TaxTMI 
TaxTMI 
2026 (7) TMI 1805
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....he issues arising in the respective assessment years have been dealt with separately. 2. We shall first take up the appeal for Assessment Year 2018-19. The assessee company is engaged in the business of generation of power through its thermal power undertakings and had, during the year under consideration, claimed deduction under section 80IA in respect of profits derived from its eligible power generation units. During the course of assessment proceedings, the Assessing Officer examined the assessee's claim of deduction under section 80IA and observed that while the assessee had disclosed income under the head "Profits and Gains of Business or Profession" amounting to Rs. 9,17,63,620/-, it had also earned Short Term Capital Gain of Rs. 3,22,31,811/- on redemption of mutual fund units, taxable at normal rates. According to the Assessing Officer, deduction under section 80IA could be allowed only against the business income component and not against income assessable under the head "Capital Gains". Consequently, though the profits of the eligible undertaking as certified in Form No.10CCB were substantially higher than the Gross Total Income, the Assessing Officer restricted the d....
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....Term Capital Gain of Rs. 3,22,31,811/- taxable at normal rates. Since the eligible profits far exceeded the Gross Total Income, the assessee had itself restricted the claim under section 80IA to the Gross Total Income in accordance with section 80A(2). It was thus contended that the controversy does not pertain to the eligibility or quantification of profits derived from the power generation undertaking, but only to the extent to which the deduction, once quantified, can be allowed while computing the total income. Reliance was placed upon the judgment of the Hon'ble Supreme Court in the case of CIT vs. Reliance Energy Ltd. reported in 441 ITR 346 (SC), which, according to the learned Counsel, squarely governs the issue in favour of the assessee. 5. We have carefully considered the rival submissions, perused the orders of the authorities below and the material placed before us. Upon a careful examination of the factual matrix, we find that the entire approach adopted by the Assessing Officer and affirmed by the learned CIT(A) proceeds on an incorrect understanding of the assessee's claim. The Assessing Officer has devoted considerable discussion to the proposition that income as....
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....ssessee subject only to the ceiling prescribed under section 80A(2), namely, the Gross Total Income. In other words, section 80IA(5) governs the determination of eligible profits, whereas the actual allowance of deduction is governed by sections 80A and 80AB. The contention of the Revenue that deduction should stand restricted only to business income was specifically rejected. 7. Applying the aforesaid ratio to the facts of the present case, we find that the profits eligible for deduction under section 80IA have been quantified at Rs. 76,29,43,289/- and the Revenue has not disputed either the eligibility of the undertaking or the correctness of such quantification. The Gross Total Income of the assessee admittedly stood at Rs. 12,39,95,431/-. Since the eligible profits exceeded the Gross Total Income, the assessee itself restricted the deduction to the Gross Total Income in accordance with the mandate of section 80A(2). Once such is the position, there was no occasion for the Assessing Officer to further restrict the deduction only to the business income of Rs. 9,17,63,620/-. The Short Term Capital Gain was never claimed as eligible profit under section 80IA; it merely formed pa....
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.... to allow deduction in respect of Rs. 25,218/- representing interest under section 7Q, whereas the disallowance relating to damages under section 14B amounting to Rs. 10,507/- is sustained. This ground is partly allowed. 11. The next issue relates to disallowance of Rs. 4,22,211/-representing provision for sick leave written back. The case of the assessee is that the said amount formed part of a provision which had already suffered disallowance under section 43B in earlier years and, therefore, once the liability was written back during the year, the corresponding amount could not once again be brought to tax without resulting in double taxation. 12. Having considered the material placed before us, we find that the contention of the assessee requires factual verification. The reconciliation furnished prima facie indicates that the amount written back emanates from a provision which had already suffered disallowance under section 43B in preceding years. If that factual position is found to be correct, taxation of the same amount again on account of reversal of provision would clearly result in double taxation of an item which has already borne tax in earlier years. Since neith....