AI Drafter 
TaxTMI 
TaxTMI 
2017 (12) TMI 1396
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....ow initio." The above ground goes to the root of the mater, therefore, we proceeded to decide the issue of notice u/s.148 of the Act. ITA No. 138/VIZ/2016 & C.O.No.32/VIZ/2016 3. Facts of the case in brief are that the assessee-company is engaged in the business of paddy milling and rice sales, filed its return of income for the Assessment Year 2007-08 on 29/10/2007 admitting total income of Rs. 1,09,41,510/-. Subsequently, a search and seizure operation under section 132 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') was conducted in the group cases of the assessee company. Consequently, a notice under section 153A was issued on 26/08/2009. The assessee filed another return admitting total income at the same figure as per the original return of income. The assessment was completed under section 143(3) of the Act on 30/12/2010. Subsequently, a notice under section 148 was issued to the assessee on 10/01/2014 for reopening of the assessment. When the assessee has asked the Assessing Officer for furnishing reasons to reopen the assessment, a copy of the reasons recorded, is submitted on 05/03/2014. The assessee, after receiving reasons for reopeni....
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.... derived from the power generation undertaking and, as such, the deduction claimed to the tune of Rs. 2,62,97,269/- needs to be disallowed, which has escaped assessment within the meaning of section 147 of the Act. Further, while calculating the eligible deduction under section 80-IA from the profits derived from the power generation undertaking, the assessee company has adopted sale value of power at Rs. 4.50 ps. per unit generated, which was the rate that have been paid by the assessee company to the AP Transco for consumption by rice mill unit. However, the AP Transco was adopted a rate of Rs. 3.25 ps. per unit for the units obtained from other similar power plants. As such, the rate of Rs. 3.25 ps. per unit has to be adopted in the assessee's case for determining the eligible deduction under section 80-IA. Accordingly, he calculated excess deduction claimed and allowed Rs. 91,15,062/- and assessment is completed by allowing deduction under section 80-IA of Rs. 1,71,82,206/-. 5. On being aggrieved, assessee carried the matter in appeal before the ld. CIT(A). 6. It was submitted before the ld. CIT(A) that during the course of original assessment proceedings, all the details....
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....o submitted before the Assessing Officer that by pointing out at page no. 22 that the rate adopted by the assessee at Rs. 4.50 ps. per unit is also submitted before the Ld. CIT(A). Therefore, the Assessing Officer after considering the explanation of the assessee, the rate adopted by the assessee is upheld. He also pointed out that so far as rate of adoption is concerned for the Assessment Years 2006-07 as well as 2009-10, the Assessing Officer has accepted the rate of Rs. 4.50 ps. per unit and therefore issuance of notice on the same aspect which is already considered by the Assessing Officer is not valid and therefore, the entire notice under section 148 is invalid and the same is liable to be quashed. 10. On the other hand, learned Departmental Representative relied on the order of the Assessing Officer. 11. We have heard both the sides, perused the material available on record and orders of the authorities below. 12 In this case, original assessment is completed under section 143(3) read with section 153A of the Act on 30/12/2010. Subsequently, a notice under section 148 is issued on 10/01/2014 on the ground that there is an escapement of income within the meaning of s....
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....h is worked out as under:- Sale value of 72,92,050 units consumed... Rs. 2,34,97,975 Sale value of steam used .... Rs. 4,71,97,137 Less: Expenses as claimed .... Rs. 3,00,14,931 Deduction 80IA as claimed by the assesses ... Rs. 2,62,72,268 Less: Deduction u/s.80IA as worked out above ... Rs. 1,71,82,206 Excess deduction claimed & allowed .... Rs. 90,90,062 In view of the above, as per reasons recorded (a) above, the total deduction u/s.80IA claimed at Rs. 2,62,72,268/- needs to be disallowed in view of sub- section (7) of section 80IA r.w.r.18BBB since the Form No. 10CCB has not been accompanied by the separate Profit & Loss Account and Balance Sheet of the undertaking of the power generation Unit Further, from the reasons recorded (b) above, it is evident that the assessee-company has claimed excess deduction u/s.80lA of Rs. 90,90,062/- if at all the such deduction is to be allowed. Therefore, the income chargeable to tax has escaped assessment for the A. Y. 2007-08." 13 From the above, it appears to us that one of the reasons for reopening is the assessee company failed to furnish profit & loss account, balance she....
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....r to complete the assessment and the Assessing Officer after considering all the details passed the assessment order, a notice issued subsequent to that which is beyond 04 years is not valid and therefore the same is quashed. 15 Insofar as adoption of unit rate at Rs. 4.50 ps. is concerned, in the reasons recorded, it was mentioned that the assessee has claimed excess deduction under section 80IA on the ground that the assessee has adopted rate at Rs. 4.50 ps. which is paid by the assessee to the AP Transco, however, the AP Transco is obtaining power per unit at 3.25 ps. from other similar power plants and therefore the Assessing Officer has allowed excess deduction under section 80-IA of the Act. So far as this aspect, in the course of the original assessment proceedings, in response to the notice issued dated 03/09/2010, the assessee has submitted a detailed reply on 04/11/2010 wherein at question No.18, it is submitted that the company is paying an amount of Rs. 4.50 ps. per unit to AP Transco for utilization of power from state government is taken as sale figure for arriving profit as per the provisions of section 80IA and the bills paid to AP Transco evidencing the payment ....
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....as two power generation units on which 80-IA deduction is allowable. As related to unit-1, the assessee company has computed the profit from the eligible business i.e. power unit by considering the unit rate at 4.50 ps. and as related to unit-2, the assessee company has computed profit for eligible business by considering the value at 3.40 per unit. While computing the total income, the assessee company claimed 80IA deduction of Rs. 10,67,88,695/- out of this, Rs. 2,47,18,782/- for unit-1 and Rs. 8,20,69,913/- for unit-2. During the course of assessment proceedings, the assessee was asked by letter dated 11/02/2015 to furnish basis for arriving at Rs. 4.50 ps. per unit value for adopting sale value for unit-1 for the purpose of claiming deduction under section 80IA of the Act. Further, he was asked to show-cause as to why Rs. 3.25 ps. per unit price should not be considered as the APEPDCL is paying the same amount for the power purchased by it. The assessee has submitted a detailed note before the Assessing Officer as follows:- "It is to inform you that while arriving the deduction to be claimed u/s.80IA in case of Unit-1, we have adopted Rs. 4.50 per unit which was the ra....
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....al power units produced less power units consumed by rice mill division, only to AP TRANSCO at the price fixed by it. At this point of time, it is to bring to your kind notice that, the determination of price between the assessee and electricity board cannot be considered as price fixed in competitive environment and under free market conditions. The price determined in such scenario cannot be equated with situation where price is determined in normal course of competitive environment. Hence, the price at which the assessee sold its power to the electricity board cannot be equated with market rate as per the provisions of sub-section 8 of sectionon 80IA. Hence, in case of Unit- II also the price paid by the assessee to the AP Transco to taken as market price but not the price paid by board to the assessee." 19. The Assessing Officer after considering the detailed explanation filed by the assessee observed that even though the cost of production of power for both the units is same, it has been found that the assessee is valuing power from both the units at different rates. The power from unit-1 is used totally for captive power and unit-2 is partly used for capt....
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....Year 2009-10 by order dated 17/05/2013 and strongly supported the order of the ld. CIT(A). 24. In this case, assessee has adopted the rate at Rs. 4.50 ps. per unit which is paid by the assessee to the AP Transco. The Assessing Officer is of the opinion that the assessee is supplying to APEPDCL at 3.40 ps. per unit and therefore the same has to be considered in the case of unit-1 of the assessee also. The very same issue has been considered by the coordinate bench of the tribunal in M/s. Eveready Spinning Mills Pvt. Ltd. (supra) and held as under:- "6. We have perused the orders and heard the contention of learned D.R. The short question arising here is whether the per unit rate of electricity, for the purpose of computing the profits windmills of the assessee, has to be taken at Rs. 2.70 or at Rs. 3.50. Rs. 2.70 was the price given by Electricity Board to the assessee for electricity generated by the windmills but, such electricity when supplied by the Electricity Board to the yarn manufacturing unit of the assessee, they had charged from the assessee Rs. 3.50 per unit. There is no dispute that the power manufactured by the assessee from its windmills though meant for t....
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....ermining of tariff between assesses and Electricity Board cannot be considered as an exercise undertaken in a competitive environment and under market conditions. Price determined in such a scenario cannot be equated with a situation where the price is determined in the normal course of competitive environment. Thus, the price at which assessee sold its power to the Electricity Board cannot be equated with market rate as understood for the purpose of Section 80dA(8) of the Act. Now the question that remains is whether the price recorded by the assessee at Rs. 3.50 per unit for purchasing power from the Electricity Board for its yarn manufacturing unit can be considered the market value. Assessee undoubtedly is an industrial consumer and the Board supplies power to such industrial consumers at the rate of Rs. 3.50 per unit. Had the assessee not been saddled with the restrictions of supplying surplus power to the State Electricity Board, it would have supplied the power to ultimate customers at a price not less than Rs. 3.50 per unit, being the rate charged by the Board from its industrial consumers. Thus, under the given circumstances, it would appropriate to hold that the considera....