s. 810IB(4) is not allowable to the assessee for generating power for captive consumption. Relief claimed in appeal The order of the CIT(A) to the above extent may be set aside and that of the Assessing Officer be restored." 2. No-one appeared on behalf of the assessee. An application for adjournment is on record. However, no reasonable cause is given for the absence, therefore, the application for adjournment is rejected. The appeal is taken up for hearing in the absence of the assessee. The facts in....
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.... the filtering unit in the Heater. Oil used in the heater passed through the filtering unit. Due to wear and tear the filtering unit was damaged and therefore it was necessary to be replaced. No new asset has been created nor there is benefit of enduring nature. The filtering unit cannot work independently and is useless unless fitted in the heater. Therefore deduction has been rightly claimed by the appellant. 2 1,69,338 Pressure Ring The function of the pressure ring is to withstand the pressure built up in the extrusion press. The pressure rings are a consumable item and are required to be replaced as and when consumed. Since the pressure ring controls the pressure, its life is very small and requires frequent replacement. No enduring benefit is availed by replacing the pressure ring. These are consumable items are therefore revenue in nature. The life of the extrusion press does not increase by incurring the said expenses. 3 31,000 Glow Totalizer This is not an independent machine. The machine is useless unless fitted to the main machine. The item is a part of main machinery and therefore would fall under the definition of replacement of parts. No enduring benefi....
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....part of the carding machine. Even if in a given case, replacement of an autoleveler could come within the connotation of the word "current repairs" if the old part is not available in the market. It is a "current repair" because the carding machine remains an asset without any change even after repair or replacement of the autoleveler. To give an example, a compressor i.e. an important part of an Air-Condition Machine. Repair of the compressor will come in the connotation of the word "current repairs" in section 31 (i) of the said Act because the assessee does not replace the Air-Condition Machine. At the highest, he replaces a part of the air-condition machine. So is the case of the picture tube in a television set, when the picture tube is replaced the television set is not replaced, therefore, such repairs alone cart come within the connotation of the word "current repairs" in section 31{i) of the said Act as it stood at the material time. They are effected to preserve and maintain the asset, viz, air conditioner or carding machine. " 3.3.1 Hence, judicial opinion is quite clearly articulated to the effect that replacement of one or....
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....essure ring is also to withstand the pressure built up in the extrusion press. It is observed by Ld. C IT(A) that the nature of parts replaced are small parts of large machines which may require replacement on being worn out. By incurring expenditure on purchase of such items, no new assets came into existence which were capable of producing any saleable item. This finding of fact is not controverted by the Revenue. In this view of the matter we do not find any infirmity into the order of Ld. CIT(A). Hence, this ground of Revenue's appeal is dismissed. 6. Next ground is against the allowing the deduction u/s 80IA of the Act as claimed by the assessee. Ld. Sr. D.R. submitted that the deduction was not available to the assessee in view of decision of the Hon'ble ITAT Chennai Bench rendered in the case of M/s Chettinad Cement Corporation Ltd vs. ACIT ITA No. 1029(Mad)2005 for the assessment year 2001-02 Ld. DR has also given a written submission on this issue which is reproduced as under:- The First of the Second issue is that the Assessing Officer has adopted rate of ₹ 2,36/- per unit, considering the average price charged by power generating companies to GUVNL, for the dete....
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....9;s decision in the case of M/s Chettinad Cement: Corporation Pvt Ltd, the Hon'ble ITAT may kindly be restored the disallowance u/s 80-IA made by the Assessing Officer." 7. We have heard the Ld. Sr. D.R. and perused the material available on record. Ld. CIT(A) has decided this issue as under: "6. Ground No. 4 relates to the denial of the claim of deduction u/s 80IA(4) amounting to ₹ 24.83,968/- on COGEN - 1 Unit and COGEN - II Unit. The assessee manufactures aluminum extrusion sections from aluminum ingots. It also generates captive power at its 250 KVA - I and 250 KVA - II power plants being COGEN Unit -I and COGBN Unit - II respectively. The energy generated in the said captive power plants was used by the assessee for its own consumption. The AO objected to the claim of deduction u/s 80IA(4) on the ground that (a) the deduction was eligible only where separate business undertaking is put up for generation/distribution of power. Since the assessee had set up the plants mainly for captive use, the deduction u/s 80lA(4)(iv) would not be available, (b) the assessee has not worked out the profit of the eligible undertakings as per section 801A(5) of the Act. In view of t....
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....re should be set off for the purpose of computing deduction u/s 8OIA. In the case of the appellant, C0GEN Unit - I started generating power from 26-6-2001 (AY 2002-03), therefore the notional unabsorbed losses of the said unit from AY 2002-03 should be considered for the purpose of computing the profits eligible for deduction u/s. 801A. Similarly the COGEN Unit - II started generation of power from 25-2-2005 (AY 2005-06), therefore the notional unabsorbed losses of the said unit from AY 2005-06 should be considered for the purpose of computing the profits eligible for deduction u/s, 801A. It was submitted that since the appellant has started claiming deduction u/s. 801A from AY 2007-08 being the first year in which the Appellant opted to claim such deduction, unabsorbed losses depreciation subsequent lo the said initial assessment year can only be considered and not prior to that. 6,3 So tar as the third aspect regarding the computation of the deduction is concerned, relying on the decision of 1TAT, Ahmedabad Bench in ITA 3594/Ahd/2007 for AY 2003-04 in the case of Alembic Ltd, it was submitted by the Id. AR that the Tribunal has held that the purchase price of power by the asses....