9911796707
TMI Blog2010 (7) TMI 1095X X X X Extracts X X X X X X X X Extracts X X X X ..... rst one filed by the assessee and the second one filed by the Revenue, and are directed against the order dated 10-07-2008 of the CIT(A)XXVIII, Mumbai, relating to asstt. year 2005-06. For the sake of convenience, these appeals were heard together and are being disposed of by this common order. ITA No.5969/Mum/2008 (By the assessee): 2. Ground of appeal no. A by the assessee relates to the order of the CIT(A) in confirming the disallowance ₹ 2,62,40,633/- by the AO u/s.145A of the I.T. Act. 3. The ld. counsel for the assessee, at the outset, submitted that this ground becomes infructuous since the AO in the order passed u/s.154 has already given the relief. In view of the above submission by the ld. counsel, ground no. A is dismissed. 4. Ground of appeal no. B by the assessee relates to the order of the CIT(A) in confirming the disallowance of ₹ 5,00,000/- made by the AO u/s.14A. The ld. counsel for the assessee submitted that the assessee does not want to press this ground for which the ld. D.R. has no objection. Accordingly, this ground by the assessee is dismissed as not pressed. 5. Ground of appeal no. C(i) by the assessee relates to the order of the CIT(A) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) has not issued enhancement notice, therefore the contention of the learned AR is rejected. 18 Now coming to the merits of the case which is decided as under:- 18.1 The CIT (A) while enhancing income by disallowing assessee's claim under section 80IA on following three reasons:- (i ) Electricity tax (ii) Allocation of indirect expenses (iii) Miscellaneous income 18.2 1st reason for disallowance of deduction u/s 80IA is in respect of electricity tax whether part of market price or not. The crux of the matter to be examined here is what should be the market price of the electricity while transferring the manufactured electricity from C.P.P. unit to other unit for the purpose of calculation of deduction under section 80IA(8) of the IT Act. The assessee, while transferring the manufactured electricity from C.P.P. unit to other unit, has taken into account the electricity tax levied by the State Government on the bill amount @ ₹ 0.18 per unit charged by the Tamilnadu Electricity Board from the consumers on the bill raised. The CIT (A) was of the view that the electricity tax is a statutory and extraneous payment the same cannot form part of the market price. The CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the price at which the assessee sold power to the Board. In the Explanation to section 80- IA(8), it is provided that the expression 'market value' for the purposes of sub-section means the price that such goods or services would ordinarily fetch in the open market. The market value is an expression which denotes a price arrived at between the buyer and the seller in the open market wherein the transactions take place in the normal course of trading and competition in contrast to a situation where the price is f ixed between a buyer and a seller in a negotiation done under the shadow of legislatively mandated compulsion. In the case of the former, the price fixed between the buyer and seller can be understood as denoting 'market price' since the elements of trading and competition exist, whereas in the case of the latter situation, the price fixed between the buyer and seller cannot be understood as denoting the market price since the elements of trade and competition are conspicuous by their absence. 18.4 The facts of West Coast Paper Mills Ltd. are that the assessee was engaged in the manufacture and sale of paper and paper boards, multi- layer boards, etc. and in the busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tamilnadu Electricity Board is to be accepted or the average price af ter reducing the average rate paid to Karnataka Electricity Board minus certain extraneous charges and its fair market value was to determine. The ITAT was of the view that the average rate minus certain extraneous charges was fair and reasonable rate. We f ind force in the submission of the learned AR that the case decided by the ITAT as above is not applicable to the facts of the case under consideration as that case decided on the issue that which rate is to be adopted out of two rates available on record i.e. one is adopted by the assessee and the other adopted by the CIT (A). Since there was no issue to decide whether market value of the electricity unit minus certain extraneous charges, therefore, that decision is distinguishable on facts. 18.5 In the light of above discussions if we considered the facts of the case under consideration we noticed that the AO did not dispute the price taken by the assessee. The CIT)A( has taken action under section 251(1)(c) of the Act whereas the requirement of the section is that Where any goods held for the purposes of the eligible business are transferred to any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tamilnadu Electricity Board from the consumers on the bill raised was the price ordinarily fetch in the open market therefore the CIT (A) was not correct in disallowing claim of assessee under section 80IA of the Act on this ground. We find the Tribunal, following the order for asst. year 2003-04, has again decided the issue in favour of the assessee for the asst. year 2004-05 in ITA No.2580/Mum/08 order dated 22-03-2010. In view of the consistent decision of the Tribunal on this issue in favour of the assessee in assessee's own case and in the absence of any contrary material brought to our notice, this ground by the assessee is allowed. 7. In ground of appeal no.C(ii), the assessee challenges the order of the CIT(A) in confirming the order of the AO disallowing the claim u/s.80IA on account of allocation of indirect expenses amounting to ₹ 68,09,675/-. 7.1 Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee has debited amounts of ₹ 12,92,000/-, ₹ 2,34,92,000/- and ₹ 24,54,699/- on account of Auditor's fee, remuneration to M.D. and traveling expenses respectively. The total of the above amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and steam, according to the AO, do not fall under the ambit of eligible business in terms of sec. 80IA(4)(iv) of the I.T. Act. He accordingly disallowed an amount of ₹ 53,31,084/- by reducing the same from exemption claimed u/s.80IA of the I.T. Act and added the same to the total income of the assessee. In appeal, the ld. CIT(A) confirmed the addition made by the AO for which the assessee is in appeal before us. 10. After haring both the sides, we find similar issue had come up before the Tribunal in assessee's own case for the asst. year 2003-04. We find the Tribunal vide ITA No.126/Mum/08 order dated 29-01-2010 at paras 18.7 to 18.9 has decided the issue. In the said order, it has been held that deduction u/s.80IA is not allowable on account from sale of sludge, whereas deduction u/s.80IA is allowable on account of income from sale of steam. The relevant portion of the order of the Tribunal reads as under : 18.7 3rd reason for disallowance of deduction u/s 80IA is in respect of miscellaneous income, Income from sale of sludge ₹ 10,09,593, Income from sale of steam ₹ 44,07,753 and Misc. income ₹ 17,567. while deciding the issue related to allocation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion before Hon'ble Supreme Court against the judgment of Hon'ble Madras High Court in T.C. No. 1773 of 2008 and vide judgment dated 6th November, 2008, the Apex court dismissed the department's appeal. In the said judgment Madras High Court dismissed the Department's appeal against the decision of Tribunal holding that the assessee was entitled to claim deduction u/s 80IA of the Act on the value of steam used for captive consumption by the assessee. CIT Vs. Tanfac Industries Ltd., S.L.P.(C) No. 18537 of 2009. (319 ITR 8&9). In the light of above discussion, we f ind that the steam produced by the assessee is eligible unit is a bye-product and income from sale of steam is the income derived from industrial undertaking, therefore, deduction u/s 80IA is allowable. We, accordingly, set aside the order of CIT(A) on this issue and the claim of the assessee is allowed. The decision of the Tribunal for the asst. year 2003-04 has been followed by the Tribunal in assessee's own case for the asst. year 2004-05 vide ITA No.2580/Mum/08 order dated 22-03-2010. In view of the consistent decision of the Tribunal in assessee's own case and in absence of any contrary material brought to our notice, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
