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2019 (12) TMI 658 - AT - Income TaxDeduction u/s 80IA - HELD THAT - There is no dispute at the end of Revenue as to the eligibility of assessee fulfilling the condition needed to claim deduction u/s. 80IA(4). We therefore respectfully following the judgment of Jurisdictional High Court in the case of Gujarat Alkalies and Chemicals Ltd. 2016 (10) TMI 1111 - GUJARAT HIGH COURT as well as the decision of the Tribunal in the case of assessee for A.Y. 2006-07 2007-08 are of the considered view that assessee has rightly computed the deduction u/s. 80IA(4) r.w.t 80IA(8) by calculating the market value of the power generated by the captive power plant by adopting the rates charged by the Gujarat Electricity Board to its customers. We accordingly set aside the findings of lower authorities and allow the respective grounds of appeal of assessee. MAT computation - not reducing the provision written back in the profit and loss account from the book profit under section 115JB - HELD THAT - A plain reading of the above provision reveals that the amount of provision written back shall be reduced from the book profit if the same has suffered the tax under MAT provision in the earlier years. Apparently, it appears that there is no ambiguity that the provisions pertaining to the assessment year 2002-03 and 2003-04 were not suffered to tax under the provisions of section 115 JB . However, the question arises where the assessee was subject to tax under normal computation of income even after giving the effect of such provision under MAT liability. In such a situation, we are of the view that it shall be deemed as if such provision has suffered to tax under MAT provision and the assessee shall get benefit in the year in which it is written back in the profit and loss account while determining the income under MAT provision of the Act. See M/S. GUJARAT INDUSTRIAL INVESTMENT CORP. LTD. AND VICE-VERSA. 2018 (9) TMI 1924 - ITAT AHMEDABAD - Impugned provision written back needs to be reduced from the book profit as claimed by the assessee. Accordingly we reverse the order of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.
Issues Involved:
1. Deduction under section 80-IA(4) for power generated for captive consumption. 2. Reduction of provision written back from book profit under section 115JB. Issue-Wise Detailed Analysis: 1. Deduction under section 80-IA(4) for power generated for captive consumption: The Revenue challenged the CIT(A)'s decision allowing the deduction under section 80-IA(4) of the Income Tax Act, which was disallowed by the Assessing Officer (AO). The AO had restricted the deduction based on the rate at which the Gujarat Electricity Board (GEB) purchases electricity from power generating units, rather than the rate charged by GEB to its customers. The Tribunal noted that this issue had already been decided in favor of the assessee in previous years (AY 2008-09 and 2009-10) where it was held that for calculating the profit eligible for deduction under section 80IA(4), the market value should be the rate at which the assessee purchased power from GEB. This was supported by various judgments, including CIT v/s. Godavari Power & Ispat Ltd., Shree Cement Ltd. v/s. ACIT, Pr. CIT v/s. Gujarat Alkalies & Chemicals Ltd., ACIT vs. Jindal Steel and Power Ltd., and Sri Velayudhaswamy Spinning Mills (P) Ltd. v. DCIT. The Tribunal emphasized that the term "market value" refers to the price that goods or services would ordinarily fetch in the open market, which, in this case, is the rate charged by GEB to its customers. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal. 2. Reduction of provision written back from book profit under section 115JB: The assessee appealed against the CIT(A)'s decision, which only partially allowed the reduction of the provision written back from the book profit under section 115JB. The assessee argued that the entire provision written back should be reduced from the book profit, as the tax was charged under normal computation of income in the earlier years (AY 2002-03 and 2003-04). The Tribunal referred to the provision of section 115JB, which allows the reduction of any amount withdrawn from reserves or provisions if such amounts were added to the book profit in earlier years. The Tribunal found that the provisions for AY 2002-03 and 2003-04 were not taxed under MAT but under normal computation, implying that the effect of such provisions had already been given under MAT. Supporting this view, the Tribunal cited the case of DCIT Vs. Gujarat Industrial Investment Corporation Ltd., where it was held that if the provision was added back under normal computation, it should be presumed to have been taxed under MAT. Therefore, the provision written back should be reduced from the book profit. The Tribunal reversed the CIT(A)'s decision and directed the AO to delete the addition, thus allowing the assessee's appeal. Conclusion: The Tribunal dismissed the Revenue's appeal regarding the deduction under section 80-IA(4) and allowed the assessee's appeal concerning the reduction of the provision written back from the book profit under section 115JB.
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