TaxTMI 
TaxTMI 
TaxTMI 
2011 (8) TMI 1362
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....e Ld. CIT (Appeals) was not justified in holding that the Appellant did not comply with the requirements of Section 80-IA(7), by misquoting the provision and the Form of Audit Report. 3. (a) Without prejudice to Ground 2 (a) and (b) above, the Ld. CIT (Appeals) was not justified in directing the Assessing Officer to recompute the income from power plant by looking into and examining the indirect expenses for allocating part of it to power plant in case it is held that deduction Under Section 80-IA is admissible to the power plant. (b) That Without prejudice to Ground 2 (a) and (b) above, that the Ld. CIT (Appeals) was not justified in directing the Assessing Officer to recompute the income from power plant by looking into and examining the rate at which electricity is being charged for computation Under Section 80-IA, in case it is held that deduction Under Section 80-IA is admissible to the power plant. 4. That the Ld. CIT (Appeals) was not justified in sustaining the disallowance to the extent of ₹ 10,01,592 out of the claim of deduction of Expenditure amounting to ₹ 10,57,792 relating to peripheral development, which is admissible Under Section 37(1) of the Inc....
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....evenue from sale of power to third parties as made in the original computation and taken in Intimation Under Section 143(1) by the ld. A.O. and the income should have been recomputed by the ld. CIT (Appeals) after ignoring the same. 9. That the Ld. CIT (Appeals) erred in rejecting the Appellant's plea that for the ends of justice the Income of the power plant undertaking and the other Income of the Company should have been properly computed as per law and then deduction Under Section 80 IA should have been allowed. 3. Both the parties were heard regarding the issues raised by the Assessee and their legal implications. 4. On careful consideration of the material made available to the Tribunal and analyzing the same in the light of the rival submissions of both the parties, the undisputed facts relating to the issues are that the Assessee is a Company incorporated under the Companies Act and derives income from manufacturing and sale of sponge iron. It has also installed a power plant to produce LCD basing on the hot gas emitted from the furnace used in the Sponge Iron Smelter plant. The Assessee had originally filed return by electronic media showing total income of ₹ ....
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....entions raised before the lower authorities with reference to the various citations relied on in support of his contentions. He further submitted that the Departmental Authorities have erred in not appreciating the contention of the Assessee that the cost of production of power produced by power plant unit valued at the market rate at which the power is being supplied to the general public by the State Electricity Board. The provisions contained in Section 80IA(7) clearly mandates that the valuation of the project by the individual unit which the inputs of the units of the power plant are to be valued at current prevailing market rate only. In that way, the Assessee has valued the power produced by the Assessee at the market rate of power in which the State Electricity Board is concerned supplying the power. Therefore, the Departmental Authorities are not at all appreciated the method followed by the Assessee in its right perspective in the light of the provisions contained in Section 80IA(7). The observation of the lower authorities that the Assessee has not shown the income from power plant in the consolidated P & L account while calculating the income taxable in its hands is not....
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....in the P & L account, the Departmental Authorities have disallowed the expenses of ₹ 11,19,048. 7. The learned AR of the Assessee has contended that the expenses of ₹ 10,57,792 was incurred by the Assessee towards peripheral development is allowable expenditure as this amount was spent for carrying out the approved project by the National Committee for Promotion of Social & Economic Welfare. So, the Assessee is entitled for claim of the said amount. He further contended that to maintain ecological balance, the Assessee is bound to maintain gardens, parks and lakes and therein the Assessee has grown vegetables also. As the expenses were maintained for ecological balance, the expenses are allowable deduction. While explaining the non-inclusion of income from vegetable, it was stated that vegetables being utilised by the employees of the Assessee who are residing in that area for their house hold purpose and the Company is not charging anything because they are growing them without charging extra and therefore, there is no receipts from those vegetables and therefore, there is no mention in the P & L account. This contention of the Assessee was not found favour by the Dep....
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....penditure. In that view of the mater, the Departmental Authorities has passed well reasoned order and it does not warrant any interference. Hence, the learned DR sought for dismissal of the appeal by upholding the orders passed by the Departmental Authorities. 9. On careful analysis of the orders passed by the Departmental Authorities in the light of the rival submissions of both the parties, it is found that undisputedly the Assessee has not shown the income derived by it from the power plant unit in the gross total income shown by the Assessee for taxation purposes. Therefore, the Assessee's computation of deduction Under Section 80IA is not in conformity with Section 80AB as well. The contention raised by the Assessee regarding the claim Under Section 80IA made before the authorities below is only of academic interest whereas the fundamental requirement of showing the income from "eligible" unit in the gross total income is mandatory which was not complied by the Assessee in order to claim deduction Under Section 80IA of the amount equal to the income generated by the eligible unit. Therefore, we are of the considered view that the rejection of the claim of the As....