2020 (11) TMI 881 - AT - Income Tax

Deduction under sections 80I/ 80IA - whether Lean gas is manufactured/ produced only at the two LPG Plants at Vaghodia (Gujarat) and Vijaipur (MP) for the purpose of allowing deduction - HELD THAT - As decided in own case 2020 (11) TMI 871 - ITAT DELHI appellant is eligible to the deductions/tax holding u/s 80HH/80I and 80IA of the Act on lean gas at the stage of customer terminals.

Summary

Issues:
1. Eligibility of deduction under sections 80I/ 80IA of the Income-tax Act, 1961 for manufacturing lean gas at customer terminals.
2. Allowance of deduction under sections 80IA for lean gas production at LPG plants.
3. Treatment of horticulture expenses as revenue expenditure.
4. Allowance of investment allowance under section 32A.

Eligibility of Deduction for Lean Gas Manufacturing at Customer Terminals:
The primary issue in this case revolved around the eligibility of the assessee for deduction under sections 80I/ 80IA of the Income-tax Act, 1961 for manufacturing lean gas at customer terminals. The assessee contended that the activities undertaken at customer terminals constituted manufacturing or production of lean gas, making them eligible for the deduction. The CIT(A) had held that lean gas was only manufactured at specific LPG plants and not at customer terminals. However, the Tribunal noted that similar issues had been considered in the assessee's previous case for the assessment year 1997-98, where the Tribunal had allowed the deductions. Consequently, the Tribunal allowed the grounds raised by the assessee regarding the eligibility for deduction for lean gas manufacturing at customer terminals.

Allowance of Deduction for Lean Gas Production at LPG Plants:
The revenue's appeal focused on the allowance of deduction under section 80IA for lean gas production at the LPG plants. The revenue challenged the directions given by the CIT(A) to the Assessing Officer to grant the deduction under section 80IA for lean gas manufacturing at the LPG plants. The Tribunal observed that the issues raised by the revenue were similar to those in the assessment year 1997-98, where the Tribunal had dismissed similar grounds. As a result, the Tribunal dismissed the revenue's grounds related to the allowance of deduction for lean gas production at the LPG plants.

Treatment of Horticulture Expenses:
Another issue raised was the treatment of horticulture expenses as revenue expenditure. The CIT(A) had allowed the claim of horticulture expenses as revenue expenditure amounting to a specific sum. The revenue contested this allowance. The Tribunal found that this issue was similar to the one raised in the assessment year 1997-98, where the Tribunal had dismissed the grounds. Consequently, the Tribunal dismissed the revenue's grounds related to the treatment of horticulture expenses.

Allowance of Investment Allowance:
The final issue concerned the allowance of investment allowance under section 32A. The revenue objected to the direction given by the CIT(A) to allow the investment allowance under section 32A. The Tribunal noted that this issue mirrored the one raised in the assessment year 1997-98, where the Tribunal had dismissed similar grounds. Therefore, the Tribunal dismissed the revenue's grounds related to the allowance of investment allowance under section 32A.

In conclusion, the Tribunal dismissed the revenue's appeal and allowed the appeal filed by the assessee. The judgment was pronounced on 26th November 2020 by the ITAT Delhi.