TaxTMI 
TaxTMI 
2015 (1) TMI 1409
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....lowing deduction u/s 801A amounting to Rs. 37,24,64,460/- in relation to its Captive Power Plant by accepting the rate claimed by the assessee @ 4.68 per unit i.e. the rate of power sold by the Electricity Board, without considering that the Electricity Board has to incur costs which are absent in the case of assessee's own Captive Power Plant. This ground is without prejudice to ground no. 1. 3. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in allowing deduction u/s 801A in respect of power generated from steam without appreciating that steam is a by-product of the power generated and hence cannot be considered a power." 2. Ground No. 1 and 2 regarding deduction under section 80IA in respect of Captive Power Plant and rate of tariff for computation of deduction. The assessee company is engaged in the business of manufacturing and sale of chemicals and fertilizers including methanol, dilute nitric acid, ammonium nitrate and ammonium nitro phosphate. The assessee has installed a Captive Power Plant to meet its electricity requirement. For the assessment year under consideration the assessee claimed deduction under section 80IA w.r.....
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.....80IA for the reason that the deduction was available only where separate business undertaking is put up for generation/distribution of power. Since the assessee has set up the power unit mainly for captive use, the assessee was not entitled to deduction. The A.O. was further of the view that even if the assessee was eligible for deduction, the quantum of deduction was to be worked out with reference to "market rate" of electricity generated and not at the rate claimed. The assessee had worked out the profit on the basis of rate of power at Rs. 5.35 per unit as against that the rate of power at 2.11 per unit being considered by A.O. We find that before Hon'ble Madras High Court in the case of Tamilnadu Petro Products (supra) one of the question before Hon'ble High Court was "whether on the facts and in the circumstances of the case, the Tribunal was right in holding that income derived by the assessee from generation of electricity which was captively consumed is not entitled to relief u/s. 80IA of the Act? The Hon'ble High Court relying on the decision of CIT vs. Thiagaraj Mills Ltd. (Tax case No.68 to70 of 2010) has held as under:- "8. The contention that only whatever p....
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....nch, we find no reason to interfere to the order of CIT (A). Thus this ground of the Revenue is dismissed." 2.3 No contrary decision has been brought to our notice by the revenue accordingly following the decision of this Tribunal in the case of sister concern of the assessee we do not find any error or illegality in the order of the CIT(A) qua the issue of deduction under section 80IA in respect of captive power plant as well as the valuation of power by applying the tariff charged by the state electricity Board. Accordingly, the ground No. 1 and 2 of the revenue's appeal are dismissed. 3. Ground No.3 is regarding deduction under section 80IA in respect of steam being a bye product of power generation and used in the process of 'other products' by the assessee . The assessee claimed deduction under section 80IA of the Income tax Act in respect of value of steam generated from the captive power plant. The assessee is using the steam in its process of manufacturing of chemical products. The AO held that the assessee is not eligible for the benefits of Section 80IA as this is not equivalent to the power/electricity generated by the captive power plant. 3.1 On appeal, the CIT....
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.... generated by the Industrial Undertaking comes within the meaning of power as per section 801A, and would hence qualify for benefit. The stand of the Department before us is that whereas the above decisions would squarely apply to the facts of the applicant's case, same has not become final in the absence of pronouncements of the Higher Courts. We are not inclined to disregard the current findings of the Tribunal merely because the matter is still pending in further appeal. We entirely agree with the opinions expressed therein that steam has to be equated with electricity in the concept of power as envisaged by section 80IA(4)(iv) of the Act. Accordingly we find little legal merit in this argument advanced by the Commissioner." 4.1 It is clear that the Settlement Commission has followed the decision of Delhi Bench of this Tribunal in the case of Sial Sbec Energy Ltd. vs. DCIT (12 TTJ 866) as well as the decision of Jaipur Bench of this Tribunal in case of Maharaja Shri Umed Mill Ltd. Since no contrary decision has been brought to our notice, therefore, we do not find any error in the impugned order of the CIT(A) in allowing the claim of the assessee by following the decision....