2008 (6) TMI 255 - AT - Income Tax

Deduction u/s 80-IA(4) - Generation of Power - ''Steam'' generated by the industrial undertaking - 'generate ' - HELD THAT -We concur with the view of the ld AR that there is little room for any doubt that scientifically or in general parlance, ' production of steam' and 'generation of steam' or for that matter , 'production of electricity' and 'generation of electricity', shall have the same meaning whichever of the two be the item under consideration. Definition of word ' generate' u/s. 2(29) of the Electricity Act, 2003 as per which 'generate' means to produce electricity from a generating station for the purpose of giving supply to its any premises or enabling a supplier to be so given. The 'power' and 'energy' are synonymous, which can be in several types and forms, be it heat, which is steam or mechanical or electrical, wind or be it thermal. As per the Cambridge International Dictionary of English, the steam is the hot gas that is produced when water boils; steam can be used to provide power, steam turbines of a steam engine/locomotive of the age of steam. Thus there is no doubt, like electricity, steam is also a form of power. The arguments advanced on behalf of the assessee also find support from the decision of Delhi Bench of the Tribunal in the case of Sial SBEC Bioenergy Ltd. vs. Dy. CIT 2004 (3) TMI 342 - ITAT DELHI-C on an identical issue wherein dealing with the matter in detail, it has been held that the word 'power' has to be given a meaning which is in common parlance and in common parlance the word 'power' shall mean the energy only. Therefore, we fully concur with the decision on the issue arrived at by learned CIT(A) that assessee is in the business of generation of power and that the steam so generated by the industrial undertaking and receipt from the business of industrial undertaking is within the meaning of s. 80-IA which would qualify for this benefit. The first appellate order is thus upheld. The ground is thus rejected. In the result, appeals are dismissed.

Summary

Issues:
Impugned first appellate order directing AO to allow deduction under s. 80-IA(4)(iv) on steam generated by power generating undertaking.

Analysis:
The Revenue contested the deduction under s. 80-IA(4)(v) based on the argument that relief under these provisions is only for electricity generation or generation and distribution, not steam production. However, the Appellant argued that the terms "generation" and "production" are synonymous, applying to both electricity and steam. The Appellant emphasized that the legislative intent was to provide benefits for various forms of power generation, not limited to electricity alone. The Appellant supported their stance with references to various legal precedents and definitions of power and energy.

The Tribunal agreed with the Appellant's interpretation, noting that steam is also a form of power and qualifies for benefits under s. 80-IA(4)(iv). The Tribunal emphasized that the legislative provisions cover different types of power generation undertakings, including those engaged in generation and distribution of power. The Tribunal rejected the Revenue's argument that the benefits were exclusive to electricity generation, highlighting that the term "power" encompasses various forms of energy, including steam. The Tribunal upheld the first appellate order, concluding that the Appellant's steam generation activities fell within the scope of s. 80-IA.

In light of the comprehensive arguments presented by both parties and the legal precedents cited, the Tribunal dismissed the appeals, affirming the first appellate order's decision to allow the deduction under s. 80-IA(4)(iv) for steam generated by the power generating undertaking.