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2018 (5) TMI 796 - AT - Income TaxDeduction u/s 80IA - on steam unit of CCGPS Plant by considering it as separate industrial undertaking or enterprise - Held that - The course adopted by the Assessing Officer for shifting a portion of expenses incurred by gas unit to the steam unit was not permissible in law and, therefore, cannot be approved. Consequently, the order of the CIT(A) confirming the above action of the Assessing Officer is set aside and the Assessing Officer is directed to allow deductions under sections 80-I and 80-IA without allocating any expenditure of gas unit to steam unit. Revenue entitled to ask for revival of the appeal - Approval from Committee on Disputes COD - Addition on account of incentives paid to various State Electricity Boards (SEBs) under the terms of one time settlement scheme on account of income tax recoverable from SEBs and provision of deferred tax - Held that - In the present case, it is not in dispute that the COD vide minutes dated 21.12.2009 has not permitted the CBDT to pursue the issues raised in Ground Nos. 2, 4 & 5, of the appeal before the ITAT. It is also clear from the office memorandum dated 04.02.2013 that no public sector undertakings may reopen those cases in which clear decisions have been issued by the COD prior to 17.02.2011. Therefore, the department ought not to have filed the appeal on these issues. Dismiss these grounds of the appeal of the department with the rider that the revenue will be entitled to ask for revival of the appeal on the happening of the events as directed by the Hon ble Jurisdictional High Court in CIT-V Vs Rural Electrification Corp. Ltd. 2014 (1) TMI 1238 - DELHI HIGH COURT - Decided against revenue
Issues Involved:
1. Deduction under Section 80IA of the Income Tax Act for the steam unit of CCGPS Plant. 2. Incentives paid to various State Electricity Boards (SEBs) under the One Time Settlement Scheme. 3. Disallowance of expenditure under Section 14A of the Income Tax Act incurred to earn exempt income. 4. Addition on account of income tax recoverable from SEBs. 5. Addition on account of provision of deferred tax. Detailed Analysis: 1. Deduction under Section 80IA: The primary issue was whether the steam unit of the CCGPS Plant qualifies as a separate industrial undertaking for the purpose of deduction under Section 80IA of the Income Tax Act. The Tribunal noted that this issue had already been adjudicated in favor of the assessee in previous assessment years (1998-99 and 1999-2000). The Tribunal held that the profits of each unit must be determined independently, and no notional expenditure should be allocated to the steam unit since it did not incur any expenditure for acquiring hot gas. Consequently, the Tribunal directed the Assessing Officer to allow deductions without allocating any expenditure of the gas unit to the steam unit. 2. Incentives Paid to SEBs: The department contested the deletion of the addition of ?2131.1 crores paid to various SEBs under the One Time Settlement Scheme. The Tribunal observed that the Committee on Disputes (COD) had not permitted the CBDT to pursue these issues, and as per the Office Memorandum dated 04.02.2013, no public sector undertakings may reopen cases where clear decisions have been issued by the COD prior to 17.02.2011. Therefore, the Tribunal dismissed this ground of appeal, noting that the department should not have filed the appeal on these issues. 3. Disallowance under Section 14A: The department challenged the deletion of ?171.2 crores disallowed under Section 14A of the Income Tax Act. The Tribunal referred to its previous decision in the case of DCIT vs. Power Grid Corporation of India Ltd., where it was held that disallowance under Section 14A requires a finding of incurring expenditure. Since no expenditure was incurred by the assessee for earning tax-free income, the Tribunal upheld the deletion of the disallowance. 4. Income Tax Recoverable from SEBs: The department disputed the deletion of the addition of ?239.33 crores on account of income tax recoverable from SEBs. The Tribunal reiterated that the COD had not permitted the CBDT to pursue this issue, and as per the Office Memorandum dated 04.02.2013, the department should not have reopened the case. Therefore, this ground of appeal was also dismissed. 5. Provision of Deferred Tax: The department contested the deletion of the addition of ?790.10 crores on account of the provision of deferred tax. The Tribunal noted that the COD had not given clearance to pursue this issue, and as per the Office Memorandum dated 04.02.2013, the department should not have reopened the case. Consequently, this ground of appeal was dismissed. Conclusion: The Tribunal dismissed the department's appeal in its entirety, upholding the CIT(A)'s order on all contested grounds. The Tribunal emphasized the importance of adhering to the COD's decisions and the Office Memorandum, which restricts reopening cases where the COD had previously issued clear decisions.
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