2016 (9) TMI 1542 - HC - Income Tax

Deduction u/s. 80IA(4) - captive power generation plant - purchase price of power from GEB - HELD THAT - Tax appeal is admitted for consideration of following substantial questions of law

Summary

Issues:
1. Interpretation of deduction under section 80IA(4) of the Act for an assessee with a captive power generation plant.
2. Allowability of claim under section 80IA(4) based on the purchase price of power from GEB.

Analysis:
1. The first substantial question of law revolves around the interpretation of section 80IA(4) of the Act concerning an assessee with a captive power generation plant. The Tribunal allowed the deduction under this section, which is contested by the appellant. The issue questions the correctness of this decision in light of a previous ruling by the ITAT Bench A Chennai in a specific case. The crux of the matter lies in whether the assessee's claim under section 80IA(4) is valid despite having a captive power generation plant, as highlighted in the Chettinand Cement Corporation Ltd. case.

2. The second substantial question of law pertains to the allowability of the claim under section 80IA(4) based on the purchase price of power from GEB. The Tribunal approved the claim made by the assessee, which is being challenged by the appellant. The dispute arises from the assessing officer's calculation, where the eligible deduction under section 80IA was determined after applying a specific rate per unit. This calculation resulted in a significant loss instead of the profit shown by the assessee for the unit. The crux of this issue lies in whether the Tribunal erred in allowing the claim based on the purchase price without considering the assessing officer's calculation, which resulted in a substantial loss.

In this case, the learned advocate for the respondent-assessee waived the notice of admission, indicating their readiness to proceed with the matter. The Court decided to hear this tax appeal along with connected appeals on a specified date for final hearing. The judgment by the High Court of Gujarat will address these substantial questions of law and provide clarity on the interpretation and application of section 80IA(4) of the Act in the context of the issues raised by the appellant.