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TMI Blog2019 (8) TMI 1201X X X X Extracts X X X X X X X X Extracts X X X X ..... -2019 - Shri V. Durga Rao, Hon ble Judicial Member And Shri D.S. Sunder Singh, Hon ble Accountant Member For the Assessee : Shri G.V.N. Hari Advocate. For the Department : Shri D.V. Subba Rao Sr.DR ORDER PER V. DURGA RAO, JUDICIAL MEMBER This appeal by the Revenue and the Cross Objection by the assessee are directed against the order of Commissioner of Income Tax (Appeals)-3, Visakhapatnam, dated 31/01/2019 for the Assessment Year 2016-17. 2. Facts of the case, in brief, are that assessee is a private limited company engaged in the business of procurement and processing of paddy; sale of rice and broken rice along with its bi-products besides co-generation of a power plant. The assessee filed its return of income by admitting total income of ₹ 1,46,06,240/-. The case of the assessee was selected manually for scrutiny as per the CBDT Instruction No. 5/2017, dated 07/07/2017. Accordingly, notice u/sec. 143(2) dated 19/09/2017 was issued and the assessment was completed u/sec. 143(3) of the Act dated 18/01/2018. In the assessment order, the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit utilizes only 10% of the heat of the steam generated in the boiler and the remaining heat of the steam is utilized by the rice-mill in its boiled milling unit. Even though the boiled rice mill does not have a power generating unit, it has to have a boiler with approximately the same capacity and use the husk as the fuel in the boiler to generate the steam for the boiled rice unit. However, the power generating unit requires only 10% of the heat of the steam generated in the boiler and the remaining 90% heat shall be utilized by the rice mill for its processing requirements. Hence the cost of the husk utilized in the boiler is attributable to the rice mill and the 90% of husk cost is relatable to the rice mill unit. As earlier mentioned even though we do not have the power generating unit we have to spend the same amount of husk for the rice mill for its boiled unit and the same amount of husk is to be utilized for the rice mill for its boiler steam requirement. Hence the husk cost is proportionately apportioned to power generating unit and rice milling unit at 10% and 90% of the husk cost respectively. In our case the power plant is subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... why 10% of husk utilization cost taken into power plant maintenance account is separately enclosed. The company is maintaining all the sub ledgers relating to power plant maintenance, salaries, machinery depreciation a/c, husk utilization a/c and interest on Term Loan taken for acquiring power plant machinery. The company is arriving the profit earned in power plant, by working out the power units produced with rate adopted equivalent to price paid to AP Transco for procuring power and taking husk utilization with rate equivalent to price paid to outsiders for procuring husk as per the provisions of sec. 8OlA(5) where in it is clearly provided that for the purpose of determining quantum of deduction the profit shall be computed as if such eligible business is the only source of income of the company. The expenses of operating the power plant i.e. Husk utilization, power plant maintenance costs, power plant repairs and maintenance, power plant depreciation, power plant interest cost and allocation of general over head are maintained separately and are charged to the Power Plant Unit accordingly. Hence, as the Company has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a dispute regarding percentage of cost of husk to be apportioned between rice mill and power plant business. The Tribunal missed the fact that husk is the raw material required for generation of steam, which is turn is used by Power plant for generation of power. Under section 801A(2)(iii) or (iv) and industrial undertaking should be engaged in ......or in the generation and distribution of power that means the words any business of and industrial undertaking used in sub-section (1) had to be read in conjunction with the activities of undertaking as defined in sub-section (2) and profits and gains of only those activites could be considered as profits and gains derived form any business of and industrial undertaking. The profits and gains of the eligible unit, i.e. Power unit of the assessee is computed as per the provisions of sec. 31 to 43 of the I.T. Act taking into consideration all business expenses. In the present case, the True profit sand gains can be arrived at only after taking into consideration the cost of Husk, the basic raw material and all the relevant expenses. The Tribunal erred in concluding that only the cost of the steam needs to be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king. (v) Further, ITAT is not correct in holing that filing for Form No. 1OCCB report is not mandatory and that is can be filed at any time during the assessment proceeding and claim of exemption u/s. 801A is not maintainable. The AR ought to have drawn support in this regard form the decision of Hon'ble P H High Court in the case of CIT Vs. Jaideep Industries reported in 180 ITR 81 wherein it was held that audit report u/s. 80J was a mandatory requirement. Since the provisions of 80J and 80IA are akin, filing of 1OCCB report is mandatory requirement. In order to keep the issue alive and to maintain consistency in the stand taken by the department on this issue, husk consumption for the power plant during the year under consideration is also taken at 55%. Accordingly, the husk consumption of the power generation plant is recasted at ₹ 2,49,28,9331- (55% of ₹ 4,53,25,333/which is 55% of the total husk consumed in relation to the power generated plant. 3. The Assessing Officer after considering the explanation given by the assessee has observed that on examination of the profit loss account relating to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 10% shown by the assessee. The relevant portion of the order is extracted as under:- 4.0) The only issue in the appeal is the action of the Assessing Officer in restricting the claim of deduction u/sec. 80IA by taking husk consumption for power plant at 55% as against 10% shown by the assessee. The issue is decided in favour of the assessee by orders of CIT (A) and ITAT in earlier years as mentioned by the Assessing Officer in the order. Respectfully following the same, it is held that the deduction u/sec. 80IA as claimed by the assessee be allowed. The addition made is deleted. 5. Aggrieved, the Revenue is in appeal before the Tribunal. 6. When this appeal is taken up for hearing, ld. counsel for the assessee has submitted that the issue involved in this appeal is squarely covered by the coordinate bench of the tribunal in assessee s own case in the A.Ys. 2008-09 2009-10 by order dated 28/04/2014 and dismissed the appeal of the Revenue. He relied on the decision of the very same Bench where AM JM are both the Members, have passed the order in ITA No. 276/VIZ/2018, dated 03/01/2019 for the A.Y. 2010-11. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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