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TMI Blog2010 (7) TMI 1095X X X X Extracts X X X X X X X X Extracts X X X X ..... <![endif]--><!--[if gte mso 10]> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... West Cost Paper Mills Ltd. vs. ACIT reported in 103 ITD 19 (Mumbai), the AO was of the opinion that 5% of electricity charges are required to be excluded while working out the profits from eligible business. He further noted that the CIT(A), while deciding the appeal of the assessee for asstt. year 2003-04, has enhanced the income by reducing the exemption to the extent of electricity duty in his order basing on the decision of the Tribunal in the case of West Coast Paper Mills Ltd. (supra) and the decision of the Hon ble Supreme Court in the case of CIT vs. Laxmi Machine Works reported in 290 ITR 667. Rejecting the various explanations given by the assessee, the AO excluded 5% of electricity charges amounting to ₹ 4,03,06,140/- and added the same to the total income of the assessee. In appeal, the CIT(A) confirmed the action of the AO. Aggrieved with such order of the CIT(A), the assessee is in appeal before us. 6. After hearing both the sides, we find similar issue had come up before the Tribunal in the assessee s own case for the asstt. year 2004-05. We find the Tribunal vide ITA No.126/Mum/2008 order dated 29-01-2010 for the asst. year 2003-05 has decided the issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods [or services] as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods [or services] as on that date : Provided that where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit. [Explanation.-For the purposes of this sub-section, market value , in relation to any goods or services, means the price that such goods or services would ordinarily fetch in the open market.] 18.3 The above section has been examined by the ITAT Delhi Bench in the case of Additional Commissioner of Incometax, v. Jindal Steel Power Ltd. [2007] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d power to industrial users. According to the AO, these rates were unrealistic as the Karnataka Electricity Board was not expected to purchase power from the assessee and it was also unrealistic to expect the Karnataka electricity board to purchase power from the assessee at a future date at the same rate at which it supplied power to the other industrial users and it was also not the fact that the assessee had sold any power to Karnataka Electricity Board in any later year. The CIT(A) asked the assessee to submit an alternative calculation based on the average actual per unit cost of power purchased from the Karnataka Electricity Board by the paper division. The assessee has given calculation of the average price of ₹ 4.74 per unit. The CIT(A) asked the AO to examine the bill and verify the average rate calculated by the Assessee. The AO recalculated the price to be adopted af ter excluding element of tax. CIT(A) accepted the AO s calculation. On appeal, the ITAT held that the AO s adoption of the rate at which the assessee sold the power to the Tamilnadu Electricity Board could not be accepted since the units itself were working at Dandeli in Karnataka was different. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of such goods as on that date. For this purpose, there must be opinion of the AO, as proviso clearly provides that where, in the opinion of the Assessing Off icer, the computation of the prof its and gains of the eligible business in the manner hereinbefore specified presents exceptional diff iculties, the Assessing Off icer may compute such profits and gains on such reasonable basis as he may deem f it. In the case under consideration there was no such opinion of AO but on the basis of opinion of CIT(A) whether the CIT (A) was having jurisdiction or not, this issue is not before us. The issue before us is whether The assessee while transferring the manufactured electricity from C.P.P. unit to other unit the assessee 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 is market price or not. The market price has been def ined by way of Explanation to section 80IA(8) of the Act that market value , in relation to any goods or services, means the price that such goods or services would ordinarily fetch in the open market. This can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by holding as under : 18.6 2nd reason for disallowance of deduction u/s 80IA is in respect of allocation of indirect expenses. We noticed that for the purpose of deduction under section 80IA only income derived from industrial under taking that has to be reckoned in computation as such the income and expenditures which are not directly relatable to that industrial unit cannot but be ignored, in other words such income and expenditure need not to be considered. In view of this position the CIT(A) is not justified in allocation 25 % of such indirect expense which are not directly relatable to that industrial unit to eligible uni t for the for purpose of computation of income for deduction under section 80IA of the Act. The order of CIT (A) on the issue is set aside. We find the Tribunal, in the assessee s own case for the asst. year 2004-05 vide ITA No.2580/Mum/08 order dated 22-03-2010, following the order of the Tribunal in the preceding assessment year, has also allowed the claim of the assessee on this issue. In view of the consistent decision of the Tribunal in assessee s own case and in absence of any distinguishing features brought before us, this ground by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng out from the plant and machinery i.e. diesel generating set does not amount to derive income from industrial undertaking. The receipt of sale of sludge is the income which is not derived from industrial undertaking. Therefore, even in accordance with the decisions cited by the learned AR in the case of Commissioner of Income-tax v. Sterling Foods 237 ITR 579(SC),Pandian Chemicals Ltd .v. Commissioner of Income-tax 262 ITR 278(SC) and Liberty India V CIT 317 ITR 218 (SC) sale of sludge does not amount to the income derived from industrial undertaking. Therefore, deduction u/s 80 IA is not allowable. We, accordingly, conf irm the order of CIT(A) on this issue. 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. Running of Diesel Generating Sets produce heat, which is recovered from the waste heat recover boiler in the form of steam. During the year ended March 2003, the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue reads as under : On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the assessing officer of ₹ 22,80,000/- u/s.40A(9) being subsidy paid in respect of employees canteen. Facts of the case, in brief, are that the AO observed from annexure 12 of the tax audit report that the company has contributed as subsidy towards employees canteen at Sahupuram aggregating to ₹ 22,80,000/- and the same has been claimed as deduction from the total income. Rejecting the various explanations given by the assessee and following the orders for preceding assessment years, the AO disallowed ₹ 22,80,000/- u/s.40A(9) of the I.T. Act and added back the same to the total income of the assessee. In appeal, the ld. CIT(A), following the order of the Tribunal in assessee s own case for the asst. years 1982-83 to 1987- 88 and the orders of the CIT(A) for the asst. years 2003-04 and 2004-05, allowed the claim of the assessee. Aggrieved with such order of the CIT(A), the Revenue is in appeal before us. 13. After hearing both the sides, we find similar issue had come up before the Tribunal in assessee s own ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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