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TMI Blog2012 (8) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... in the circumstances of the case of the CIT (A) erred in law in applying the decision of M/s Topman Exports to which only the excess of sale proceeds of DEPB license over the face value is covered by 28(iii)(e) when the said decision has been reversed by the Hon'ble Bombay High Court in CIT vs. Kalpataru Colours Chemicals Ltd . 3. Briefly stated, assessee was accounting export benefits on cash basis till assessment year 1999-2000. From assessment year 2000-01 onwards they have switched over to accrual basis. The matter was contested before the ITAT in earlier years and the ITAT in its order for assessment year 2000-01 recognized the change of method which was as per the expert committee of the ICAI and to comply with the change in the provisions of section 145 which mandates that assessee has to follow the mercantile system of accounting. AO in the course of the assessment however, has made addition on the basis of receipt which the CIT (A) has deleted. Even though the issue is whether the income is to be assessed on receipt basis or accrual basis, the Revenue has raised the ground on the reason that the decision of Topman Exports has been reversed by the Hon'ble B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of turnover of 10-B Units. 7. AO in these assessment years included the amounts received as part of sale of scraps, packing material/raw material as part of turnover. The CIT (A) upheld the above action of AO. It was fairly admitted that this issue was considered by the Coordinated Bench in assessee s own case in assessment year 2004-05 in ITA No.3245/Mum/2007 and held in favour of assessee. The order of the ITAT is as under: 12. We have considered the rival submissions. It is not the business of the assessee to deal in bardana. The details of the sale of bardana are given at page 35-37 of the assessee's paper book. The decision in the case of CIT Vs. Ashok Leyland Ltd., 297 ITR 107 (Mad); in which it was held that scrap sale would not be included in total turnover for the purpose of allowing deduction u/s. 80HHC supports the plea of the assessee. The concept of turnover would be appropriate only in respect of goods purchased and sold by an assessee in the course of carrying on business. The decision of the ITAT Chandigarh Bench in the case of ITO Vs. Jagraon Exports, 124 Taxman (Chd) page 220 clearly supports the stand of the assessee that sale of scrap will go to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has been claiming S.10B exemption on the entire profits right from A.Y 2002-03. 4. The Genset was also imported for S.10B Unit without paying customs duty as per the benefits available to the S.10B Units. 5. The said Genset always formed part of the 10B Unit. 6. There was no separate Profit Loss A/c drawn for this Genset. During the current assessment proceedings assessee has made a claim for the first time that the Gas Based Genset is nothing but captive power plant and eligible for deductions under section 80IA. He has also submitted the auditors certificate under section 80IA wherein they have computed the income from the so called captive power plant to be Rs. 33,65,304/-. The AR has also submitted that the so called CPP is an independent undertaking generating power right from the previous year relevant to A.Y 2003-04. When asked why this was not so claimed during the A.Y 2003-04 the AR has replied that the deduction of income from CPP is also 100% and hence they had not claimed separately deduction under section 80IA. He however, urged that deduction under section 80IA be granted to the said CPP unit. The above arguments of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the Gujarat State Electricity Board Power, partly using diesel DG set generator electricity and partly using the electricity from Gas Turbine now being set up all as part of his manufacturing activity. Another issue is whether the so called captive power plant is a power plant. Section 80IA is applicable in respect of an undertaking which starts generating power. Section 80IA is applicable for the companies which are involved in generation, transmission and transportation of power. In the instant case assessee has merely purchased a gas based Genset of 1.04 KVA and put up the same in his factory where he is manufacturing chemicals and dyes. This is not same as generation of power which is intended under section 80IA. If assessee s logic were to be accepted then even a small DG set installed in a shop for taking care of power problems also should be called as a power plant. Assessee s main activity is manufacturing of chemicals and dye intermediaries. For the purpose of this manufacturing activity, it needs power and the same was hitherto being supplied by GSEB. The company also has a DG set which is run on diesel. Now assessee has purchased another generator which runs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stablished by the Hon'ble Madras High Court (Supra) and the ITAT Mumbai Bench in the case of West Cost Paper Mills Ltd, 103 ITD 19 wherein the DG Unit which generated power for captive consumption was allowed deduction under section 80IA. AO is directed to examine the issue on facts as well as on law and if assessee is eligible for deduction directed to allow the same. Accordingly, the issue in assessment year 2005-06 is restored to the file of AO for fresh determination. Ground is considered allowed. 9. In assessment year 2006-07, even though assessee has raised the ground, the issue does not arise as assessee has not claimed any deduction in that year. This issue is only academic in nature and whatever findings AO gives in AO 2005-06 are equally applicable to assessment year 2006-07 so that assessee, if eligible, can claim in subsequent years. With these remarks the ground is considered rejected as there is no claim in this year and the issue is only academic in nature. Issue of disallowance of ESI Contribution: 10. In assessment year 2006-07, an amount of ₹ 36,686/- and ₹ 5,981/- were disallowed on the reason that these contributions were made beyond the du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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