2016 (1) TMI 1344 - AT - Income Tax

Excluding sale proceed of sale tax entitlement from profits derived from its wind mill installed at Ahmadnagar (Maharastra) for the purpose of claiming section 80IA - Held that - The assessee files a tabulation chart and copy of various tribunal orders in its own case in support of the above stated grounds. The Revenue is fair enough in not disputing correctness thereof. It is to be seen from the case record that a co-ordinate bench in assessee s own case 2014 (1) TMI 234 - ITAT AHMEDABAD has remitted the first issue of sales tax sale proceeds back to the Assessing Officer for fresh adjudication. We feel that the instant ground deserves to follow suit in absence of any distinction on facts of law. Thus remitting the issue back to Assessing Officer after considering the scheme sales tax entitlement of the Maharastra Govt. under which the assessee has received its entitlement after taking into consideration of hon ble jurisdictional high court in case of CIT vs. Birla VXL Ltd (2013 (7) TMI 655 - GUJARAT HIGH COURT) Deduction u/s 80IA - Held that - It is not in dispute that the initial Assessment Year in the case of Jivraj Tea & Industries Ltd. is the Assessment Year 2004-05 and in the case of Jivraj Tea Ltd. is Assessment Year 2007-08 and it is also not in dispute that the assessee has not suffered any loss in the said year, therefore, in our considered opinion no brought forward loss or depreciation could be reduced for determining the amount in which the deduction is to be allowed u/s. 80IA of the Act. We, therefore, set aside the orders of the lower authorities on this issue and allow the ground of appeal of the assessee. Challenging section 14A disallowance - Held that - Restrict the impugned disallowance of ₹ 86,223/- to the extent of assessee s exempt income only

Summary

Issues Involved:
1. Exclusion of sale proceeds of sales tax entitlement from profits for section 80IA deduction.
2. Disallowance of section 80IA deduction for profits derived from electricity generation.
3. Disallowance under section 14A for expenses related to exempt income.

Issue-wise Detailed Analysis:

1. Exclusion of Sale Proceeds of Sales Tax Entitlement:
The assessee challenged the CIT(A)'s order confirming the Assessing Officer's action in excluding the sale proceeds of sales tax entitlement of Rs. 69,16,667/- from profits derived from its windmill for the purpose of claiming section 80IA deduction. The assessee argued that the CIT(A) should have treated the amount received on the sale of sales tax entitlements as capital receipts not liable to be taxed. The Tribunal noted that a co-ordinate bench in the assessee's own case for the assessment year 2007-08 had remitted the issue back to the Assessing Officer for fresh adjudication. Following this precedent, the Tribunal remitted the issue back to the Assessing Officer for fresh consideration, taking into account the scheme of sales tax entitlement of the Maharashtra Government and the jurisdictional high court decision in CIT vs. Birla VXL Ltd. The ground was thus allowed for statistical purposes.

2. Disallowance of Section 80IA Deduction for Profits from Electricity Generation:
The assessee contested the disallowance of Rs. 1,13,94,998/- claimed as section 80IA deduction for profits derived from electricity generation from its windmill. The Tribunal referred to its earlier decision in the assessee's own appeal for AY 2007-08, which had accepted the contention that the assessee could choose the initial year for claiming the deduction under section 80IA. The Tribunal emphasized that the losses prior to the initial assessment year, which had already been set off, could not be brought forward and adjusted against the profits of the initial year. The Tribunal reiterated that the initial assessment year chosen by the assessee was after 1-4-2000, when the amended provision of section 80IA was applicable. Consequently, the impugned disallowance was deleted, and the ground was accepted.

3. Disallowance under Section 14A for Expenses Related to Exempt Income:
The assessee challenged the disallowance of Rs. 86,223/- under section 14A related to its exempt income of Rs. 9,207/-. The Tribunal referred to a co-ordinate bench's decision in the assessee's own case for the assessment year 2008-09, which had restricted the disallowance to the extent of exempt income. Following the same reasoning, the Tribunal restricted the disallowance to the amount of the exempt income only. Thus, the ground was partly accepted.

Conclusion:
The Tribunal partly allowed the assessee's appeal, remitting the issue of sales tax entitlement back to the Assessing Officer, deleting the disallowance of section 80IA deduction for profits from electricity generation, and restricting the section 14A disallowance to the extent of the exempt income. The order was pronounced in the open court on 20-01-2016.