2019 (4) TMI 2038 - AT - Income Tax

Deduction u/s. 80IA - assessee was having captive power plant - profit in respect of sale of steam to process was disallowed which was in turn confirmed by the Ld. CIT(A) - HELD THAT - We find no infirmity in the order passed by the Ld. CIT(A) in deleting such addition made by the Ld. AO following the decision taken by his predecessor in the earlier year 2018 (1) TMI 1667 - ITAT AHMEDABAD in allowing the deduction u/s. 80IA of the Act taking in consideration of the judgment passed by the Co-ordinate Bench a discussed above hence the same is confirmed. Revenue s appeal is found to be devoid of any merit and hence dismissed.

Summary

Issues Involved:
1. Deduction under Section 80IA of the Income Tax Act, 1961 for the sale of steam.
2. Consistency in the application of tax laws and previous judgments.
3. Reasonableness and valuation of the steam cost.

Issue-wise Detailed Analysis:

1. Deduction under Section 80IA of the Income Tax Act, 1961 for the sale of steam:
The assessee company, engaged in processing, manufacturing, and trading of clothes, claimed a deduction under Section 80IA of the Income Tax Act, 1961 for its captive power plant. The assessee's claim included profits from the sale of steam to its Process Division, which the Assessing Officer (AO) disallowed. This disallowance was confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)], leading to the present appeal. The Tribunal noted that in the earlier years, deductions under Section 80IA(4)(iv) were allowed, and the assessee had provided a certificate in Form 10CCB from a chartered accountant to support the claim. The Tribunal concluded that steam qualifies as "power" under Section 80IA(4) and is eligible for deduction.

2. Consistency in the application of tax laws and previous judgments:
The Tribunal emphasized the principle of consistency, referencing the assessee's own case for Assessment Year 2011-12, where a similar deduction was allowed. The Tribunal cited a previous judgment where the AO had accepted that steam is eligible for deduction under Section 80IA(4). The Tribunal found the AO's contradictory stance—accepting steam as eligible for deduction while disallowing the deduction—unjustifiable. The Tribunal upheld the CIT(A)'s decision, which was based on consistent and reasoned grounds, including reliance on an engineer's certificate and various case laws.

3. Reasonableness and valuation of the steam cost:
The Tribunal reviewed the detailed computation of the cost of steam and power provided by the assessee, including quantitative details and expenses incurred. The assessee submitted an engineering certificate and a rate chart to support the reasonableness of the steam cost. The Tribunal noted that the AO had accepted the steam cost's eligibility for deduction and found the profit margin from captive consumption fair and reasonable. The Tribunal upheld the CIT(A)'s decision, which was based on the engineer's certificate and consistent with previous case laws.

Conclusion:
The Tribunal found no infirmity in the CIT(A)'s order, which allowed the deduction under Section 80IA of the Income Tax Act, 1961. The Tribunal dismissed the Revenue's appeal, confirming the CIT(A)'s decision to delete the addition made by the AO and uphold the deduction for the sale of steam. The Tribunal's decision was based on the principle of consistency and the reasonableness of the steam cost valuation.

Order Pronouncement:
The Tribunal pronounced the order in the Court on 29-04-2019, dismissing the Revenue's appeal.