9911796707
TMI Blog2016 (1) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee was not entitled to deduction u/s.80IA of the Act in respect of the profits relating to captive generation of power which could not be considered as profits "derived from" an identification industrial undertaking. He further submitted that the two power generating units in the assessee's manufacturing facility producing newsprint and writing paper was not a separate industrial undertaking. The expression 'undertaking' means a separate and distinct business or industrial activity and does not comprehend a small part of the manufacturing process. According to the ld. DR, the CIT(Appeals) failed to observe that these two power units formed part of the main manufacturing undertaking and had been treated as such for Central Excise purposes and therefore the assessee cannot claim deduction u/s.80IA on the said units. He also submitted that the CIT(Appeals) failed to take note in the assessee's case that there may be an increase in profits by way of cost reduction and such increase in profits could not be considered as profits 'derived from' an eligible industrial undertaking u/s.80-IA of the Act. Further, the ld. DR submitted that the SLP is pending before the Supreme Court ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, profits and gains derived by an undertaking of an assessee would be eligible for deduction subject to other sub-sections thereunder. There is no case for the Revenue that the turbo generator units were not situated in India. Definitely it was situated or set up in a part of Indian territory and just because it was placed within the main unit of the assessee producing paper, in our opinion, could not be cited as a reason for denying the claim to the assessee. Whether placed inside the premises or outside, the unit was producing electricity and taking a different view for production of electricity from inside of the premises and outside of the premises would not have any rational meaning nor would it be an intelligible differentiation. Even otherwise, Hon'ble jurisdictional High Court in the case of Tanfac Industries Ltd. (supra) had held that power produced using steam which was generated in the course of the main production activity of an assessee would still be eligible for claim of deduction under Section 80-IA of the Act. If we have a look at para 8 of the order of Hon'ble jurisdictional High Court in the case of Thiagarajar Mills Ltd. (supra) reproduced by us a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the other income could not be notionally carried forward and taken into consideration for the purpose of computation of deduction u/s.80IA stipulating that the said undertaking should be considered as only the source of income of the assessee for the purpose of determining the eligible profits and he submitted that SLP is pending before the Supreme Court against the High Court's order of TCA nos.39 & 40 of 2012 dated 13.03.2012 on this issue in the assessee's own case. 8. The ld. AR, relied on the judgment of the Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. v. ACIT (340 ITR 477) and the decision of the Tribunal in assessee's own case in ITA No.554/Mds/2011 dated 30th June, 2011 for the assessment year 2006-07. 9. We have heard both the sides and perused the material on record. Similar issue was considered in favour of the assessee by this Tribunal in assessee's own case for assessment year 2006-07 vide order dated 30.6.2011. Similarly in the case of Velayudhaswamy Spinning Mills (P) Ltd. v. ACIT(supra), the Jurisdictional High Court has held as under: "13. Sec.80-IA reads as follows: [(1) Where the gross total income of an assessee includes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made. From reading of sub-s (1), it is clear that it provides that where the gross total income of an assessee includes any profits and gains derived by an undertaking for an enterprise from any business referred to in sub-s(4) i.e. referred to as the eligible business, there shall, in accordance with and subject to the provisions of the section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to 100 percent of the profits and gains derived from such business for ten consecutive Assessment Years. Deduction is given to eligible business and the same is defined in sub-s (4). Subss (2) provides option to the assessee to choose 10 consecutive Assessment Years out of 15 years. Option has to be exercised. If it is not exercised, the assessee will not begetting the benefit. Fifteen years is outer limit and the same is beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve that the Supreme Court decision in the case of M/s. Liberty India (371 ITR 218) has held on a similar issue that profits from sale of duty drawback are not eligible for deduction u/s.80IA. By using the expression 'derived from', the intent of the Government is to cover sources not beyond the first degree. 12. On the other hand, the ld. AR, relied on the judgment of the Andhra Pradesh High Court in the case of CIT v. My Home Power Ltd. (365 ITR 82). 13. We have heard both the parties and perused the material on record. In our opinion, similar issue was decided by the Andhra Pradesh High Court in the case of CIT v. My Home Power Ltd. (supra), wherein it was held that income received from sale of carbon credit is considered as capital receipt and not business receipt and not liable for tax under the Act. Accordingly, we agree with the finding of the Commissioner of Income-tax(Appeals) on this ground and dismiss the ground of appeal taken by the Revenue. 14. Coming to the cross-objection, we find that there is a delay of 27 days. The assessee has filed an affidavit stating the reasons for delay. After going through the reasons stated in the affidavit, we are of the opinion that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
