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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI D.S.SUNDER SINGH
आदेश / O R D E R
PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:
This is an appeal filed by the Revenue against the Orders of
Commissioner of Income Tax (Appeals)-, Chennai, in ITA No.724 /CIT(A)-
2013-14 fror the AY 2008 –09 and708/2013-14 & 170/2014-15 for the
A.Y.210-11 and 2011-12. Since the common issues are involved in all the
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above appeal the appeals are clubbed and heard together and disposed off
in a common order as under:
The common grounds raised by the assessee in this appeal are as follows:
The order of the learned CIT(A) is contrary to law and facts of the case. 2.1 The learned CIT(A) erred in deleting the disallowance on Deduction u/s.80IA(4)(iv). 2.2 Having regard to the Hon’ble ITAT’s decision in the case Armstrong Knitting Mills (P.) Ltd vs. DCIT (2013) 56 SOT 334, (Chennai — Trib), the Learned CIT(A) ought to have upheld the action of the AO in rejecting the assessee’s claim on Deduction u/s.80IA(4). 2.3 The learned CIT(A) ought to have appreciated the findings of the AO that as the assessee had acquired the business of generating power from M/s.K.A. Infrastructure Pvt.Ltd which was earlier generating power through windmills taken on lease, the assessee’s case is hit by section 80IA(3)(ii). 2.4 The learned CIT(A) ought to have appreciated the findings of the AO that as the assessee is not the owner of the windmills, he runs the windmills in the status of a works contractor and hence not eligible for Deduction u/s. 80IA(4). 3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored.
2.0 All the grounds of the appeal are related to the deduction u/s.80-
IA(4)(iv) of Income Tax Act (in short ‘the Act’). The assessee is engaged
in the generation of power. The assessee has taken the wind mills on long
lease for 20 years lease from M/s.Khivraj Holdings Pvt. Ltd. and others,
and generating power and claiming the deduction of u/s.80-IA(4)(iv) of
the Act. The assessee claimed the deduction u/s.80-IA(4)(iv)for the AY
2008-09 to 2011-12 as under:
2008-09 1,54,28,763.00 2009-10 For the AY the AO has made the addition and the Ld.CIT(A) allowed the assessee’s appeal and the Department is yet to file the appeal before this Tribunal. 2010-11 3,88,28,746.00 2011-12 3,07,68,050.00
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3.0 The Assessing Officer (in short ‘AO’) disallowed the deduction
claimed u/s.80-IA(4)(iv) on power generation, since the wind mills were
taken on lease from the group concerns and of the view that the
generation of wind energy by taking wind mills on lease will amount to
splitting of the business, and hence the assessee is not the owner of the
wind mills:
On the two above presumptions, the AO disallowed the deduction
claimed by the assessee. For ready reference and clarity we extract the
relevant Para No.3.3 to 3.8 of Assessment Order:
3.3 The assessee brought the above windmills from its Group concern and from one of the director of the company. As per lease deed, the ownership is retained by the lessor and lease hold right alone is given to the lessee. The lease is for a period of 20 years. By one stroke, the lessor without running the wind mills gets the benefit of depreciation and lessee without owing the windmills gets the benefit of deduction u/s.80IA(4)(iv). That is not the intention of the legislature. Now the issue is whether the assessee company is entitled to claim deduction u/s.80IA(4)(iv) of the IT Act. Section 80IA(4)(iv)(a) reads ‘an undertaking which is set up in any part of India for the generation or generation and distribution of power….“. 80IA(3) prescribes certain conditions to be fulfilled in order to claim deduction u/s.80IA(4)(iv). An extract of Section 80IA(3) is reproduced below for ready reference:
“This section applies to an undertaking referred to in clause (ii) or clause (iv) of sub section (4) which fulfils all the following conditions, namely :-
(i) it is not formed by splitting up, or the reconstruction, of a business already in existence.
Provided that this condition shall not apply in respect of an undertaking which formed as a result of the reestablishment, reconstruction or revival by the assess of the business of any such undertaking as is referred to in section 33B, in circumstances and within the period specified in that section (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose.
3.4 Section 80IA(4)(iv) only states that the section applies to an undertaking that is set up in India for generation and distribution of power and to an aasessee or an undertaking who is involved in the operation and maintenance of wind mills taken on lease. Section 80IA(4)(iv) does not have any provision to grant deduction to an undertaking which is only operating and maintaining a power plant. Sooner the ownership is retained by one person and lease hold rights alone passed on to the other, it amounts to splitting up the business already in existence.
3.5 An examination of the lease deeds, it is revealed that the assessee is not the owner of any of the above windmills. Though the assessee has stated to have taken the windmills on financial lease, still the ownership ties with the lessor. The assessee being the lessee cannot claim absolute ownership on the windmills. Even para 19 of the tease agreement
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says that the “LESSEE shall hand over possession of the Wind mill with all related equipments, fittings etc. on completion of the lease period specified hereunder in good order and condition subject to normal wear and tear.” This clause once again emphasis the stand of the Department that the assessee is allowed only to operate and maintain the wind mill and return the wind mills to its original owner after the expiry of lease period of 20 years.
3.6 According to section 80IA(5), “the profits and gains of an eligible business to which the provisions of Sub Section (1) apply shall, for the purpose of determining the quantum of deduction under that sub section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year………….”.
3.7 The assessee company furnished a copy of P&L A/c in respect of its 80IA(4)(iv) units. The assessee has not booked any depreciation on account of the above windmills. This goes to show that he is not the owner of the windmill. He only pays the lease charges to the owner i.e. lessor of the wind mills. In order to claim deduction u/s.80IA(4)(iv), one should be a owner of the windmill. It is strengthened by section 80IA(3). According to this section, the undertaking should not be formed by splitting up or it is not formed by the transfer to a new business of machinery or plant previously used for any purpose. When the windmill is taken on tease, it attracts the provisions of section 80IA(3).
3.8 The status of the assessee is only in the nature of a contractor. Since he is not the owner of the windmill, he runs the windmills in the status of a works contractor. This stand is supported by Explanation to section 80IA which is reproduced below:
“For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub section (4) which is in the nature of a works contract awarded by any person (including the Central or State Government) and executed by the undertaking or enterprise referred to in sub section (1 )“.
4.0 Aggrieved by the order of the AO, the assessee went on appeal
before the Commissioner of Income Tax(Appeals) (in short ‘CIT(A)’) and
the Ld.CIT(A) deleted the addition made by the AO holding that there is
no requirement in law to own the assets to claim the deduction u/s 80IA.
The assets taken on lease by the assessee for generation of power were
not used by the lessors and the assessee is using the wind mills from the
day one of it’s installation hence it cannot be held as formed by splitting.
The Ld.CIT(A) observed that the assessee has satisfied all the conditions
laid down by section 80IA and hence eligible for the deduction. The
Ld.CIT(A) also relied on the decision of the Hon’ble Madras High Court in
WP No.11871/2011 in the assessee’s own case dated 28.10.2011.
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5.0 Aggrieved by the Order of the Ld.CIT(A), the Department is on
appeal before this Tribunal.
It is a fact that the assessee has taken the wind mills on lease from
its concerns M/s.Khivraj Holdings Pvt. Ltd., and generating the power.
The wind mills were purchased by the M/s.Khivraj Holdings Pvt. Ltd., and
other group concerns and given on lease to the assessee before being put
to use. The assessee has installed the machinery, completed all the
formalities such as registration with Electricity Board and generating the
power. The assessee is paying the lease rentals on wind mills and claimed
the same as deduction. The assets were never used by the lessor before
giving it on lease to the assessee. These facts were confirmed by the both
the parties and was also in the Assessment Order dated 22.03.2016. The
Ld.CIT(A) in his order allowed the assessee’s appeal holding that there
was no requirement to own the assets for claiming the deduction u/s.80-
IA(4)(iv) of IT.Act and taking the assets on lease does not amount to
splitting up of business. The Ld.CIT(A) brought out all the facts in his
appellate order and discussed the issue elaborately. For the sake of
convenience and clarity, we extract relevant paragraphs of the Ld.CIT(A)
order (for the AY 2008-09) as under:
4.2. I have considered the assessee’s submissions as well as the contents of the assessment order carefully. The Assessing Officer in his assessment orders disallowed the assessee’s claim of deduction u/s.80IA(4)(iv) of the Income Tax Act, mainly for two reasons, i.e. — (i) That the assessee is not the owner of the windmills, and (ii) That the assessee’s business of power generation from windmills was splitting up of the business.
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4.3 On the other hand, the assessee’s claim is that there is no provision in the I.T. Act, that mandates the ‘ownership’ over the windmills for claiming deduction u/s.80IA(4)(iv) of the Act. Since the windmills were ‘brand new’ and taken on lease from the very first day of their erection, these windmills are not the pre-used ones. Hence, the question of splitting up of business does not apply in its case.
4.4 In the case of ‘undertakings’ engaged in ‘generation’, or ‘generation and distribution‘ of electricity, special deduction from the incomes are provided u/s.80IA(4)(iv) of the Act. As per the provisions, the requirement is that the ‘undertaking’ should be engaged in “generation” or “generation and distribution” of electricity. Nowhere in the statutes it was prescribed that the undertakings should own the ‘assets’ (i.e. windmills) under consideration. The relevant provisions are as under:
Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.
Sec.80-IA. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years.
(2) ……………..
(2A)………………..
(3) This section applies to an undertaking referred to in clause (ii) or clause (iv) of sub-section (4)! which fulfils all the following conditions, namely :—
(i) it is not formed by splitting up, or the reconstruction, of a business already in existence:
Provided that this condition shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section;
(ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose:
Provided that nothing contained in this sub-section shall apply in the case of transfer, either in whole or in part, of machinery or plant previously used by a State Electricity Board referred to in clause (7) of section 2 of the Electricity Act, 2003 (36 of 2003), whether or not such transfer is in pursuance of the splitting up or reconstruction or re-organisation of the Board under Part XIII of that Act.
Explanation 1.—For the purposes of clause (ii), any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely
(a) such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India; (b)such machinery or plant is imported into India from any country outside India; and (c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of machinery or plant by the assessee.
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Explanation 2.—Where in the case of an undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this sub-section, the condition specified therein shall be deemed to have been complied with.
(4) This section applies to— (i)………… (ii)………… (iii)…………… (iv) an undertaking which,—
(a) is set up in any part of India for the generation or generation and distribution of power if ii begins to generate power at any time during the period beginning on the 1st day of April, 1993 and ending on the 31st day of March, 2011;
(b)…………………….. (c)…………………….. [underscore & emphasis supplied]
4.5 The assessee has taken seven windmills on lease from various concerns in the earlier financial years. These windmills were originally erected by various concerns of the Khivraj group (or the assessee group). On erection, but before putting them to use, these windmills have been leased out to M/s. K.A. Infrastructure P. Ltd., on a twenty year lease basis. The owners retained the ownership rights and started claiming the depreciation. M/s. K.A. Infrastructure P. Ltd. started operating these windmills and generating the electricity. The lease rents paid to the owners was being claimed as expenditure against the electricity income. The assessee started claiming deduction u/s.80IA(4)(iv) on these windmills, contending that it is actually engaged in generation of wind energy from the windmills and the windmills were not pre-used before. The claim of deduction u/s.80IA(4)(iv) on the above windmills, in the hands of the present assessee (i.e. M/s.K.A. Infrastructure P. Ltd) continued up to the A.Y;2009- 10. (Consequent to the scheme of amalgamation approved by the Hon’ble High Court of Madras, business of “operating the wind mills has been transferred from M/s.K.A. Infrastructure P Ltd to M/s.Khivraj Automobile and Infrastructure P Ltd, w.e.f 01.04.2009. Hence, M/s.Khivraj Automobile and Infrastructure P Ltd, started claiming deduction u/s.80IA(4)(iv) of the Act from A. Y.2010-11 onwards).
4.6 As mentioned above, there is no requirement in the statutes that the undertaking should own the windmills before generating the wind energy for the purpose of claiming deduction u/s.801A(4)(iv) of the Act. As held by the Hon’ble High Court of Madras, in the assessee’s own case, even the power generated from the windmills taken on lease is eligible for deduction u/s.801A(4)(iv) of the Act. The background and the details of the judgment are as under:
4.7 M/s. K.A. Infrastructure P Ltd filed an application for recognition u/s.10(23G) Act, to the Central Board of Direct Taxes. One of the conditions for recognition s.10(23G) is that the undertaking should fulfill all the conditions mentioned under sub-sections (3) and (4) of section 80IA of the Act. The CBDT, observed that M/s.K.A. Infrastructure P Ltd has not satisfied the conditions laid down u/s.80IA(4)(iv) of the Act, read with sub-section (3), on account of the generation of power by taking the windmills on lease. Hence, the CBDT rejected the application filed for recognition u/s. 10(23G) of the Act. Aggrieved against the above decision of the CBDT, M/s. K.A. Infrastructure P Ltd filed a writ petition before the Hon’ble High Court of Madras. The Hon’ble High Court, while disposing of the above writ petition (in WP 11871 of 2011 on 28.10.2011) has observed that there is no prohibition in the Act that ‘power generated from the windmills taken on lease’ is not eligible for deduction u/s.80IA(4)(iv) of the Act. Accordingly, the Hon’ble High Court, in its order in WP 11871 of 2011 dated 28.10.2011, held that M/s. K.A. Infrastructure P Ltd is eligible for deduction u/s.80IA(4)(iv) of the Act, as it has fulfilled the requisite conditions of section 80-IA(4) of the Act and consequently entitled for recognition u/s.10(23G) of the Act. The relevant portion of the judgment is as under:
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Section 80 IA appearing in chapter VA, deals with straight deduction to be made in computing total income. A reading of the provisions of section 80IA of the Income Tax Act shows that it grants deduction from the total income of the assessee, an amount equal to 100% profit and gains derived from the business engaged in the infrastructure development for ten consecutive assessment years. Sub-section (3) gives the qualification of the undertaking which are eligible to have the benefit under section 80IA.
A reading of the said provision shows that the benefit under section 80IA available to industries, covered under sub clause (iv) of sub section (4), is not available to companies, which are formed by splitting up, or the re-construction, of a business already in existence, and new business which is formed by the transfer of the plant and machinery already in use for any purpose. Explanation (1) there under states that machinery used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, subject to the stated conditions. We are not concerned about this in the present case before us. Sub-clause (iv) to sub-section (4) of the section 80-IA is a specific provision on enterprises engaged in generation or generation and distributing of power. Sub-clause (iv) contains two sub-divisions, the first of which is as regards the undertaking set up for the generation or generation and distributing of power; the undertaking has to begin its operation as early as 1993 and ending 2006 amended periodically, which is now amended and extended to 31st March, 2011. Sub Clause (b) of Clause (iv) or Sub Section (4) of Section of 80 IA is with reference to laying a network of new transmission or distribution lines at any time during the period beginning on the 1st day of April 1999 and ending on 31st March, 2011. The proviso states that the deduction under sub-clause (b) would be available only in relation to the profits derived from laying of such network of new lines for transmission or distribution. The third clause relates to renovation and modernization of the existing network.
The reading of the above said clauses thus makes it clear that as far as deduction under section 80-IA with reference to undertakings which are there for generation and distribution of poser is concerned, the qualification is generation or generation and distribution of power. Read with sub-section (3) the undertaking is not formed by splitting up or the reconstruction or a business already in existence or formed by the transfer of plant and machinery used for any purpose to a new business. Thus an enterprise which is engaged in the generation or generation and distribution of power qualifies for a deduction, subject to satisfying sub-clauses in the section. Considering the fact that the deduction is with reference to the undertaking generating or generating and distributing of power, the deduction would be available at the hands of the lessee assessee, which is engaged in the generation or generation and distribution of power and there is no restrictive clause therein that the benefit attached to the undertaking would be deprived on a lease given in contradistinction to a case of new industry which cannot claim the relief if it were to use that plant and machinery previously used for any purpose. Thus the prohibition prescribed under sub-section (3) says nothing about lease of the undertaking. As already pointed out by the learned counsel appearing for the petitioner, the section itself being very clear that the qualification for deduction is available to an undertaking engaged in the generation or generation and distribution of power, in the absence of any of the disqualification as given under sub-section (3) present here, the petitioner cannot be denied of the relief.
I agree with the submission made by the learned counsel appearing for the petitioner that in contradistinction to sub-clause (v) to sub-section (4) of section 80IA, there is no qualification to be read into the term “undertaking” so as to be restrictive of an assessee to be a owner alone to claim the benefit under Section 80IA. Contrary to the assertion of the learned standing counseling appearing for the Revenue, I do not find anything in sub-section (3) of Section 80IA, which would go against the claim of the assessee herein; that the mere fact that the assessee is a lessee, per se, does not result in any disqualification to reject the deduction claim falling under Section 80IA. The facts herein are that the windmill was already in use by the lessor, which was now sought to be given on lease to the assessee. Thus, if the claim is to fall under clause (a) to sub-clause (iv) to Subsection (4), so long as
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the windmill is one already set up from the qualifying date 1st April, 1993, and it has been in generation of power and distribution of energy thereon, I do not find any ground to reject the plea of the assessee for grant of approval under Section 10(23G) of the Income Tax Act.
A reading of Section 10(23G) of the Income Tax Act shows that where an assessee makes an application in respect of the income by way of dividend or by way of tong term funding in any enterprise or undertaking engaged in the business referred to under Section 80IA(4) or (3) or section 80IB(10) approved by the Central Government, the same shall be exempted in the computation of income. Explanation (1) to Section 10(23G) defines ‘infrastructure capital company and infrastructure capital fund’. As far as infrastructure capital company is concerned, it is defined to mean company, which had made investment by way of acquiring shares or providing long term finance to an enterprise wholly engaged in the business of referred to in this clause. It is no doubt true that Section 10(23G), inserted, with effect from 01.04.1997, was subsequently omitted from the statute. As the law then stood, given the definition of an eligible business under the provisions of Section 80IA and the fact that the assessee has taken on lease the windmill, which is infrastructure facility, I have no hesitation in allowing the Writ Petition, thereby quashing the order passed by the Central Board of Direct Taxes.
Touching on the scope of Section 84 as it ordinarily stood, later on substituted as Section 80J before its repeal, the Central Board of Direct Taxes, tilde F.No. 15/5/63-IT (AT) dated 13.12.1963, pointed out that “the benefit of Section 84 of the Income Tax Act 1961 (now- Section 80J) attaches to the undertaking and not to the owner thereof. The successor will be entitled for the unexpired period of five years provided the undertaking is taken over as a running concern’. As far as the present case is concerned, the reasoning of the Board went on the aspect of lease, a fact which does not stand in the way of the assessee claiming approval under Section 10(23G) or the relief under Section 80IA(4).
4.8 Thus, from the above, it is clear that “ownership” over the windmills is not a pre- requisite for the purpose of availing deduction u/s.80IA(4)(iv) of the Act. What is required to be seen is whether the assessee is engaged in generating the wind energy or not. Therefore, the above decision of High Court makes it clear that the assessee is eligible for deduction u/s.80-IA(4) of the Act, even on income derived from generation of power from the windmills taken on lease.
4.9 The next contention of the Assessing Officer is that the assessee’s “generation of wind energy by taking the windmills on lease” will amount to splitting up of the business. As per the Assessing Officer, the windmills are owned by some other assessees. The moment these windmills are leased out to another assessee, it will amount to splitting up of business and hence the present assessee (being the lessee) is not eligible for deduction u/s.80IA(4)(iv) of the Act.
4.10 The above contention of the Assessing Officer is also not well founded. As per the statutes, one of the requirements u/s.80IA(4)(iv) is that ‘it should not be by splitting up of the existing business’. Here, splitting up of business is with respect to the existing business. In other words, if there is an existing business, any new branch/unit by splitting up of such existing business will not be eligible for deduction. It is not with respect to a newly/freshly started business. In the present case there was no existing business of ‘power generation’ earlier. All the persons who owned the windmills (which are the subject matter of present lease to the assessee company) have not exploited the windmills for power generation on their own. All these windmills are the new windmills acquired by the said persons (owners). They never put these windmills to use. Thus, the business of ‘power generation from the wind mills’ never came into existence in the hands of owners. Immediately after acquiring the windmills, the owners let out these windmills to the present assessee company, on a twenty year lease basis. Only thereafter, the present assessee company (i.e. M/s. K.A. Infrastructure P Ltd) started generating the wind energy from these windmills. Thus, the present windmills are, for the first time, put to use by the present assessee company only. Thus, the generation of wind energy from the present windmills, started with the instant assessee company only. In other words, as far the
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generation wind energy is concerned, there is no splitting up of the business, as contemplated the Assessing Officer in his assessment order.
4.11 Under the provisions of section 80-IA(4)(iv) of the Income Tax Act, any undertaking which is engaged in - (i) ‘generation’; or (ii) ‘generation and distribution’ of power commencing from the A.Y. 1993-94, is eligible for 100% deduction of its profits for a period of 10 successive assessment years. Sub-section (3) of section 80IA imposes two restrictions before claiming deduction u/s.80IA. The restrictions or conditions imposed are-
(i) That the undertaking is not formed by splitting up or reconstruction of a business which is already in existence; (ii) That it is not formed by transferring any previously used plant and machinery.
4.12 As mentioned above, the present windmills (which are the subject matter of lease with the assessee) were not put to use by the lessors or any other persons, in any manner for any purpose, before they are leased to the present assessee. Hence, the present windmills are “not previously used” plant and machinery, thus satisfying the second condition mentioned above. Also as detailed in the earlier paragraphs, there was no business of ‘generating’ or ‘generation and distribution’ of power using the above windmills, either in the hands of the concerned owners of the windmills or in the hands of any other persons. The generation of power by the present assessee company from the above windmills is for the first time, and hence, forms a new business. Mere letting/leasing out of brand new windmills (without putting them to use before) can not constitute the business of ‘generating’ or ‘generation and distribution’ of power. It only constitutes a “business of leasing”. Thus, letting out/ leasing out of brand new windmills will not constitute ‘splitting up’ of the business of ‘generation’ or ‘generation and distribution’ of power. It is also important to emphasize here that ‘splitting up of a business already in existence’, means the splitting up of the ‘business of generation of power’ only, which is not the case in the present situation. Therefore, even the first condition imposed by the sub-section (3) of section 80IA stands satisfied in favour of the assessee. Thus, the Assessing Officer’s observations that the assessee’s business of generation of wind energy was formed by splitting up of business, is not in accordance with the provisions of the I.T. Act.
4.13 It is also important to mention here that the same (above) facts were before the Hon’ble High Court of Madras while deciding the above mentioned writ petition in WP.11871 of 2011. In the said order, the Hon’ble High Court had clearly held that ‘of power by “taking the windmills on lease” is also entitled for deduction s.80IA(4)(iv) of the Act. As held by the court, there are no conditions imposed by the statutes that the windmills should be owned by the undertaking. There is a clear underlying principle in this judgment. When ‘generation’ of power by taking the windmills on lease is held to be entitled for deduction u/s.80IA(4)(iv) of the Act it also implies and clarifies that the leasing out of brand new windmills will not amount to splitting up of business of power ‘generation’. Thus, in view of the above decision of the jurisdictional High Court, it is clear that the present business of ‘generation’ of power is not by ‘splitting up’ of an existing business.
4.14 In view of the above discussions and the judgment of the jurisdictional High Court in the assessee’s own case (in WP 11871 of 2011 dated 28.10.2011), the assessee is entitled for deduction u/s.80IA(4)(iv) of the Act. The Assessing Officer is directed to allow the assessee’s claim of deduction u/s.80IA(4)(iv) of the Act. The assessee succeeds in its appeal in this regard.
From the plain reading of the sections 80-IA(4)(iv), there was no
bar on the assessee to generate power by taking the assets on lease for
claiming deduction u/s 80IA(4)(iv). The conditions for granting the
deduction as laid down in section 80IA are (i) generation of power (ii) the
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unit should not formed by the splitting up of business and (iii) the unit should have been formed during period 01/04/1993 to 31/03/2017 apart from other conditions maintenance of accounts and filing of the tax audit report and filing the return of income before the due date. The assessee has satisfied all the conditions and this fact was not disputed by the Ld.DR during the appeal. Since the assets were not put use by the lessor and the assets were first put to use by the assessee for power generation we do not find any infirmity in the order of the Ld.CIT(A) and the same is
upheld. This view is supported by the decision of Hon’ble jurisdictional High court in assessee’s own case in WP 11871 of 2011 filed in connection with granting approval u/s.10(23G) of IT Act relied upon by the CIT(A). The Revenue’s appeals for the AYs 2008-09, 2010-11 & 2011-12 are dismissed. 6.0 In the result, the appeals of the Revenue are dismissed.
Order pronounced in the Open Court on 3rd May, 2017, at Chennai. Sd/- Sd/- (एन.आर.एस. गणेशन) ("ड.एस. सु�दर %संह) (N.R.S. GANESAN) (D.S.SUNDER SINGH) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER चे�नई/Chennai, 6दनांक/Dated: 3rd May, 2017. TLN आदेश क1 /�त%ल7प अ8े7षत/Copy to: 1. अपीलाथ./Appellant 4. आयकर आयु9त/CIT 5. 7वभागीय /�त�न�ध/DR 2. /0यथ./Respondent 6. गाड+ फाईल/GF 3. आयकर आयु9त (अपील)/CIT(A)