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Issues involved:
The issue involved in this case is the denial of deduction u/s 80IA of the Income-tax Act, 1961 to the assessee for its income from windmills, based on the interpretation of whether each windmill should be considered a separate undertaking or not. Deduction u/s 80IA: The assessee claimed deduction u/s 80IA for its income from windmills, treating each windmill as a separate undertaking. However, the AO and CIT(A) held that the windmills should be considered in a combined manner, relying on a previous Tribunal decision. The assessee argued that the windmills should be treated as separate undertakings as per sec. 80IA(5) and cited relevant Tribunal decisions and a High Court judgment in its favor. Captive Consumption of Power: The question of whether deduction u/s 80IA could be claimed for power produced and captively consumed was also raised. The High Court's decision in Thiagarajar Mills Ltd.'s case supported the assessee's position that captive consumption of power generated would enable the assessee to derive profit and gains eligible for deduction u/s 80IA. Consideration of Power Undertakings: Another issue was whether each power undertaking should be considered separately or if the consolidated income from all windmill units should be taken together for computing deduction u/s 80IA. The Bangalore Bench's decision in Jindal Aluminum Ltd.'s case favored the assessee, emphasizing that deduction u/s 80IA should be computed undertaking-wise, not combining all undertakings, as per sec. 80IA(5) and a Special Bench decision. Conclusion: The Tribunal held in favor of the assessee, allowing the appeal and stating that the windmills were eligible for claiming deduction under sec. 80IA, considering each windmill separately. The decision of the High Court and relevant Tribunal judgments supported the assessee's position on both the treatment of windmills as separate undertakings and the eligibility for deduction based on captive consumption of power and undertaking-wise computation.
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