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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘D’
Before: SHRI WASEEM AHMED
PER MADHUMITA ROY- JM: The instant appeal is directed against the order dated 26.04.2016 passed by the Commissioner of Income Tax (Appeals)-7, Ahmedabad u/s. 143(3) of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’) arising out of the order dated 09.03.2015 passed by the DCIT, Cir-4(1)(2), Ahmedabad for Assessment Year 2012-13.
The assessee company engaged in the business of processing manufacturing and trading of clothes filed its return of income on 25.09.2012 declaring total income of Rs. NIL, followed by a revised return filed on 28.09.2013 declaring total income of NIL which was processed u/s. 143(1) of the Act. Under scrutiny notice u/s. 143(2) dated 02.09.2013 followed by a further notice u/s. 143(2) r.w.s 129 along with 142(1) dated 18.11.2014 was issued.
ITA No. 1734/Ahd/2016 A.Y. 2012-13
During the course of assessment proceeding it was found that the assessee was having captive power plant on which the assessee was claiming deduction u/s. 80IA of the Act. It also appears that out of the total sales of Rs. 20,44,51,202/- made by the captive power plant to Process Division of the assessee Rs. 7,83,66,133/- was in respect of sale of power and at Rs. 12,60,85,069/- was in respect of sale of steam. Ultimately such claim of the assessee was not accepted by the Ld. AO and the profit of Rs. 2,51,27,5478/- was in respect of sale of steam to process was disallowed which was in turn confirmed by the Ld. CIT(A). Hence, the instant appeal before us.
At the time of hearing of the instant appeal Ld. Counsel appearing for the assessee submitted before us that the issue is squarely covered in assessee’s own matter for Assessment Year 2011-12 by the judgment dated 24.01.2018 passed by the Co-ordinate Bench of the Ld. Tribunal copy whereof has also been handed over to us in ITA No. 125/Ahd/2015.
The Ld. DR, however, failed to controvert the same.
We have heard the Ld. Counsel appearing for the respective parties, we have also perused the relevant materials available on record and also carefully considered the judgment passed by the Co-ordinate Bench in assessee’s own case in appeal preferred by Revenue in ITA No. 125/Ahd/2015 for A.Y. 2011-12. The identical issue has been considered by the Co-ordinate Bench in the said judgment, the relevant whereof is as follows:-
“6. In earlier years, on the basis of such valuation, deduction u/s. 80IA (4)(iv) of the Act were allowed from A.Y. 2006-07. In our considered opinion, assessee is therefore on the principle of consistency, eligible for such deduction. Further as required assessee filed a certificate inform 10CCB from a charted accountant for claim and therefore the reasonableness and valuation of steam is certified through that certificate is eligible deduction. In support of its contention, assessee also filed a rate chart at Page No. 13 of Paper Book and same is reproduced as under: VISHAL FABRICS PRIVATE LIMITED STATEMENT OF COMPUTATION OF COST OF STEAM AND POWER
SN PARTICULARS 2010-11 2009-10 20008-09 2007-08 2006-07 2005-06 A QUANTITATIVE DETAILS TOTAL STEAM 1 KGS 157762938 KGS 159223900 KGS 154169059 154614653 155172583 146106760 GENERATION 2 STREAM TO KGS 117695051 KGS 11433615 KGS 109171082 107678291 110573541 106190960
ITA No. 1734/Ahd/2016 A.Y. 2012-13
PROCESS STEAM POWER 3 KGS 49967887 KGS 44890285 KGS 44997977 46936360 44599042 39915800 PLANT FUEL COSUMED 4 KGS 46007204 KGS 43078021 KGS 43371340 38118207 37910326 35607106 (LIGNITE) STEM/FUEL RATIO 5 3.43 3.70 3.55 4.06 4.09 4.10 A1/A3 0 TOTAL POWER UNITS 14023208 UNITS 15220300 UNITS 14708800 14889700 14890900 14060310 GENERATED POWER PLANT UNITS 3011739 UNITS 3035967 UNITS 2960203 3032648 3047536 2952422 CONSUMPTION POWER TO PROCESS UNITS 11011469 UNITS 12184333 UNITS 11748597 11857052 11843364 11107888 EXPRENSES RS/ RS/ *S/ B TOTAL TOTAL TOTAL INCURRED KC KC KG
1 LIGNITE & COAL RS. 117202086 RS. 111244176 RS. 125388619 88141936 73476124 58649912 MAINTENANCE 2 RS. 13569303 RS. 7530700 RS. 11263070 8103337 7048532 625896 EXPENSES 3 SALARIES & WAGES RS. 3371517 RS. 3459680 RS. 3096961 3730681 2906145 1977572 4 INTEREST RS. 361661 RS. 859515 RS. 1495029 2321120 2382390 2845500 5 DEPRECIATION RS. 11149377 RS. 11149458 RS. 11149556 11149446 11107858 11107858 0 TOTAL EXPENSES RS. 145653944 0.92 RS. 134243523 0.34 RS. 152393235 0.99 113446520 0.73 96921049 0.62 75206738 0.51
COST PER KG OF C RS. RS. RS. 0.73 0.62 0.51 STEAM STEAM USED IN D KGS 117695051 KGS 114333615 KGS 109171082 107678291 110573541 106190960 PROCESS
STEAM COST E CHARGED TO PROCESS RS. 135349309 1.15 RS. 131483657 1.15 RS. 128546744 1.15 86142633 0.80 71872809 0.65 47785932 0.45
GENERATING POWER RS. 10304635 RS. 2759866 RS. 26846491 27303887 25048240 27420806
We have also gone through the assessment order in details in that there is a finding of the AO in Page No. 9 Para ii, wherein she has stated that 80IA(4) is an allowable deduction on steam and there is no dispute on it, steam has already been held to be power within the meaning of Section 80IA(4) of the Act. When on one hand AO herself is accepting the steam is eligible for deduction and on the other hand she is disallowing the deduction, it itself is contradictory, when once the AO is of the opinion that deduction is available on steam then no disallowance should have been made only on assumptions basis. The assessee has submitted several decisions in support of its contention and same are stated therein, the steam was transferred at a higher price. Further assessee has submitted engineering certificate at Page No. 10 of Paper Book in which also the cost of generation of steam can be considered in the range of Rs. 1.16/- to 1.25 per kg of steam. Further the saving in cost due to Captive production also cannot be ruled out which has been elaborated discussed by the Ld. CIT(A).
We therefore, relying on various decision in support of the claim made by the assessee and acceptance by the AO that steam is a form of power and eligible for deduction and for the basis of deduction relying on the engineers certificate as well different case laws held. CIT(A) has rightly deleted the addition and profit and margin kept by the assessee in Captive consumption is fair and reasonable. In our considered opinion on the basis of consistency and Ld. CIT(A) has passed a detailed and reasoned order. We upheld the order of Ld. CIT(A).
Respectfully, following the same we find no infirmity in the order passed by
the Ld. CIT(A) in deleting such addition made by the Ld. AO following the
decision taken by his predecessor in the earlier year in allowing the deduction u/s.
80IA of the Act taking in consideration of the judgment passed by the Co-ordinate
ITA No. 1734/Ahd/2016 A.Y. 2012-13
Bench a discussed above, hence the same is confirmed. Revenue’s appeal is found to be devoid of any merit and hence dismissed.
In the result, Revenue’s appeal is dismissed.
[Order pronounced in the Court on 29-04-2019.]
Sd/- Sd/- (WASEEM AHMED) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 29/04/2019 TANMAY TRUE COPY आदेशक���त�ल�पअ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent. 3. संबं�धतआयकरआयु�त/ Concerned CIT 4. आयकरआयु�त(अपील) / The CIT(A) 5. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण/ DR, ITAT, 6. गाड�फाईल / Guard file.
आदेशानुसार/ BY ORDER
उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपील�यअ�धकरण, अहमदाबाद / ITAT, Ahmedabad
Date of dictation : 04-04-2019 2. Date on which the typed draft is placed before the 15-04-2019 : Dictating Member. 3. Date on which the approved draft comes to the : 25-04-2019 Sr.P.S./P.S 4. Date on which the fair order is placed before the : 25-04-2019 Dictating Member for pronouncement. 5. Date on which fair order placed before Other : Member 6. Date on which the fair order comes back to the : 30-04-2019 Sr.P.S./P.S. 7. Date on which the file goes to the Bench Clerk. : 30-04-2019 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant : Registrar for signature on the order. 10. Date of Despatch of the Order :