SANJAYKUMAR D. LOKHANDE, PUNE vs. DAMODAR JAGANNATH MALPANI, SANGAMNER

ITSSA 26/PUN/2024Status: DisposedITAT Pune27 September 2024AY 2015-1624 pages
AI SummaryDismissed

What were the facts?

The Revenue filed six appeals against the orders of the CIT(A) for assessment years 2015-16 to 2020-21. The assessee, Damodar Jagannath Malpani, is a firm engaged in manufacturing tobacco, power generation, and share trading. A search action under section 132 was conducted on February 17, 2021. The Assessing Officer disallowed a deduction of Rs. 31,82,48,769 claimed by the assessee under section 80IA(4)(iv)(a) for profits from wind and solar power generation. The AO argued that each windmill project should not be treated as a separate undertaking and that section 80IA(5) requires computation as if the eligible business were the only source of income, which showed a loss. The CIT(A) allowed the deduction, relying on the assessee's submissions and previous Tribunal orders.

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, dismissing the Revenue's grounds of appeal. Regarding the first issue, the Tribunal found that the CIT(A)'s order was fair and reasonable. It noted that the assessee had presented arguments that each undertaking was independent, maintained separate accounts, and filed separate audit reports. The Tribunal also observed that the issue had been decided in favour of the assessee in their own case by the ITAT for earlier assessment years, and the Revenue had not pointed out any distinguishing features or brought any contrary material from higher judicial forums. The Tribunal held that merely because the Revenue challenged a favourable decision before the High Court, which was pending, was not a basis for taking a contrary view. The Tribunal also addressed the second issue concerning the initial assessment year for claiming deduction under section 80IA, referencing a previous decision of the Tribunal in the assessee's own case. The Tribunal held that the initial assessment year is the year in which the deduction was first claimed by the assessee after exercising their option under section 80IA(2), relying on decisions of the ITAT and the Madras High Court. The Revenue could not bring any contrary decision. Therefore, the relief granted by the CIT(A) on this issue was also upheld.

What were the issues?

1. Whether the deduction under section 80IA(4) of the Income Tax Act, 1961, for profits from wind and solar power generation can be claimed for each windmill project treated as a separate undertaking, or if the entire power generation business should be considered as a single undertaking. Assessee's Contention: The assessee argued that each undertaking is set up at different locations, functions independently, has separate power purchase agreements, maintains separate books of accounts, and files separate audit reports. The use of 'an' in section 80IA(4) implies a singular undertaking, and section 80IA(5) refers to the eligible business mentioned in sub-section (1), not prohibiting claims for individual undertakings. They relied on the Tribunal's decision in their own case for earlier assessment years and other High Court and ITAT decisions. Revenue's Contention: The Assessing Officer contended that there is no mandate to treat each windmill project as a separate undertaking, and section 80IA envisages only two classifications: eligible and non-eligible business. The AO also argued that the issue had not attained finality, citing Supreme Court SLPs in similar cases. Furthermore, the AO noted that the eligible business of power generation showed a loss, making the deduction impermissible under section 80IA(5). 2. Whether the initial assessment year for claiming deduction under section 80IA(3) can be chosen by the assessee, or if it is determined by the year of installation.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A,Section 143(2),Section 142(1),Section 80IA(4),Section 80IA(5),Section 80IA,Section 80IA(4)(iv)(a),Section 80IA(3),Section 80IA(2),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI R. K. PANDA & MS ASTHA CHANDRA

For Appellant: Shri Nikhil S Pathak, Shri Amol Khairnar, CIT-DR

PER BENCH:

The above batch of 6 appeals filed by the Revenue are directed against the orders dated 30.01.2024 of the CIT(A), Pune-11 relating to assessment years 2015- 16 to 2020-21, respectively. Since identical grounds have been raised in these appeals, therefore, for the sake of convenience, these appeals were heard together and are being disposed of by this common order.

2.

First, we take up ITA No.26/PUN/2024 as the lead case. Facts of the case in brief, are that the assessee is a firm mainly engaged in the business of manufacturing, packaging & selling of Tobacco, Jarda & allied byproducts, generation of power from windmill & solar, business in sh

The order continues below.

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