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2017 (1) TMI 314 - AT - Income TaxDeduction u/s.80JJA - whether baggase/husk is not a waste but is a by-product of agriproduce processing industry which was purchased and not collected & processed or treated by the assessee, which is a pre-requisite for claiming deduction u/s.80JJA? - Held that - As decided in assessee s own case the word collecting means to gather; to fetch. It is a neutral word and does not mean collection for consideration or collection without consideration. It is an admitted/undisputed position that the respondent assessee has collected bagasse from sugar factories after having made payment for the same. Therefore, the aforesaid requirement of collecting as provided under Section 80JJA of the Act is satisfied. It is a undisputed finding of fact that the collected bagasse has been used by the respondent assessee to make briquettes for fuel as that indeed is the business of the respondent-assessee. The reliance upon the circular No.772 dated 23/12/1998 by the appellant is misplaced. The aforesaid Circular does not restrict its benefits only to local bodies. In any event the circular cannot override the clear words of Section 80JJA of the Act which provides deduction in respect of profits and gains derived from the business of collecting and processing/treating of biodegradable waste i.e. bagasse into briquettes for fuel. - Decided in favour of assessee Claim of depreciation on windmills - assessee was not a registered owner of the windmills and it was purchasing electricity from Nav Maharashtra Chakan Oil Mills Ltd. (NMCOML), thus having no title/dominion and right to use the asset - Held that - We find the Ld.CIT(A) following his order for A.Y. 2008-09 & 2009-10 allowed the claim of depreciation. We find the Tribunal in assessee s own case upheld the order of the CIT(A) for A.Y. 2008-09 and 2009-10 and dismissed the appeal filed by the Revenue wherein held The very concept of depreciation suggest that the tax benefit on account of depreciation legitimately belongs to one who has invested in the capital asset, is utilizing the capital asset and thereby losing gradually investment caused by wear and tear, and would need to replace the same by having lost Its value over a period of time. It is well settled that there cannot be two owners of the property simultaneously and in the same sense of the term. The intention of the legislature in enacting section 32 would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time being vests the dominion over the building and who is entitled to use it in his own right ad is using the same for his business or profession. Assigning any different meaning would not sub-serve the legislative intent. In CIT Vs National Cooperative Consumers Federation Ltd. (2000 (9) TMI 15 - DELHI High Court ), the Delhi High Court followed its Full Bench decision in Gowersons Publishers (P) Ltd. Vs CIT (1999 (8) TMI 39 - DELHI High Court ) and held that the assessee was entitled to depreciation allowance in respect of godown-cum-showroom purchased but, not registered in its name.- Decided in favour of assessee Disallowance on account of Employees contribution to Provident Fund and ESIC and Labour Welfare Fund - assessee had made contributions in the respective funds after the due date as specified under the provisions of relevant Acts - Held that - Although the contribution to the above funds were made after due date as specified under the relevant Acts, but before the due date of filing of return of income under the Income Tax Act. This fact has not been disputed by the Department. The Hon ble Supreme Court of India in the case of Commissioner of Income Tax Vs. Alom Extrusions Ltd. (2009 (11) TMI 27 - SUPREME COURT ) has held that the contributions made after due date as prescribed under the Provident Fund Act but before the due date of filing of return of income, the assessee is eligible to claim deduction thereof. - Decided in favour of assessee Deduction u/s.80IA(4) on windmill - Held that - We are of the considered view that this issue needs a revisit to the file of Assessing Officer. The Assessing Officer shall re-examine the claim of assessee in respect of deduction u/s. 80IA(4) in the light of decision of Pune Bench of the Tribunal in the case of Serum International Ltd. Vs. Addl. CIT (2013 (1) TMI 688 - ITAT PUNE ).
Issues Involved:
1. Deduction under Section 80JJA of the Income Tax Act. 2. Depreciation on windmills. 3. Deduction under Section 80IA(4) of the Income Tax Act. 4. Disallowance of Employee's contribution to Provident Fund (PF), Employees State Insurance Corporation (ESIC), and Maharashtra Labour Welfare Fund. Issue-wise Detailed Analysis: 1. Deduction under Section 80JJA: The Revenue challenged the CIT(A)'s decision to allow the deduction under Section 80JJA, arguing that bagasse/husk is a by-product, not a waste, and was purchased rather than collected. The Assessing Officer (AO) disallowed the deduction, stating the conditions under Section 80JJA were not met, as the materials were not waste, not generated in municipal limits, not causing disposal issues, and not collected but purchased. The CIT(A) allowed the deduction, referencing previous decisions, including the Tribunal's decision in the case of DCIT Vs. Padma S. Bora, which was upheld by the Bombay High Court. The Tribunal noted that bagasse is considered biodegradable waste and that collection can be for consideration. The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision. 2. Depreciation on Windmills: The Revenue contested the CIT(A)'s decision to allow depreciation on windmills, arguing the assessee was not the registered owner and that the transaction was a sham to avail depreciation benefits. The AO disallowed the depreciation, citing the windmills were not registered in the assessee's name and the electricity generated was purchased through book entries. The CIT(A) allowed the depreciation, stating the assessee had beneficial ownership and used the windmills for its business. The Tribunal upheld the CIT(A)'s decision, referencing previous Tribunal decisions and judicial precedents that recognized beneficial ownership for depreciation purposes. 3. Deduction under Section 80IA(4): The AO disallowed the deduction under Section 80IA(4), arguing the sales tax benefit included in the profit calculation was not derived from the industrial undertaking. The CIT(A) allowed the deduction, noting no sales tax benefit was sold during the year under consideration. The Tribunal restored the issue to the AO to re-examine the claim in light of previous Tribunal decisions, specifically the case of Serum International Ltd. Vs. Addl. CIT, directing the AO to provide an opportunity for the assessee to be heard. 4. Disallowance of Employee's Contribution to PF, ESIC, and Labour Welfare Fund: The AO disallowed the contributions, stating they were not deposited before the due dates under the relevant Acts. The CIT(A) upheld the disallowance. The assessee argued the contributions were made before the due date of filing the return, referencing the Bombay High Court decision in Ghatge Patil Transports Ltd. The Tribunal allowed the assessee's appeal, noting the payments were made before the due date of filing the return, in line with the Bombay High Court's decision. Conclusion: The Tribunal upheld the CIT(A)'s decisions on the issues of Section 80JJA deduction and depreciation on windmills, dismissed the Revenue's appeals, and restored the Section 80IA(4) issue to the AO for re-examination. The Tribunal also allowed the assessee's appeal regarding the disallowance of employee contributions to PF, ESIC, and Labour Welfare Fund.
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