TaxTMI 
TaxTMI 
2020 (3) TMI 231
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.... (B) Whether the Appellate Tribunal has erred in law and on facts in upholding the order of the CIT(A) deleting the addition made on account of disallowance u/s.40(a)(ia) of the Act for non deduction of tax on commission payable to foreign agents of Rs. 2,47,85,500/-? (C) Whether the Appellate Tribunal has erred in law and on facts in considering the steam as "power" for the purpose of deduction u/s.80IA(4) of the Act? (D) Whether the Appellate Tribunal has erred in law and on facts in upholding the order of the CIT(A) deleting the addition made on account of disallowance u/s.14A of the Act of Rs. 19,09,800/-?" 3. It appears from the materials on record that the assessee is engaged in the business of liquefied dyes. The return of income was filed by the assessee on 30th September 2011, declaring the total income of Rs. 9,12,75,000/-. The case was selected for scrutiny and the notice under Section 143(2) of the Act was issued on 3rd August, 2012. 4. So far as the first question as proposed by the Revenue is concerned, we take notice of the fact that the Assessing Officer had disallowed the commission paid to the foreign agents taking the view that the income ....
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....f the Act. The assessee had capitalized the interest cost of Rs. 32,64,147/- on the borrowings used to acquire the capital assets. The Assessing Officer rejected the submission of the assessee and worked out the total interest to be capitalized at Rs. 50,49,554/- and, after setting off the interest already capitalized by the assessee, further disallowed Rs. 17,85,407/-. The CIT (A), while allowing the appeal, preferred by the assessee, held as under: "On a careful consideration of entire facts of the case, it is noted that the appellant had given detailed working of interest capitalisation for the year. It had given details of the opening capital work in progress and the monthly accretion therein month-wise during the year. Further it has also given details of capitalisation, Cumulative expenses, Cumulative capitalization and percentage of C WIP to CAPEX. It is noted that the first instalment of loan was received by the appellant in the month of August 2010 and it has bifurcated the interest by taking into account the percentage of CWIP to CAPEX. For example the percentage of capital work in progress to CAPEX was 69% in the month of August, the interest cost has been propo....
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....ue. Therefore, this ground of appeal of the Revenue is dismissed." 9. The concurrent finding of fact recorded by the two authorities is, that the assessee had furnished the working of interest capitalized to the tune of Rs. 32,64.147/- after taking into consideration the capital expenditure incurred for the capital assets and the quantum of work in progress from time to time. 10. The Tribunal rightly observed that the presumption drawn by the Assessing Officer that the total term loan received was towards the CWIP could not be said to be based on any cogent material. 11. In view of the concurrent findings, we are of the view that the second question, as proposed by the Revenue cannot be termed as a substantial question of law. 12. We now proceed to look into the third question as proposed by the Revenue with regard to Section 80IA(4) of the Act. 13. It appears that during the year under consideration, the assessee had claimed deduction of Rs. 32,51,080/- under Section 80IA(4) of the Act. This claim was on account of the operation of the Captive Power Plant. The assessee showed income from sale of Power to the tune of Rs. 1,23,10,500/- and the sale of vapour of Rs. 6,....
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....essure so that it can be utilised for some other work. Accordingly, this steam cannot be consider as a by product but it is intentionally being produced or generated for a specific purpose. Further the intention of the legislature was to provide deduction for generation of electricity and not for generation of steam. The intention is clearly evident from the perusal of the speech of the honourable Finance Minister while introducing the provisions for deduction in the budget. The use of word 'power' is intended for 'electricity' as the other relevant sections clearly mentioned the word 'electricity'. The honourable Bench of ITAT Ahmedabad while deciding the issue in N.R. Agrawal Industries Private Limited has discussed these aspects in detail and accordingly relying on the judgment it is held that the appellant is not entitled for deduction under section 80 I-A on sale of such steam to its chemical plant. Accordingly, the decision of the AO in this regard is upheld. 3. For the purpose of calculation the quantum of deduction and allocation of expenditure incurred for production of steam the appellant had given certain information-related to the heat value of steam (Enthalpy)....
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....so the power plant are also to be disallowed on proportionate basis. It is also noted that the appellant has taken loan from financial institutions for installing the power plant. The appellant is also paying huge amount of interest on the loan. Proportionate allocation of the interest expenditure should also be done and added to the cost of generation of steam. Since the details related to the expenses of head office as well as interest expenditures are not available before me, the AO is directed to work out the proportionate allocation of the interest expenditure should also be done and added to the cost of generation of steam. Since the details related to the expenses of head office as well as interest expenditure are not available before me, the AO is directed to work out the proportionate allocation of these expenses by obtaining suitable details from the AO. The details of following expenses are readily available from record:- Expenses for generation of steam 9321977 Depreciation on turbine 1289189 Electricity duty 787872 The AO is also directed to verity the above figures. Accordingly the AO is directed to rework the deduction under Section ....
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....ectification and recalled its earlier judgment. The Revenue came before this Court in appeal. This Court took the view while allowing the appeal of the Revenue that the claim of the assessee for deduction under Section 80IA of the Act was not tenable in law. 19. This Court took notice of the fact that the assessee had installed turbine for power generation which relied on the excess steam production capacity of the plant. This Court ultimately took the view that the installation of turbine for power generation could be said to setting up of a new industrial unit and therefore, the assessee would not be entitled for deduction of sum under Section 80IA of the Act. 20. In our view, the facts in the case of Commissioner of Income-tax Vs. Atul Ltd. (Supra) are quite different and the ratio, as propounded in the same, will have no applicability to the case on hand, more particularly, the question No.3 with which we are dealing with. 21. It is difficult for us to take the view as suggested by the learned standing counsel appearing for the Revenue that "steam" would not amount to power. The word "Power" used in Section 80IA(4) has not been defined under the Income Tax Act. 22. ....