2018 (10) TMI 1442 - AT - Income Tax

Deduction u/s 80IA computation - AO not being satisfied with the allocation made by the assessee after going through the assessee s record comparable cases, estimated the cost of consumption @ 55% of the total husk to the power generation plant and accordingly recomputed the deduction u/s 80IA - Held that - AO has not given the details of the initial assessment year in which the deduction u/s 80IA was claimed and the expiry of time limit for claiming the deduction in the assessment orders. As per the information available on record, the assessee had installed the power plant in the assessment year 2003-04 and started claiming the deduction u/s 80IA from the assessment year 2004-05. As per section 80IA, the assessee is entitled for deduction u/s 80IA for 10 consecutive years which expires in 2014-15, whereas the assessee claimed the deduction in 2015-16 also. Therefore, the AO is directed to verify and allow deduction u/s 80IA correctly for the period for which the assessee is entitled. With the above observation we dismiss the appeals of the revenue.

Summary

Issues:
Allocation of cost of husk consumption between rice mill unit and power generation plant. Validity of deduction claimed under section 80IA for assessment years 2012-13 to 2015-16.

Analysis:
The appeals were filed by the revenue against the order of the Commissioner of Income Tax(Appeals) related to the allocation of husk consumption cost between the rice mill unit and power generation plant. The Assessing Officer (AO) found discrepancies in the allocation made by the assessee and restricted the deduction under section 80IA for the assessment years 2012-13 to 2015-16. The assessee had claimed the deduction based on allocating 10% of the husk cost to the power plant and 90% to the rice mill. However, the AO estimated the cost of consumption at 55% for the power generation plant, leading to a different deduction amount.

The CIT(A) allowed the appeal of the assessee, citing a previous decision of the ITAT in the assessee's own case for the assessment years 2008-09 to 2009-10. The ITAT upheld the CIT(A)'s decision, emphasizing that the allocation of husk at 10% was reasonable and justified based on the cost of steam allocated between the power plant and the rice mill. The ITAT also referred to a similar decision for the assessment year 2011-12, where the appeal of the assessee was allowed.

Since the facts were identical to previous cases, the ITAT upheld the order of the CIT(A) and dismissed the appeals of the revenue. However, the ITAT directed the AO to verify and allow the deduction under section 80IA correctly for the period entitled to the assessee. The ITAT also allowed the cross objections filed by the assessee in support of the CIT(A)'s order.

In conclusion, the ITAT upheld the decision of the CIT(A) based on previous judgments and directed the AO to verify the deduction claimed under section 80IA correctly. The appeals of the revenue were dismissed, and the cross objections filed by the assessee were allowed.