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2017 (5) TMI 986 - HC - Income TaxEntitlement for deduction under Section 80-IA - notional income from generation of electricity which was captively consumed by the assessee itself in another unit of the same company - Held that - Generation of electricity by setting up a fully independent and identifiable industrial undertaking and use of that captive power for its own other unit is also required to be dealt with as per provisions of Section 80-IA and is entitled for the deduction in the same terms. See COMMISSIONER OF INCOME-TAX, DELHI Versus M/s. DCM SHRIRAM CONSOLIDATED LTD. 2015 (2) TMI 759 - SUPREME COURT Tribunal rightly declared the assessee entitled to claim deduction as prescribed under Section 80-IA and even for the purpose of computing the books of account as per Section 115-JA of the Income Tax Act, 1961. - Decided in favour of assessee.
Issues involved:
1. Correctness of the judgment passed by the Income Tax Appellate Tribunal regarding the assessment year 2000-2001. 2. Interpretation of provisions under Section 80-IA and Section 115JA(ii) of the Income Tax Act, 1961. 3. Whether the assessee is entitled to deduction under Section 80-IA for income from generation of power. 4. Application of the judgment in Civil Appeal No.3461/2010; Commissioner of Income Tax, Delhi Vs. M/s. DCM Shriram Consolidated Ltd. to the present case. Issue 1: Correctness of the Tribunal's Judgment The High Court examined the correctness of the judgment passed by the Income Tax Appellate Tribunal for the assessment year 2000-2001. The Tribunal had dismissed the appeal by the Revenue, affirming the order of the Commissioner of Income Tax (Appeals). The Tribunal concluded that income from generation of power, even if captively consumed by the assessee, entitles the assessee to deduction under Section 80-IA of the Income Tax Act, 1961. Issue 2: Interpretation of Provisions under Section 80-IA and Section 115JA(ii) The High Court analyzed the provisions of Section 115JA(ii) and Section 80-IA of the Income Tax Act, 1961. It emphasized that Section 115JA(ii) is a fictional provision for determining tax liability when no taxable income exists, while Section 80-IA grants tax exemption to companies involved in power generation. The Court highlighted that the provisions of Section 115JA(ii) must be strictly construed, and the term 'business' includes activities like manufacturing, not just commodity sales. The Court upheld the assessee's claim for deduction under Section 80-IA, rejecting the Revenue's contentions. Issue 3: Entitlement to Deduction under Section 80-IA The Court considered whether the assessee was entitled to claim deduction under Section 80-IA for income from power generation. It referenced the judgment in Civil Appeal No.3461/2010, Commissioner of Income Tax, Delhi Vs. M/s. DCM Shriram Consolidated Ltd., where the Supreme Court affirmed that setting up an independent industrial undertaking for power generation qualifies for Section 80-IA deduction. In line with this precedent, the Court dismissed the Revenue's appeal, confirming the assessee's entitlement to the deduction under Section 80-IA. Issue 4: Application of Precedent Judgment The High Court applied the judgment in Civil Appeal No.3461/2010 to the present case, emphasizing the requirement of treating power generation for captive use as eligible for Section 80-IA deduction. The Court concluded that the Tribunal rightly allowed the assessee's claim for deduction under Section 80-IA and upheld the decision even in the context of computing books of account under Section 115JA of the Income Tax Act, 1961. This detailed analysis of the judgment by the High Court of Rajasthan sheds light on the interpretation of key provisions of the Income Tax Act, the entitlement of the assessee to deductions, and the application of precedent judgments in resolving the issues at hand.
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