CHHATTISGARH STATE POWER TRANSMISSION COMPANY LTD.,RAIPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1), RAIPUR

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ITA 154/RPR/2023Status: DisposedITAT Jodhpur08 April 2026AY 2013-147 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee failed to present evidence before the CIT(Appeals) due to inadvertence, leading to an ex-parte decision. Considering the interest of substantive justice and the need for proper adjudication, the matter was remanded.

What were the facts?

The assessee claimed deduction under Section 80IA(4) for its electricity transmission business. The AO denied this deduction, stating the assessee was not a new industrial undertaking and did not meet the conditions for modernization. The CIT(Appeals) upheld the AO's decision.

What were the issues?

Whether the assessee, formed from a restructuring of an existing electricity board, qualifies as a new industrial undertaking eligible for deduction under Section 80IA(4). Whether the assessee fulfilled the conditions for modernization as required by the section.

Which sections of the Income-tax Act were involved?

Section 80IA(4),Section 80IA(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY & SHRI AVDHESH KUMAR MISHRA

For Appellant: Shri R.B Doshi, CA
For Respondent: Dr. Priyanka Patel, Sr. DR
Hearing: 07.04.2026Pronounced: 08.04.2026

आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM: The captioned appeals preferred by the assessee emanates from the respective orders of the Ld.CIT(Appeals)/NFAC, Delhi dated 08.03.2023 for the assessment year 2013-14 as per the grounds of appeal on record.

2.

At the very outset, parties herein conceded that the facts and issues involved in both these appeals are substantially similar and identical. Having heard the submissions, both these appeals are heard together and disposed of vide this consolidated order.

3.

The main issue emanating in both these appeals a/w. some other grounds is that deduction claimed by the assessee u/s.80IA(4) of the Income Tax Act, 1961 (for short ‘the Act’) was denied by the A.O for the following reasons:

(i) Assessee is not a new industrial undertaking eligible u/s. 80IA of the Act for the reason that the assessee was an electricity Board and on 01.12.2000, the financial and functional segregation of the assessee from the erstwhile undivided Board took place. This is evident from Page 4, 1st para of the assessment order.

3 Chhattisgarh State Power Transmission Co. Ltd. Vs. DCIT, Circle-1(1), Raipur ITA Nos. 153 & 154/RPR/2023

(ii) The A.O observed that as per Section 80IA(4)(iv) of the Act makes it clear that it is available to an undertaking which fulfills all the three conditions laid out in sub-clause (a), (b) & (c). That it must undertake substantial renovated modernization of the existing network of transmission or distribution lines during the specified period as has been held by the A.O at page No.5 of the assessment order.

(iii) The assessee does not satisfy all the conditions laid down in sec. 80IA(4)(iv) of the Act and in that, it is not an undertaking set up for generation etc. of power, it is not an eligible business u/s 80IA(4) of the Act.

(iv) The assessee is not eligible for deduction as it was formed by splitting up of the existing industrial undertaking i.e. MPEB. The plant and machinery consist of that received from Madhya Pradesh Electricity Board (MPEB) and claimed to have been renovated and modernized.

(v) The assessee is not a new industrial undertaking and the business of electricity transmission was transferred to assessee upon restructuring. It thus becomes the old business and does not fulfill the condition of being a "new industrial undertaking" as laid down in Section 80IA(3) of the Act. Since MPEB established the said plant and machinery long back, assessee

4 Chhattisgarh State Power Transmission Co. Ltd. Vs. DCIT, Circle-1(1), Raipur ITA Nos. 153 & 154/RPR/2023

is not eligible for deduction. The machinery was used by earlier entities i.e. MPEB & CSEB which was split up.

(vi) Since plant and machinery was obtained from CSEB, it cannot be said that book value appearing in the books of CSEB as on 01.04.2004 relates to the assessee company. The assessee has not, therefore, complied with Section 80IA(4)(iv)(c) of the Act as per Page 6 of the assessment order.

4.

That when the matter went before the Ld. CIT(Appeals)/NFAC, it was held while upholding the findings of the A.O that the assessee had not undertaken any substantial modernization but was formed out of already existing business i.e. MPEB (later on it became CSEB) which was in existence even before 1991. The assessee, therefore, did not fulfil conditions laid out in Section 80IA(4)(iv) of the Act and thus, “2nd proviso” to Section 80IA(3) of the Act does not apply to the assessee to claim any deduction.

5.

At the time of hearing, it was submitted by the Ld. Counsel for the assessee that inadvertently the assessee was not able to file any written submission or evidence before the Ld. CIT(Appeals)/NFAC and as a fact of the matter, therefore, the order of the Ld. CIT(Appeals)/NFAC on this issue has been passed in an ex-parte manner. The Ld. Counsel further submitted that whether they qualify for deduction u/s. 80IA(4)(iv) of the Act, whether the “2nd proviso” to Section 80IA(3) applies to the assessee or

5 Chhattisgarh State Power Transmission Co. Ltd. Vs. DCIT, Circle-1(1), Raipur ITA Nos. 153 & 154/RPR/2023

not, has not been substantially adjudicated by the Ld. CIT(Appeals)/NFAC since the assessee was not able to provide any evidence/document to substantiate the requirement of said provision for claiming deduction. In this regard, he prayed for one final opportunity stating that the matter may be remanded for the purpose of verification and adjudication before the Ld. CIT(Appeals)/NFAC wherein the assessee will get an opportunity to furnish all the relevant details to substantiate their claim on merits.

6.

The Ld. CIT-DR was absent when the matter was called for hearing. The regular Ld. Sr. DR was earlier directed to speak to the Commissioner for making alternative arrangement for hearing for today i.e. 07.04.2026 onwards for rest of the week so that the functioning of the Bench does not suffer. However, today also, no such arrangement has been made by the Commissioner and therefore, the matters were taken as heard considering the submissions of the Ld. Counsel for the assessee and on a careful perusal of the documents placed on record.

7.

Having said so, we are in agreement with the submissions of the Ld. Counsel for the assessee in the interest of substantive justice. It is a question of PSU and question of whether the said PSU is entitled for deduction u/s.80IA(4) of the Act. That as per the hierarchy of adjudication, the A.O has arrived at a conclusion that no such deduction should be available to the assessee since the requirement of the provisions has not

6 Chhattisgarh State Power Transmission Co. Ltd. Vs. DCIT, Circle-1(1), Raipur ITA Nos. 153 & 154/RPR/2023

been complied with. Moving further ahead at the level of the Ld. CIT(Appeals)/NFAC, the assesse had not filed any written submission nor any evidence to substantiate the claim on merits. That in absence of any adverse material against the assessee being filed by the Revenue showing any malafide or deliberate conduct for not responding to the hearing notices, this Bench therefore, considers the said assessee to be bonafide and since it is a case whether the assessee is eligible for claiming deduction or not u/s. 80IA(4) of the Act, the onus is on the assessee to fulfil the requirement of the provisions of Section 80IA(4) of the Act. In view thereof, we set-aside the respective orders of the Ld. CIT(Appeals)/NFAC and remand the matters back to its file for denovo adjudication complying with the principles of natural justice. At the same time, the assessee shall respond to the hearing notices and file submission/evidence demonstrating their claim in accordance with the ingredients required u/s. 80IA(3) & (4) of the Act. Since the main issue in contention is remanded to the file of the Ld. CIT(Appeals)/NFAC, therefore, all other grounds including legal grounds are also restored back to the file of the Ld. CIT(Appeals)/NFAC as per aforesaid directions for sake of completeness for purpose of adjudication.

7 Chhattisgarh State Power Transmission Co. Ltd. Vs. DCIT, Circle-1(1), Raipur ITA Nos. 153 & 154/RPR/2023

8.

That as per the above terms, both the appeals of the assessee are allowed for statistical purposes. Order pronounced in the open court on 08th April, 2026.

Sd/- Sd/- AVDHESH KUMAR MISHRA PARTHA SARATHI CHAUDHURY (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; �दनांक / Dated : 08th April, 2026. SB, Sr. PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : 1. अपीलाथ� /The Appellant. 2. ��यथ� /The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, रायपुर ब�च, रायपुर / DR, ITAT, Raipur Bench, Raipur. 5. गाड� फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur.

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