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TMI Blog2011 (1) TMI 1593X X X X Extracts X X X X X X X X Extracts X X X X ..... ly ash bricks production does not form part of income derived from generation of power for the purposes of deduction under Section 80IA of the Act. Alternatively it is contented that the cost of fly ash enhanced by the learned CIT (A) from Rs. 50/- per MT to Rs. 75/M.T. is still low. 3. The facts relating to the issue are stated in brief. The Assessee company is carrying on business of manufacture and sale of fatty acids. It established a biomass power plant and the income therefrom is eligible for deduction Under Section 80IA of the Act. The Assessee is using biomass fuel and also residues of agricultural produce like cotton stalks, chilli stalks, rice husks etc. in the process of generation of power. Coal is used as supporting fuel. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard the rival contentions on this issue. In the instant case the fly ash is generated as a residuary product in the process of generation of power. From the commercial point of view, fly ash dust and fly ash bricks are entirely two different products. For production of fly ash bricks, the fly ash dust obtained from the power plant may be the raw material and for that reason alone, in our view, both the products cannot be placed in the same platform. Hence we are of the view that the tax authorities are right in holding that the profit from sale of fly ash bricks cannot be taken as the income of the power plant. Since fly ash dust is obtained as a by product, the market value of the same can be taken as the income derived from generation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mass/coal and husk consumed which includes consumption of husk only 15804 Mt. in production of fly ash bricks. I therefore, direct the Assessing Officer to take average cost of fly ash at Rs. 75/- per Mt. Accordingly, total cost works out Rs. 1,38,375/- instead of Rs. 92,250/-. The profit on account of sale fly ash bricks therefore, works out to Rs. 4,27,063/- (4,73,188 (-) 46,125). The Assessing Officer is therefore, directed to exclude profit of Rs. 427063/- on account of sale of fly ash bricks while working deduction Under Section 80IA on account of generation of power. Thus, the ground of appeal of the Appellant is partly allowed. On a careful perusal of the order of the learned CIT (A), we find it to be a reasonable one. Though the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see's own case in the earlier years. He also placed copies of the orders passed by the Tribunal. We have gone through the copies of orders passed by the ITAT in the earlier years in the hands of the Assessee. 8. The question whether the interests received from sundry debtors is eligible for deduction Under Section 80I of the Act was considered by the third Member in the Assessee's own case in ITA No. 224/Vizag/2002 relating to the a.y. 1998-99. The relevant observations made the 3rd Member, in his order dated 01-02-2008 are extracted below: It is observed by the learned Accountant Member that nothing has been brought on record whether charging of interest on delayed payment was a prevalent trade practice in the nature of business ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izag/2000 relating to the assessment years 1995-96, 1996-97 and 1997-98. The relevant observations from the order dated 31-01-2008 passed by the third member are extracted below: 6. I have duly considered the rival contentions and the material on record. The view expressed by the learned Accountant Member finds acceptance by me. If one looks purely from the accounting point of view, the claim given by the insurance company is to make good the damage caused to the generator. The insurance company would assess the damage and then would sanction the claim as per the terms of the policy. Thus, the claim given by the insurance company would be in the form of reimbursing to the Assessee the repair expenses that it would have had to incur for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he industrial undertaking and the same is eligible for deduction Under Section 80IB of the Act. 10. The next item, viz., the Refund from sales tax department, is taxed Under Section 41(1) of the Act. and this issue is also covered by the decision of the third member in the Assessee's own case in ITA No. 224/V/2002. The relevant observations from the order dated 01-02-2008 of the third member are extracted below: 11. So far as this issue is concerned, the language of Section 41(1) itself is quite explicit. It is clearly provided that where an allowance or deduction has been made for any year in respect of loss, expenditure or trading liability incurred by the Assessee and subsequently during any previous year if the Assessee recovers the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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