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TMI Blog2015 (2) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... rence is called for in the order of the Commissioner of Income-tax (Appeals) on this issue because no case has been made out by the Assessing Officer for making addition in the present year. - Decided against revenue. Deduction under section 80-IA of the Act in respect of captive power consumption - CIT(A) allowed the deduction - as per AO assessee-firm was not set up for the generation or distribution of powers but the firm was formed specifically for constructing and running a commercial complex - Held that:- As per partnership deed the assessee-firm is authorised to carry on business of real estate and business of similar nature and/or other business as the partners may mutually decide and agree from time to time. In our considered opinion, the objects clause of the assessee-firm are so wide that it includes any sort of activity being carried on by the assessee as authorised by the said partnership firm and therefore, we do not find any merit in the first objection of the Assessing Officer that the assessee-firm was not set up for the generation of electricity. Higher profit shown for the purpose of claiming extra deduction under section 80-IA - Commissioner of Income- ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Decided in favour of assessee. - ITA Nos.342 & 343/LKW/2011, ITA Nos.563 & 564/LKW/2012 - - - Dated:- 7-8-2014 - SHRI SUNIL KUMAR YADAV AND SHRI A.K. GARODIA, JJ. For the Appellant : Shri Alok Mitra, D.R. For the Respondent : Shri Swaran Singh, F.C.A. ORDER All these four appeals are filed by the Revenue and the cross-objections are filed by the assessee. The appeals of the Revenue are for the assessment years 2006-07, 2007-08, 2008-09 and 2009-10 and the cross-objections of the assessee are for the assessment years 2006-07 and 2007-08. All these appeals and the cross-objections were heard together and are being disposed of by way of this common order for the sake of convenience. 2. First we take up the appeal of the Revenue for the assessment year 2006-07 i.e., I. T. A. No. 342/Lkw/2011. In this appeal, the Revenue has raised the following grounds : 1. That the learned Commissioner of Income-tax (Appeals)-II, Kanpur has erred in law and on facts in deleting the addition of ₹ 1,25,000 made by the Assessing Officer on account of parking charges without appreciating the fact that the assessee had been collecting parking charges dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05-06 in the assessee's own case and for the present year, he has followed his own order for the assessment year 2005-06 and deleted the addition. Now, the Revenue is in appeal before us. 5. The learned Departmental representative of the Revenue supported the assessment order whereas the learned authorised representative of the assessee supported the order of the Commissioner of Income-tax (Appeals). 6. We have considered the rival submissions. We find that in the assessment order, the Assessing Officer has noted regarding survey carried out on September 19, 2007 which means financial year 2007-08 relevant to the assessment year 2008-09. In the assessment order for the assessment year 2008-09, it is noted by the Assessing Officer in paragraph 4.1 that the assessee admitted that in the financial year 2008-09 relevant to the assessment year 200910, the contract for parking was given on annual payment of ₹ 1,50,000. In the assessment year 2009-10 also, no income was declared by the assessee and it was submitted that the assessee has adopted cash method of accounting in respect of this income and since no income was received within that year, it was not declared by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch permission has been brought on record by the assessee before the Commissioner of Income-tax (Appeals) or before the Tribunal. He strongly supported the assessment order. The learned Departmental representative of the Revenue also submitted that as per the Electricity Regulatory Act, any electricity generating company cannot have a profit of more than 16 per cent. of capital invested. He further submitted that in the present case, profit reported by the assessee on account of generation of electricity is much more than this limit of 16 per cent. and therefore, even if deduction is to be allowed to the assessee under section 80-IA of the Act, then for that purpose, profit in excess of 16 per cent. on capital invested should be ignored. At this juncture, the Bench directed the learned Departmental representative of the Revenue to submit copy of such Electricity Regulation Act highlighting the provision therein in this regard but the learned Departmental representative of the Revenue has not brought on record the copy of any such Act by highlighting such provision. 8. As against this, the learned authorised representative of the assessee supported the order of the Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper book and profit and loss account of other unit i.e., air conditioning unit is available on page No. 115 of the paper book. He further pointed out that the income shown in the profit and loss account of power generation and distribution undertaking of ₹ 80.74 lakhs on account of electricity transfer to air conditioning undertaking has been shown as expenses in the profit and loss account or air conditioning undertaking. Thereafter he drawn our attention to the Gazette of India dated February 12, 2005 with regard to National Electricity Policy as appearing on page Nos. 116 to 132 of the paper book and in particular our attention was drawn to paragraph 5.2.2 of this policy as appearing on page No. 120 of the paper book and it was pointed out that it is specified in this paragraph that there is no requirement of licence for generation of electricity. He also pointed that it is also specified that the requirement of techno-economic clearance of DEA for thermal generation project is no longer there. He also submitted that in accordance with this National Electricity Policy already notified in the Gazette of India on February 12, 2005, there is no requirement for any licence fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature and/or other business as the partners may mutually decide and agree from time to time. In our considered opinion, the objects clause of the assessee-firm are so wide that it includes any sort of activity being carried on by the assessee as authorised by the said partnership firm and therefore, we do not find any merit in the first objection of the Assessing Officer that the assessee-firm was not set up for the generation of electricity. As per a Tribunal decision cited by the learned authorised representative of the assessee, it was held by the Tribunal that it is not necessary that generation of electricity and distribution should be main object of the assessee. This Tribunal decision also supports our opinion. 9.2. Regarding the second objection of the Assessing Officer that the assessee firm has shown higher profit for the purpose of claiming extra deduction under section 80-IA of the Act, we find that the Commissioner of Income- tax (Appeals) has reproduced the detailed working regarding rate per unit of electricity along with the meter reading, etc., and a clear finding is given that rate per unit charged is same as that being charged from other tenants of the buildin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the capital invested as per the Electricity Regulatory Act, we find that no such copy of any Act by highlighting such provision has been brought on record by the learned Departmental representative of the Revenue and moreover, even if such restriction is there regarding profit of electricity generating company, then such restriction is on account of restricting the rate of electricity to be charged by electricity generating company to common public by holding that such electricity company should not earn higher profit. In the present case, as against supply of power to the tenants and captive power consumption of ₹ 130.83 lakhs, the assessee is showing profit of ₹ 17.54 lakhs whereas in respect of air conditioning undertaking against total receipt of ₹ 135 lakhs, the assessee is showing net profit of ₹ 27.68 lakhs and considering these facts, we are of the considered opinion that in the facts of the present case, the profit reported by the assessee in respect of power generation cannot be said to be excessive or unreasonable particularly when the same rate of power per unit is being charged by the assessee from tenants. The amount of capital invested has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order of the learned Commissioner of Income-tax (Appeals)-II, Kanpur dated March 14, 2011 needs to be quashed and the order passed by the Assessing Officer dated November 30, 2009 be restored. 5. That the appellant craves leave to modify any of the grounds of appeal mentioned above and/or to add any fresh grounds as and when it is required to do so. 13. In this year also, the disputes are same, i.e., regarding deleting the addition of ₹ 1.25 lakhs on account of parking charges and deleting the disallowance made by the Assessing Officer regarding deduction claimed by the assessee under section 80-IA of the Act in respect of power generation. Both sides agreed that both issues are identical to issues raised in the assessment year 2006-07 and hence, in this year also, both issues can be decided on the similar lines. In the assessment year 2006-07, these issues were decided by us in favour of the assessee. Accordingly, in the present year also, both these issues are decided in favour of the assessee in line with our decision in the assessment year 2006-07. 14. In the result, the appeal of the Revenue stands dismissed. 15. Now we take up the appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions. We find that it is noted by the Commissioner of Income-tax (Appeals) in paragraph 8.5.10 that the assessee has not shown any expenditure on account of security and general upkeep or notional rent payable on account of occupying space for installing the DG sets. This finding of the Commissioner of Income-tax (Appeals) could not be controverted by the learned authorised representative of the assessee. The Commissioner of Income-tax (Appeals) has considered an amount of ₹ 1.80 lakhs per annum as reasonable amount to cover all these expenses. In our considered opinion, this estimate of the Commissioner of Income-tax (Appeals) is reasonable and not excessive and these expenses have to be considered for computing correct income of power generating and distributing unit. We, therefore, do not find any reason to interfere in the order of the Commissioner of Income-tax (Appeals) on this issue. This cross-objection of the assessee is dismissed. 23. Now we take up the cross-objection filed by the assessee for the assessment year 2007-07, i.e., C.O. No. 24/Lkw/2011. In this cross-objection the assessee has raised the following grounds : 1. That the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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