9911796707
TMI Blog2011 (5) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 - Boiler 5 - TNPL Main Site 3. Assessee was put on notice by the A.O. that power generated for captive consumption would not be eligible for claiming deduction under Section 80-IA of the Act. Reply of the assessee was that though the power was used for captive consumption, it was actually a generation of power through separate units and there was no bar in the statute from power being used for self consumption, for claim of deduction under Section 80-IA of the Act. However, the A.O., relying on the decision of co-ordinate Bench of this Tribunal in the case of Prasad Production (P) Ltd. v. DCIT (98 ITD 212) held that profit arising on account of power used for captive consumption would not be eligible for calculating deduction under Section 80-IA of the Act. The A.O. also found that assessee was having unabsorbed depreciation/losses in respect of the units manufacturing power for earlier years which was notionally required to be brought forward and set off before computing relief under Section 80-IA of the Act. 4. In its appeals before the CIT(Appeals), argument of the assessee that notional depreciation of earlier years could not be considered for set off before working out el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-IA of the Act could not be granted to the assessee in respect of its TG-3 Boiler 4 and TG-4 Boiler 5 units producing electricity for captive consumption. Nevertheless it seems that the assessee was allowed such deduction on power produced from its wind farm units used for captive consumption. 5. Now before us, the learned A.R. assailing the order of the CIT(Appeals), submitted that there was no requirement under the enactment for an assessee to prove existence of separate industrial undertaking in respect of each of the units producing power for captive consumption. According to him, undisputedly TG-3 Boiler 4 and TG-4 Boiler 5 units were two different power generation plant and the ld. CIT(Appeals) fell in error in viewing power generated through wind farms and power generated through turbo generators separately. According to him, the mode of generation was irrelevant since the product which was generated was electricity and for such generation, independent units were there. Just because TG-3 Boiler 4 and TG-4 Boiler 5 units were placed in the same premises from where the manufacture of paper was being done, would not make the electricity generated therefrom ineligible for clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per learned D.R., though the assessee's claim that captive consumption would not make it ineligible for claiming deduction under Section 80-IA of the Act might be true, it still had to establish that there were separate undertakings for such generation. Again as per learned D.R., in so far as wind farms are concerned, there was no dispute in this regard since these were separate unit disparately located, but in so far as the TG-3 Boiler 4 and TG-4 Boiler 5 units were concerned, these were only a part of its main undertaking manufacturing paper. 7. We have perused the orders and heard the rival contentions. In so far as power produced from wind farm units are concerned, captively consumed by the assessee, there is no dispute regarding eligibility for claiming deduction under Section 80-IA of the Act. In fact, ld. CIT(Appeals) has allowed the claim of the assessee in this regard. Though this Tribunal had taken a view against such claim of deduction under Section 80-IA being allowed in the case of Chettinad Cement Corporation Ltd. v. ACIT (I.T.A. No. 1029/Mds/05 dated 5.1.2007), in our opinion, this decision has now become irrelevant in view of the decision of Hon'ble jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er inasmuch as the assessee is able to save to that extent which would certainly be covered by Sec.80IA(1). When such will be the outcome of own consumption of the power generated and gained by the assessee by the assessee by setting up its own power plant, we do not find any lack of merit in the claim of the respondent/assessee when it claimed by relying upon Sec. 80IA(1) of the Act by way of deduction of the value of such units of power consumed by its own plant by way of profit and gains for the relevant assessment years." 8. The issue here therefore boils down to whether power produced from TG-3 Boiler 4 and TG-4 Boiler 5 units were also eligible for deduction under Section 80-IA of the Act, on par with the wind farms. Contention of the Revenue is that these two units were an integral part of the main industrial undertaking of the assessee producing paper. A.O. himself at Sl.No.10 of the facing sheet of the assessment order has mentioned the nature of business of the assessee as manufacture and sale of newsprint, paper and generation of electricity. There is no dispute that TG-3 Boiler 4 and TG-4 Boiler 5 were turbo generators. There is also no dispute that such turbo units we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mills Ltd. (supra) reproduced by us at para 7 above, their Lordship has held that an assessee should have set up an undertaking or an enterprise and from and out of which electricity should have been generated whether for captive use or otherwise for being eligible for 80-IA deduction. No doubt, here, it is not coming out of the orders of the authorities below whether the turbo generators where powered by diesel or powered by steam or powered by any other bye-products produced by the assessee in the course of its main activity of producing paper. But, nevertheless this would not by itself be sufficient to hold that the turbo generators were not an undertaking by itself eligible for claiming deduction under Section 80-IA of the Act in respect of power generated therefrom used for captive consumption. Especially so, since steam based generating units, where steam was only an incidental output of main manufacturing activity, was held by the Hon'ble jurisdictional High Court in the case of Tanfac Industries Ltd. (supra) to be eligible for 80-IA deduction in respect of power generated and captively used. We are therefore of the opinion that the assessee is bound to succeed in these ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
