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2019 (12) TMI 658
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....ecision 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.80IB(4)(iv) is not allowable to the assessee for generating power for captive consumption. 2. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary. Relief claimed in appeal It is prayed that the order of the CIT (Appeals) be set aside and that of the Assessing Officer be restored. 2. The only issue raised by the Revenue is that the learned CIT (A) erred in allowing the deduction under section 8- IA of the Act which was disallowed by the AO. 3. The assessee is a Government company and engaged in business of manufacturing and selling of fertilizer and chemicals in State of Gujarat. The assessee is also having an independent plant generating electricity for in house captive consumption. The assessee in respect of such power plant worked the deduction under section 80-IA(4) of the Act after applying the rate charge by GUVNL to the customers. 4. However, the Assessing Officer disagreed with the rate used by the assessee to calcula....
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....h captiveable is the rate at which assessee company has purchased power from GEB. Reliance was further placed on following judgment:- (1) CIT v/s. Godavari Power & Ispat Ltd. 223 taxman 234(Chattisgarh High Court) (2) Shree Cement Ltd. v/s. ACIT (2014) 31 ITR (T) 513 (Jaipur) ITAT (3) Pr. CIT v/s. Gujarat Alkalies& Chemicals Ltd. tax appeal 544 of 2016 dated 03/10/2016 (High Court of Gujarat) (4) ACIT vs. Jindal Steel and Power Ltd. (2007) 16 (SOT) 509 (Delhi ITAT) (5) Sri Velayudhaswamy Spinning Mills (P) Ltd. v. DCIT (2012) 2012 ITR(T) 353 (Chennai-ITAT) 22. On the other hand Ld. D.R. vehemently argued supporting the order of lower authorities. 23. We have heard the rival contentions and perused the record placed before us and gone through the judgments and decisions relied on by the assesse carefully. Short issue for adjudication is that whether the assessee has rightly computed the deduction u/s.80IA(4) of the Act for the income earned from power generation plant by taking the rate of electricity charged by Gujarat Electricity Board (GEB) to its customers. As per the contention of the assessee for the purpose of cal....
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....ssee for the separate assessment year, Revenue filed Tax Appeal No. 708/2016 raising the same questions. This tax appeal was admitted for consideration of following substantial question of law: "1. Whether, on the facts and circumstance of case, the Tribunal was right in law in allowing the deduction u/s.80IA(4) of the Act without appreciating that the assessee had captive power generation plant and therefore the claim u/s. 80IA(4) of the Act was not allowable as held by the Hon'ble ITAT Bench A Chennai vide In the case of Chettinand Cement Corporation Ltd. in 1TA No. 1026 (Mds)2005? 2. Whether on the facts and circumstance of case, the Tribunal was right in law in allowing the claim u/s. 80IA(4) as claimed by the assessee on the basis of purchase price of power from GEB, without appreciating the fact that assessing officer had rightly calculated the amount eligible for deduction u/s, 80IA after 3. applying the rate at Rs. 2.47 per unit which became 'Nil' as after applying rate at Rs. 2.47 per unit, there is LOSS of Rs. 4243.19 lakh, instead of profit shown by the assessee for the unit?" 2. In both the tax appeals though slightly diff....
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....the market value of the electricity should be reckoned on Rs. 5.32 ps. per unit as was done by the Revenue authority. 6. Under sub-Section(8) of Section 80IA of the Act, if it is found that where any goods or services held for the purposes of the eligible business are transferred to any other business carried on by the assessed 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 for such transfer does not correspond to the market value of such goods as on the date of the transfer, then for the purposes of deduction under Section 80IA in case of the eligible business as if the transfer had been made at the market value of such goods or services. It is in this context that the question of substituting the actual consideration by the market value comes into picture. 7. We may notice that the Tribunal did not accept the contention of the assessee that the electricity is neither goods nor services and that, transfer of electricity, therefore, would not be covered under sub-Section (8) of Section 80IA of the Act. However, in so far as the Tribu....
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....market. To our mind sum of Rs. 4.51 per unit of electricity only represented cost of electricity generation to the assessee and not the market value thereof It is not in dispute that the GEB charged Rs. 5 per unit for supplying electricity to other industries including non eligible unit of the assessee itself. Tribunal therefore, while adopting the said base figure and excluding excise duty therefrom to work out Rs. 4.90 as the market value of the electricity generated by the assessee, to our mind, committed no error. It can be easily seen that if the assessee were to supply such electricity or was allowed to do so in the open market, surely it would not fetch Rs. ft.,51 per unit but Rs. 5 per unit as was being charged by GEB. Since the excise duty component thereof would not be retained by the assessee, Tribunal reduced the said figure by the nature of excise duty and came to the figure of Rs. 4.90 to ascertain the market value of electricity generated by the eligible unit and supplied to non eligible business of the assessee. No error was committed by the Tribunal. No question of law therefore, arises. Tax Appeal is dismissed." 5. Issue once again reached the Division Be....
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....er of the learned CIT (A). Hence, the ground of revenue's appeal is dismissed. Coming to assessee's appeal bearing ITA No. 3476/Ahd/2015 for the assessment year 2006-07 8. The issue raised by the assessee is that the learned CIT(A) erred in confirming the order of the AO by not reducing the provision written back in the profit and loss account from the book profit under section 115 JB of the Act. 9. The assessee have made provision on account of take or pay rental charges to GSCPTL in the A.Y. 2002-03, 2003-04, 2004-05 and 2005-06 aggregating to Rs. 28,85,36,999/- only. However in each assessment year the provision made by assessee was disallowed and added to the normal income by the AO being unascertained provision. Further in A.Y. 2004-05 and 2005-06 the provision also added to book profit as calculated u/s 115JB of the Act. All the above additions were confirmed by ITAT in respective Assessment Years in the appeal as discussed above. However in current year assessee reversed all provision and credited to P&L a/c but failed to reduced the same from book profit while filing return of income. 9.1 Accordingly, the assessee during assessment proceedings requested AO to re....
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....debit to the 15[statement of profit and loss]), if any such amount is credited to the 15[statement of profit and loss]: Provided that where this section is applicable to an assessee in any previous year, the amount withdrawn from reserves created or provisions made in a previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation or Explanation below the second proviso to section 115JA , as the case may be; or]" 13.1 A plain reading of the above provision reveals that the amount of provision written back shall be reduced from the book profit if the same has suffered the tax under MAT provision in the earlier years. Apparently, it appears that there is no ambiguity that the provisions pertaining to the assessment year 2002-03 and 2003-04 were not suffered to tax under the provisions of section 115 JB of the Act. However, the question arises where the assessee was subject to tax under normal computation of income even after giving the effect of....
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....aw, it is the duty of the Assessing Officer to compute the normal total income and also the book profit under section 115JA in that year and then compare and decide to invoke the normal provisions of the Act or special provisions of book profit under section 115JB. Once the Assessing Officer invokes the normal provisions of tax, it indirectly means that he has compared the computation under section 115JA and decided that the income under normal provisions was more. In that situation it is to be presumed that the provision was added back to the book profit of that year. Even by means of Explanation ( g)introduced to section 115JA by the Finance (No. 2) Act, 2009, with retrospective effect from April 1, 1998 the provision for bad and doubtful debts would be deemed to have been added back in computing the book profit in that year and so the amount, now credited to the profit and loss account, is to be reduced by virtue of the provision of section 115TB. In view of this there is justification in the assessee's contention in claiming the provision as deduction in the computation of book profit in this year. On the fact that the assessee had been disallowed in that year under the nor....