TaxTMI 
TaxTMI 
2016 (9) TMI 1625
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....aimed the deduction on that power plant u/s 80-IA of the Act. When questioned by the AO, the assessee vide letter dated 9/3/2004 pointed out that for generation of the power what is required is turbine. For composite plant for generation of power what is required is boiler and turbine. Boiler manufactures the steam which is the raw material for turbine. Turbine is independently kept for generating power. The assessee installed new turbine which itself is a new industrial undertaking capable of generating electricity. This turbine can be operated by purchasing steam from outside source but the assessee since had the spare capacity of steam used the same for generating electricity in turbine. It was pointed out that the assessee has' charged for consumption of steam at the rate of Rs. 660 per MT. Relying on the decision 107 ITR 195 (SO), it was pointed out that the assessee may establish a new unit for using the product of the old business as Its raw material. The business may establish new unit for supplying raw material for its old unit. The assessee may establish a division of its own product as a new unit and the assessee may establish one or more units. It was also pointed o....
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....ee could, have bought the steam from outside also. The power and plant is a separate unit from the boiler. Therefore, the assessee should have treated new turbine to be an Industrial Undertaking. Even otherwise also it was contended that the value of the boiler in any case was less than 20% of the total plant and machinery installed by .the assessee. Both the learned AO and the learned CIT(A) could not be able to understand that the power can be generated independently. Thus, it was contended that the assessee was entitled for the deduction u/s 80IA. The learned DR, on the other hand; relied on the order of the AO. 9 We have/carefully considered the rival submissions and perused( the material on record along with the order of the tax authorities below. The deduction u/s 80IA is available to an assessee where the gross total income of the assessee includes any profits and gains derived by an undertaking or enterprise from any eligible business as referred to in sub-section (4). The deduction shall be allowed an amount equal to 100% of the profits and gains derived from such business for ten consecutive years. As per this section applies to any undertaking which is set up part of I....
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.... undertaking itself cannot generate the power. No material or evidence was brought to our knowledge which may prove that the new turbine installed by the assessee can independently generate the power. The assessee is already having the undertaking engaged in the business of generating the power. The assessee in this case has merely added a new turbine to the existing undertaking by which his capacity to generate the power has increased. This, in our opinion, is merely an expansion of the existing undertaking. The new undertaking as is eligible u/s 80IA, in out opinion, must be independent and integrated unit which should be able to carry on the activities or to carry on the business as has been stipulated u/s 80IA independently. It is not the case of the assessee that the new unit established by the assessee. has taken the boiler from the existing unit for its exclusive use and generation of power. It is only in the existing unit the assessee has added new turbine which, in our opinion, cannot be regarded to be establishing the new undertaking qualifying for Reduction u/s 80IA. We, therefore, do not find any illegality or infirmity in the order of the CIT(A) in denying deduction to....
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....eciation under section 43A. One of the important reasons for giving the power of rectification to the Tribunal is to see that no prejudice is caused to either of the parties appearing before it by its decision based on a mistake apparent from the record." 10. From the facts on record, it emerges that the Tribunal in its original judgment dated 16.05.2008 had held that the assessee had not established a new power plant so as to qualify for deduction under section 80IA of the Act. The Tribunal recalled this order in exercise of powers of rectification on the ground that this view is not in consonance with in case of Gujarat Alkalies and Chemicals Ltd. (supra). It is undisputed that under section 254(2) of the Act, the Tribunal enjoys the power to rectify any mistake apparent on the face of the record at any time within four years from the date of the order. In view of the judgment of this Court in case of Assistant Commissioner of Income-Tax v. Saurashtra Kutch Stock Exchange Limited, reported in 262 ITR 146, the decision of the jurisdictional High Court even if rendered subsequently, would constitute a mistake apparent on record, investing the Tribunal with jurisdiction to rectif....
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....original judgment, upheld the view of the Revenue authorities holding that turbine itself would not be sufficient to generate power and the plant therefore would not qualify as a new industry. On the basis of judgment of Supreme Court in case of Gujarat Alkalies and Chemicals Ltd. (supra), however, the Tribunal was persuaded to recall this judgment and post the appeal for further hearing. In Gujarat Alkalies' case, the facts were that the assessee was in the business of manufacturing caustic soda and other chemicals, for which, it had installed a production plant. The assessee acquired a new industrial license and a new letter of intent for substantial expansion of the production capacity of the caustic soda, by which, its existing capacity was nearly doubled. The assessee had made sizable investment in acquiring new machinery and plant. The assessee therefore claimed that this was a new industrial undertaking and the profit in respect of which would qualify for deduction under section 80IA of the Act. The claim was rejected by the Revenue authorities and the Tribunal on the ground that this is a case of substantial expansion and not of installment of new industry. One of the g....