TaxTMI 
TaxTMI 
2019 (12) TMI 658
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....ered 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 calculate sale value as the market rate as the same is not applicable in ca....
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....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 calculating deduction u/s. 80IA(4) r.w.s. 80IA(8) of the Act the "market value" for transfer of electricity from eligible unit to non-eligible unit,....
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....tion 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 differently worded, the questions concerning the same assessee are identical and concern the issue of deduction under section 80IA ofthe Income Tax Act granted to the assessee by the Tribunal on captive power ....
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.... 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 Tribunal's reasoning to adopt the market value of the goods at Rs. 5.40 ps. per unit is concerned, we find no error. Undisputedly, GEB supplied the electricity to its consumers at the same rate. This, therefore, was a market value of the elec....
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....stries 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 Bench of this Court in case of Commissioner of Income-tax-I v. Alembic Limited in Tax Appeal No.471/2009 and connected appeals. The Division Bench referring to earlier judgments of the Court held as under : "11. We have considered the submissions made by ....
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....g 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 reduce such provision written back from book profit under clause (i) to explanation to section 115JB of the Act. But AO did not adjudicate the same. 10. The Ld. CIT(A) allowed the reduction in book profit to the extent of provision added to book profit in earlier year i.e. in A.Y. 2004-05 and ....
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....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 such provision under MAT liability. In such a situation, we are of the view that it shall be deemed as if such provision has suffered to tax under MAT provision and the assessee shall get benefit in the year in which it is written back in the profit and loss account while determining the income under MAT provision of the Act. In holding s....