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TMI Blog2014 (2) TMI 1186X X X X Extracts X X X X X X X X Extracts X X X X ..... le premises, under a separate license with manifold increase in capacity with new machinery and buildings without transfer of any portion of the old buildings or machinery which pre-existed. To constitute reconstruction, there must be transfer of assets of the existing business to the new industrial undertaking. In our opinion, generation of power unit is separate and distinct undertaking for which separate approval was obtained and recognised by the IREDA and it cannot be said that splitting of existing business structure. Therefore, in our considered opinion, the lower authorities are not correct in denying the deduction under section 80IA of the Act. - Decided in favour of assessee. Deduction u/s 80IA claimed by assessee on cost of steam sold to sugar unit - CIT(A) delted addition - Held that:- The issue in dispute is squarely covered by the decision of the ITAT in assessee’s own case for preceding AYs 2007-08 to 2009-10 [2012 (2) TMI 483 - ITAT HYDERABAD] lower authorities did not dispute that the profit credited to Profit and Loss Account in respect of steam is only ₹ 11.43 Lakhs. Thus, even assuming that steam is not power as held by the Assessing Officer, at best ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for power generation has been established by the assessee within the meaning of section 80IA of the IT Act. 3. Briefly, the facts relating to issue raised in this ground are that the assessee company is engaged in the business of manufacture of cement, sugar and in generation of power. The assessee company has a sugar manufacturing unit along with a co-generation plant in Khammam District of AP. It also has a cement factory in Krishna District of the same state. During the year, the assessee disclosed the turnover of the power division at ₹ 25,91,65,000/-. This turnover included sale of electricity to sugar division amounting to ₹ 146.14 lakhs, sale of electricity to cement division amounting to ₹ 770.04 lakhs, sale of electricity to APTRANSCO at ₹ 398 lakhs and sale of steam to sugar division at ₹ 287.54 lakhs. The assessee generates electricity using bagasse as fuel, which is the residue obtained upon crushing of sugarcane. The Assessing Officer stated that as and when required coal is also used as a fuel. 3.1. The Assessing Officer held that the assessee was not eligible for deduction u/s 80IA of the IT Act. It was stated that the new unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle as laid down by the Apex Court, in the case of Textile Machinery Corporation Ltd., Vs. CIT [supra], directly and squarely applies to the facts of the case. In the instant case, the true test is not whether the new industrial undertaking connotes expansion of the existing business of the assessee but whether it is all the same a new an identifiable undertaking separate and distinct from the existing business of the assessee but whether it is all the same a new and identifiable undertaking separate and distinct from the existing business. The lower authorities agrees that from 2002-03, a new co-generation plant was put up and also they agrees that installation of sophisticated and high capacity machinery to produce steam and electricity has taken place in the place of existing old technology. Thus, they impliedly agree that the new machinery and plant have been installed under separate licence and premises. Even though the decision of Textile machinery [supra] was concerned with the clause dealing with reconstruction of existing business but the expression 'not formed' was construed to mean that the undertaking should not be a continuation of the old but emergen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities are not correct in denying the deduction under section 80IA of the Act. Hence, we decide this issue in favour of the assessee company and against the Revenue. 3. Respectfully following the above order of the Tribunal, we are inclined to confirm the order of the CIT(A) on this issue. This ground by the Revenue is dismissed. 9. Since the issue in dispute is materially identical to that of AY 2007-08 and 2008-09, respectfully following the decision of the coordinate bench in those years, we uphold the order of the CIT(A) on this issue and dismiss ground Nos. 1 2 raised by the revenue. 10. Ground No. 3 is as follows: Whether on the facts and circumstances of the case, the CIT(A) is justified in deleting the addition of ₹ 2,87,54,037/- by ignoring the artificial nature of the assessee s claim of sale of steam by Power Division to Sugar Division. 11. The Assessing Officer held that steam is not a power as envisaged in the section 80IA. Secondly it is only a bye-product which cannot be said to be income from the business of power generation. Since no value has been ascribed to it by APERC in tariff fixation, its value has to be taken as nil. Similarly sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee company is eligible for deduction under section 80IA of the Act. For this proposition, we place reliance on the order of the Tribunal in the case of DCW Ltd.vs. Addl. CIT, ITA No. 126/Mum/2008, AY 2003-04 dated 29th January, 2010 reported in 42 DTR (Mumbai) (Trib.) 369 at page 383 para 18.8 which reads as under: 18.8 the next item of miscellaneous income is the income from sale of steam produced by the assessee. Briefly the facts and nature of steam are that the captive power undertaking also has waste heat recovery boiler, which is part of the power undertaking. The power generated by the running of diesel generating set is used in the manufacture of caustic soda. Runniong of diesel generating sets produce heat, which is recovered from the waste heat recovery boiler in the form of steam. During the year ended March, 2002, the total quantity of steam generated is 1,02,295 MT. The said steam is used as power for the manufacture of PVC and limenite and 6,240 MT was used towards internal consumption. Durng the year 66,900 MT of steam was consumed in the manufacture of PVC and 29,065 MT was consumed in the manufacture of limenite. 18.9 The submission of the learned Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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