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TMI Blog2015 (3) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding the determination of ratio of CPP stands merged with the order of the Tribunal. The AO has mainly followed the direction of the Tribunal and allowed the deduction as per the profit determined. Such a variation of deduction u/s 80- I, now cannot be disturbed by examining the claim of deduction of expenses denovo as held by him. The ratio of asset of gross block of fixed assets has been worked out in the manner, which has been determined and upheld in the earlier years. The same now cannot be disturbed on an entirely different footing specially when the AO has simply carried out the computation to allow the deduction u/s 80-I as per the order of the Tribunal. Such an observation of the CIT with regard to the adjustment of expenses is neither borne out from the original assessment order nor from the first appellate order. If at all, some mistake has occurred on the ratio of determination of profit, then the same would relate to the original assessment order dated 30.11.2000 and not in the second order. Such an order, now cannot be revised u/s 263, as it is clearly barred by limitation. - Decided in favour of assessee. - ITA No.492/Coch/2007, ITA No.493/Coch/2007 - - - Dated: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of its case and the law prevailing on the subject the impugned Order passed by the Commissioner of Incometax u/s 263 of the Income-tax Act, 1961 is time barred and hence ought to be struck down as bad-in-law and void ab-initio. 1.3 The Appellant submits that the impugned Order passed by the Commissioner of Income-tax u/s 263 of the Income-tax Act, 1961 should be struck down. 3. The brief facts of the case are that, the assessee is a Public Sector Undertaking, engaged in the business of Refining of Crude Oil to produce various Petroleum Products. The company has filed its return of income for the assessment year 1997-98 on 28.11.1997 at an income of ₹ 34,10,92,480. The said return of income was revised on 31.03.1999, disclosing taxable income as per section 115JA at ₹ 32,67,85,616. The business income was shown at ₹ 34,85,46,038. From the said income, the assessee had claimed deduction u/s 80-I on Aromatic Unit at ₹ 3,82,39,669 and deduction u/s 80-IA on Capacity Expansion Project (CEP). This also included claim of deduction for Captive Power Plant (CPP) at ₹ 3,43,11,242. In the assessment order passed u/s 143(3), vide order dated 23.03.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,36,941 (7) Disallowance of provisions for gratuity debited. ₹ 5,07,423 Rs.175,81,62,082 Balance business income ₹ 13,55,34,455 Income from other sources ₹ 3,17,93,062 Gross total income ₹ 16,73,27,517 Less : Deduction under Chapter VI-A (1) Deduction u/s 80G Rs.10,17,500 (2) Deduction u/s.80-IA in respect of CEP Business income Rs.13,55,34,455 Ratio -0.3611 Income relating to CEP ₹ 4,89,41,492 30% thereof ₹ 1,46,82,497 (3) Deduction u/s 80-I on Aromatic unit Rs.3,82,39,669 ₹ 5,39,39,616 Revised Total income Rs.11,33,87,900 4. From the above, it is seen that so far as the deduction u/s 80-I on Aromatic unit, there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving effect to Tribunal order. The variation in the claim of deduction u/s 80-IA has occurred due to enhancement of business income at various stages. If at all, the claim of deduction can be said to be erroneous, then the same should reckoned or said to have arisen in the original assessment order dated 23.03.2000. He submitted that, there is another angle in claim of deduction u/s 80-IA, that, the assessee has also made a claim for deduction u/s 80-IA with regard to Captive Power Plant (CPP), which was included in the Capital Expansion Project (CEP). In the original assessment order, the AO has specifically disallowed the claim of deduction u/s 80-IA with regard to CPP. This claim for deduction has ultimately been allowed by the Tribunal following the earlier year Tribunal orders, wherein deduction u/s 80-IA on CPP has been allowed. Once the issue of section 80-IA has been touched upon by the Tribunal, then the entire order of the AO merges with the order of the Tribunal. The CIT now in revisionary jurisdiction u/s 263, cannot touch upon the computation of deduction u/s 80-IA at all. This proposition is covered by the decision of the Hon ble Supreme Court in the case of CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, because the time limit to initiate action u/s 263 in this case would begin from the date of completing of the original assessment order, i.e. 23.03.2000 and not the order giving effect to the Tribunal order. The reason being that, the later order had nothing to do with the computation of income or disallowing or allowing of claim of deduction under Chapter VI-A. From the facts as discussed above, it is seen that the deduction under Chapter VIA and more specifically deduction u/s 80- IA with regard to CEP unit have been varied right from the stage of filing of revised return to the stage of ITAT order, due to enhancement and reduction of the gross total income. In the original assessment order, the AO has determined the gross total income and deductions under Chapter VI-A in the following manner:- Gross Total Income: (1) Business Rs.1,92,84,13,774 (2) Other Sources ₹ 3,17,93,062 Total Income Rs.1,96,02,06,836 Less : Deduction u/s 80G as per claim ₹ 10,17,500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate authority. Here in this case, the assessee s claim for deduction u/s 80-I with regard to CPP unit, which was disallowed by the AO, has been finally allowed by the Tribunal. Now the AO has to compute the deduction u/s 80-I of such units. It has been admitted that the CPP is a part of CEP and the deduction u/s 80-I is included in the overall claim of deduction of CEP unit. Therefore, the AO has to determine the deduction u/s 80-I and such a deduction has to be in accordance with the provisions of section 80A(2) read with sections 80AB and 80B(5). Accordingly, we affirm the order of the learned CIT. 8.2 Now coming to the argument of the learned Counsel, Shri Girish Dave, that the impugned proceedings u/s 263 is barred by limitation and the case of the assessee is covered by the decision of the Hon ble Supreme Court in the case of CIT v. Alagendran Finance Limited (supra), we find that first of all, the learned CIT has not transgressed upon the issue of determination of either the profit of eligible unit nor the allowability of deduction u/s 80-I / 80- IA. He has simply required the AO to compute the deduction in accordance with Chapter VI-A. He has not touched upon any part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has allowed the similar deduction. Accordingly, the AO was directed to grant the benefit in accordance with the law. In the order giving effect to the ITAT order, the AO has computed the income in the following manner:- Business income as per order Dated 8-3-2002 before deduction under Chapter VI-A Rs.138,35,63,753 Less : Reduction by ITAT: (1) Disallowance of capital expenditure on current repairs allowed as revenue expenditure. ₹ 91,06,235 (2) Expenditure on feasibility studies allowed as revenue expenditure. ₹ 4,83,500 (3) Receipts for Oil co-ordination committee excluded. ₹ 47,86,03,000 (4) Addl. Depreciation on Piping, Heat Exchanger etc. ₹ 2,04,59,587 (5) Disallowance of projects consultancy/technical assistance fee deleted. ₹ 1,37,33,625 (6) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.6122 Taxable income of CPP ₹ 14,01,99,816 30% thereof ₹ 4,20,59,945 ₹ 31,16,38,585 Revised Total income Rs.223,46,20,640 10. Thus, the profit of CPP was arrived at ₹ 14,01,99,816 and deduction u/s 80-I at ₹ 4,20,59,945. The aforesaid order of the AO dated 01.03.2005 giving effect to the ITAT order, is the subject matter of revision u/s 263 by the CIT. The case of the CIT is that, major part of the assessee s claim for depreciation on assets installed in CPP has been allowed by the Tribunal for this year as well as for the earlier years. As a result, the computation of profit in the ratio of asset is not a correct method. The profit derived from the generation of power in CPP can, therefore be found out by deducting the expenses incurred in relation to CPP unit, which can be following:- (i) Depreciation on all assets including depreciation on assets claimed at 100%. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 24. The tenth ground raised by the assessee-company is that the CIT(A) has erred in confirming the disallowance of deduction available u/s 80I in respect of the Captive Power Plant. This ground is allowed, in view of the decision taken by the Tribunal in assessee s appeals for the earlier assessment years 1996-97 and 1997-98. The Assessing Officer is directed to grant the benefit in accordance with law. 14. Thus, the claim of deduction u/s 80-I in respect of CPP stood allowed. Now in the impugned order u/s 263, the learned CIT had observed that, firstly, the Tribunal has not accepted the computation of deduction u/s 80-I on the profits of CPP and has mainly directed to allow the deduction u/s 80- IA in accordance with law. How the computation of profit of CPP has to be worked out, has been discussed by him in detail. In our opinion, such an observation and the finding of the CIT is not tenable in law and on facts, because the assessee s claim for deduction u/s 80-I on CPP has been specifically allowed by the Tribunal and secondly, the ratio and method of determination of profit of CPP unit has already been decided in the earlier years and it was also not a subject matter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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