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Income Tax Appellate Tribunal, ‘C’ BENCH : BANGALORE
Before: SHRI. B.R BASKARAN & SMT. BEENA PILLAI
Date of Hearing : 25-03-2021 Date of Pronouncement : 29-03-2021 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeals have been filed by revenue against independent order is dated 04/10/2018 passed by the Ld.CIT(A), Davangere for assessment years under consideration. It has been submitted that the issue raised by revenue in all these appeals are common and identical. Therefore grounds pertaining to assessment year 2012-13 are being considered:
Page 2 of 7 to 24/Bang/2019 “1. The order of the CIT(A) is opposed to the facts and position of the Law.
Whether on facts and in circumstances of the case, the Ld.CIT(A) in allowing the deduction u/s 80 IA of Rs. 18,11,97,736/- even though the assessee has not fulfilled the basic condition as per the Section 801A(3)? 3. Whether on facts and in circumstances of the case, the Ld.CIT(A) is correct in allowing the assessee appeal when the assessee has expanded its business and not established a new power plant.
Whether on facts and in circumstances of the case, the Ld.CIT(A) is correct in allowing deduction u/s 801A(3) to the assessee company even when the assessee had initial power production from its plant started in the year 1996-97 and the period of 15 years ended in the year 2010? 5. The appellant craves leave to add, alter, amend or to delete any of the grounds of appeal
.” Brief facts of the case are as under:
2. The assessee is a limited company engaged in the manufacturing of sugar and other products and also generation of power. It filed its return of income on 30/09/2012 declaring total income of Rs.8,44,170/-after claiming deduction under section 80IA amounting to Rs.18,11,97,736/-. The Ld.AO observed that books of accounts were audited under section 44 AB of the Act.
3. During the assessment proceedings Ld.AO disallowed the deduction under section 80 IA by considering it excessive and not acceptable. The Ld.AO disallowed the claim of assessee for the reason that assessee had manufactured power since assessment year 1997-98.
4. Aggrieved by the orders of Ld.AO, assessee preferred appeal before the Ld.CIT (A).
5. Before Ld.CIT(A), the assessee submitted that it was having a steam generation unit for running the sugar mill machineries but assessee was not having any power generation unit during Page 3 of 7 ITA No.22 to 24/Bang/2019 the period following assessment year 1997-98. It was submitted that power generation for captive consumption through steam turbine was carried out by assessee which has been ignored by the Ld.AO. Assessee before Ld.CIT(A) filed supporting documents regarding the start of you who generation of power unit. Assessee also submitted the permission obtained from KP TCL, government of Karnataka undertaking and necessary bills for erection of new cogeneration unit which was started for transmission of power from 25/03/2004 onwards and the commissioning certificate of 20 MW.
6. Based on the above facts the Ld.CIT(A) is observed as under: “6a. The AO has disallowed Rs.18,20,41,909/- being deduction claimed by the appellant u/s 80A1 of the Act on the following grounds . [i] Assessee has been involved in production of power even before 1996- 97 relevant to AN 1997-98. [ii] The assessee's claim is not made within 15 years as prescribed under the Act. I have carefully considered the contention of the appellant and the Assessing Officer. I find that the AO has not appreciated that the assessee has undertaken commissioning of new undertaking for generation of power. The opinion of the AO is that the assessee was generating power from F.Y 1996-97. He had not appreciated that this generation was not through the same source for which deduction u/s 801A was claimed. The generation of power from AY 1997-98 was through Diesel Generator and Captive Steam Power. Be that as it may be, what is relevant is whether a new undertaking was established or not. Also relevant is, whether deduction u/s 801A is claimed in connection with that undertaking. The AR filed before me, the Sale Invoices of Steam Boiler and other Machineries as proof of old system having been dismantled. The same was filed before the AO too. The AO has not bothered to apply himself on that. Had he considered the same, he would not have come to the opinion that this undertaking claimed is only an expansion. The AR further submits the following documents, [1] Approval of the Government of Karnataka dated 12/09/2001 for establishing a 24. MW Co-generation plant.
Page 4 of 7 to 24/Bang/2019 [2] Copy of Government of Karnataka's "in principle clearance" for setting up Co-generation Power Plant vide letter No.DE.38NCE200 1 dated 07/11/2001. [3] Commissioning Certificate issued by Karnataka Power Transmission Corporation Limited dated 25/03/2004. [4] Copy of Commissioning approval of 1x24.45 MW TG set, 1x30 MVA, 66/11 KV Switch. [5] Approval of Drawings for Evacuation of 20 MWs power from the Co- generation Plant dated 11/04/2003. Considering all the above, I am of the opinion that the appellant has created a new undertaking and not restructuring of existing unit. Therefore, the appellant company is eligible for deduction u/s 801A of the Act. Thus, the ground succeeds.” The Ld.CIT(A) thus allowed the claim of assessee.
Aggrieved by the order of Ld.CIT(A), revenue is in appeal before us now.
The Ld.CIT.DR has filed written submission dated 25/03/2021 wherein it has been submitted that assessee was just generating power from financial year 1995-96 and through diesel generator and captive steam power. Ld.CIT.DR submitted that, when the cogeneration power plant was installed by assessee, the production diesel generator also existed. It he thus submitted that it is an extension of the available facility with the assessee and not a new production unit. He thus supported the order passed by the Ld.AO. On the contrary, the Ld.Counsel submitted that there is no extension of existing activity. She submitted that the power generation was for the captive consumption through steam turbine and that assessee had furnished all information/documents which was very well required for allowability of deduction under section 80 IA during the relevant period.
Page 5 of 7 to 24/Bang/2019 She thus relied on the observations of learn CIT (A).
We have perused submissions advanced by both sides in the light of records placed before us. There is a categorical factual observation made by the Ld. CIT (A) in his order that assessee was generating power from the new cogeneration unit which was started from 25/03/2004 onwards which was based on the commissioning certificate.
The Ld.CIT(A) has returned such findings based on allowing statutory documents: (1) Approval of Government of Karnataka dated 12/09/2001 for establishing a 24 MW Co-genetration plant; (2) reproduce from page 8 at the bottom of CIT appeal order (3) reproduce from page 9 of the top of the CIT appeal order (4) reproduce from page 9 of the top of the CIT appeal order (5) reproduce from page 9 of the top of the CIT appeal order 11. The Ld.CIT(A) based on the above documents returned a finding that there was no restructuring of existing unit. Nothing contrary is bought before us by the Ld.CIT.DR in support of his argument. We therefore do not find any infirmity in the observations of Ld.CIT(A) and the same is upheld. Accordingly grounds raised
by revenue for assessment year 2012-13 stands dismissed.
12. Facts for the subsequent assessment years being 2013-14 and 2014-15 are identical and the issues raised by revenue are similar with assessment year 2012-13.
Page 6 of 7 to 24/Bang/2019