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Income Tax Appellate Tribunal, BENCH, NAGPUR
Before: SHRI D. KARUNAKARA RAO, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
ORDER
PER D. KARUNAKARA RAO, AM:
This appeal is filed by the assessee against the order of the Pr. CIT-2, Nagpur dated 24.04.2015 for the assessment year 2011-12.
The grounds raised by the assessee are as under :- “1] Learned C.I.T. erred in passing an Order U/s. 263. The assessment order was neither erroneous nor prejudicial to the interest of revenue and hence C.I.T. had no jurisdiction to revise the same U/s. 263. 2] Learned C.I.T. erred in observing that the assessee claimed excessive deduction amounting to Rs.2,30,41,897/- U/s. 80IA. Credit given by MSEDCL of Rs.2,30,41,897/- was on account of power supplied by the assessee’s power plant and banked with MSEDCL and hence it was an income of power plant eligible for deduction U/s. 80IA.
3] Assessee craves leave to urge additional grounds at the time of hearing as may be necessary.”
Before us, at the outset, ld. Counsel for the assessee informed that this is a case where the Pr.CIT through his revision order u/s 263 of the Act attempted to withdraw the claim of deduction u/s 80IA of the Act with reference to the credit received by the assessee from MSEDCL. Mentioning that similar core issue came up for adjudication before the Tribunal, the ld. Counsel for the assessee filed a copy of the order of Nagpur Bench of the Tribunal in assessee’s own case vide for the assessment year 2006-07 order dated 02.09.2016 and submitted that the claim of the assessee now stands covered by the said order of the Tribunal (supra) and the Tribunal allowed the same in favour of the assessee. Bringing our attention to the contents of para 31 to 33 of the said order of the Tribunal (supra), ld. Counsel read out the following “In view of the above it is held that the amount of Rs.3,21,34,000/- is eligible for deduction u/s 80IA and the assessee is entitled to claim deduction u/s 80IA which it has properly claimed at Rs.3,58,13,000/- ”. Further, ld. Counsel submitted that the revision order passed u/s 263 of the Act by the Pr.CIT for disallowing the deduction u/s 80IA of the Act in respect of the similar amounts involving MSEDCL. Further, ld. Counsel submitted that the said order of the Tribunal (supra) was passed on 02.09.2016. Mentioning that the said order of the Tribunal (supra) was passed subsequently to the revision order of the Pr. CIT dated 24.04.2015, ld. Counsel submitted that the Pr. CIT did not have the benefit of the said order of the Tribunal for the alleged assessment year.
Heard both the sides. We appreciate the facts demonstrated by the ld. Counsel for the assessee before us and find the credits of Rs.2,30,41,897/- given by the assessee from MSEDCL with similar to that of the amounts given by the assessee from MSEB. Therefore, such amounts are eligible for deduction u/s 80IA of the Act. This is a settled legal proposition of law and the order made by the Assessing Officer originally on 24.03.2014 does not suffer from any error. Therefore, there is no loss of revenue as impounded in the said order of the Assessing Officer. We perused the said order of the Tribunal (supra) and find the contents of paras 31 to 33 are relevant in this regard. For the sake of completeness, the said paras 31 to 33 of the said order of the Tribunal (supra) are extracted hereunder :- “31. The claim U/s.80IA for A.Y.2007-08 amounting to Rs. 17,79,97,436/- which includes the power supplied/banked with MSEB for which the similar adjustment has been given by MSEB to the assessee from their power bill is allowed U/s.80IA by A.O. himself in 143(3) order, though there is no discussion on the said issue in the assessment order. Nor the same is revised by C.I.T. The said order is final. In A.Y.2008-09 the claim of the assessee U/s.80IA was Rs.4,95,27,642/- which included the value of power banked with MSEB amounting to Rs.3,25,04,810/- for which MSEB had given credit to the assessee from their power bill. However the A.O. in para 4 of order for A.Y.2008-09 held that the credit given by MSEB cannot be considered as the income generated through supply of power by the eligible undertaking. This amount of Rs.3,25,04,810/- is not for production done by the assessee but credit given by MSEDCL. So holding he disallowed deduction to the extent of Rs.3,25,04,810/-. In appeal against the said order same C.I.T(A) directed to A.O. to allow the deduction of net profit of power plant subject to verification if 10CCB etc. are filed or not Against the said order resulting in allowance of Rs.3,25,04,810/- the department is in appeal. Similarly in subsequent years also the learned C.I.T.(A) has allowed the deduction in respect of the value of power banked with MSEB for which deduction/adjustment was given by MSEB from their power bills. For those years also the Revenue is in appeal 32. Thus the point to be considered in the present appeal for A.Y.2006- 07 as per C.I.T.’s direction was to consider whether the credit of Rs.3,21,34,000/- given by MSEB is eligible for deduction U/s.80IA. The facts in this regard are that the assessee has a separate industrial unit for power generation which is eligible for deduction U/S.80IA. The power generated by the said unit is supplied to it’s own steel plant and partly it is banked with MSEB. The details of power generated and supplied to power plant itself, to steel plant and wheeled back with MSED is given on page 4 of the paper book being relevant paper from B.S. and also on page 3 of the paper book. The details given on p.4 are as under :-
Total power generated KWH 121100000 Captive power consumption in Power Plant itself 14522836 Power consumption by Steel Plant 93572164 Power wheeled back with MSEB 13005000 33. The cost of power supplied to steel plant calculated at the rate of Rs.3.6101 per unit amounted to Rs.33,78,00,000/-. The cost of power supplied/wheeled back with MSEB at the same rate for which MSEB gave credit to the assessee during the year was Rs.3,21,34,000/-. For power used by power plant itself nothing is charged. Thus the total gross receipt of power plant (whose income is to be computed as if such eligible business was the only source of income U/s.80IA(5)) was Rs.36,99,41,000/-. Thus the income of eligible power unit is to be considered separately by itself as an independent entity. After deducting the expenses and depreciation that net income of the power plant was Rs.3,58,13,000/- which was claimed as deduction U/S.80IA. in respect of the power supplied/banked with MSEB it was, liable to pay Rs.3,21,34,000/- to the said power unit. MSEB could pay the said amount by cheque or cash or by adjustment against the amount recoverable by it from the assessee on account of power supplied by it to the steel company. In all such cases it amounts to payment by power plant to eligible unit and it amounts to receipt by eligible unit on account price or value of power supplied to MSEB. During the year in respect of power supplied by the eligible unit to and banked with MSEB amounted to Rs.3,21,34,000/- which MSEB paid to eligible unit by adjustment against their power bills. Such payment is payment of price by MSEB to eligible unit and it is a receipt by eligible unit for the power supplied to MSEB. In view of these facts the assumption of the learned A.O. that this amount of Rs.3,21,34,000/- is not for the production done by the assessee but credit given by MSEB is wholly untenable. If the MSEB had not received the power from the eligible unit why would it give credit to the assessee from their electric bills? It is thus clear that the amount of Rs.3,21,34,000/- constitutes the receipt of eligible power plant on account of electricity supplied/banked by it with MSEB and as such the said income was eligible for computing income for deduction U/s.80IA. It is also seen that the power is supplied by the eligible unit to MSEB at the same rate at which MSEB supplied electricity to the assesses. Thus the same is at market rate. And further the power consumed by power plant itself is not considered in computing the eligible deduction U/s.80IA. In view of the above it is held that the amount of Rs.3,21,34,000/- is eligible for deduction U/s.80IA and that the assessee is entitled to claim deduction U/s.80IA which it has properly claimed at Rs.3,58,13,000/-. For deciding the first issue it is necessary to refer to the notice U/s.263, assessee’s reply and Hon. C.I.T.’s order on the relevant issue. Notice u/s 263 clearly refers to the adjustment of Rs.3,21,34,000/- given by MSEB to the assessee against power generation bills issued by it and which adjustment given by MSEB is treated by the assessee as income of power plant eligible for deduction U/s.80IA. The issue raised in the notice is whether this amount of Rs.3,21,34,000/- can be treated as an income of the Power Plant eligible for deduction U/s.80IA.”