Cethar Limited, Trichy V. DCIT, Trichy

ITA 1052/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4696 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 20-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 1052/MDS/2013 ASSESSMENT YEAR 2005-06 CETHAR LIMITED, NO.4, DINDIGUL ROAD, TRICHY-620 001. [PAN: AAACC 2721 M] VS DY. COMMISSIONER OF INCOME TAX, CIRCLE-I(1), TRICHY (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PHILIP GEORGE, ADVOCATE RESPONDENT BY : SHRI N. MADHAVAN, JCIT DATE OF HEARING : 11-11-2013 DATE OF PRONOUNCEMENT : 21-11-2013 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-TIRUCHIRAPA LLI, DATED 20-02-2013, RELEVANT TO THE ASSESSMENT YEAR (AY) 20 05-06. 2. THE ASSESSEE-COMPANY IS MANUFACTURER OF BOILERS AND IN BUSINESS OF GENERATION OF ELECTRICITY THROUGH WIND MILLS. THE I.T.A. NO. 1052/MDS/2013 :- 2 -: ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY. 200 5-06 ON 27-10-2005 DECLARING ITS INCOME AS ` 39,69,73,114/- . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE W AS ISSUED TO THE ASSESSEE U/S.143(2) OF THE ACT (HEREIN AFTER RE FERRED TO AS THE ACT) ON 25-10-2006. THE ASSESSING OFFICER VIDE AS SESSMENT ORDER DATED 28-12-2007, DIS-ALLOWED CERTAIN EXPENSE S ON BUILDING MAINTENANCE WHICH WERE TREATED AS REVENUE IN NATURE BY THE ASSESSEE. THE ASSESSING OFFICER TREATED THE SAME A S CAPITAL IN NATURE. THE ASSESSING OFFICER FURTHER DIS-ALLOWED ENTERTAINMENT EXPENSES, HOLDING THEM AS PERSONAL IN NATURE. THER EAFTER, RE- ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE A SSESSEE. NOTICE U/S.148 WAS ISSUED TO THE ASSESSEE ON 26-02- 2010. IN RE- ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD CLAIMED THE BENEFIT OF DEDUCTION U/S.8 0IA ON THE AMOUNT OF ` 38,79,459/- WHEREAS ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80IA ONLY ON ACTUAL SALE OF POWER TO TAMIL NADU ELECTRICITY BOARD [TNEB] I.E., ` 13,36,848/-. THE ASSESSING OFFICER DIS-ALLOWED THE DEDUCTION U/S.80IA ON THE REMAINING AMOUNT OF ` 25,42,611/-. THE ASSESSEE FILED AN APPEAL ASSAILIN G THE ORDER DATED 24-12-2012 PASSED U/S. 143(3) R.W.S. 147 BEFO RE THE I.T.A. NO. 1052/MDS/2013 :- 3 -: CIT(APPEALS). THE CIT(APPEALS) CONCURRED WITH THE DECISION OF THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF T HE ASSESSEE. NOW, THE ASSESSEE HAS COME IN APPEAL BEFORE THE TRI BUNAL IMPUGNING THE ORDER OF THE CIT(APPEALS). 3. SHRI PHILIP GEORGE, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS GENERATING ELECTRICITY AND IS SUPPLYING TO TNEB. AT THE SAME TIME, THE AS SESSEE IS ALSO BUYING ELECTRICITY FROM TNEB. THE ASSESSEE IS PAYI NG NET CHARGES TO THE TNEB AFTER GETTING THE CREDIT OF ELE CTRICITY UNITS SUPPLIED TO TNEB. THE ASSESSEE IS ENTITLED TO CLAI M BENEFIT OF DEDUCTION U/S.80IA ON THE TOTAL UNITS GENERATED. 4. ON THE OTHER HAND, SHRI N. MADHAVAN, APPEARING O N BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDERS OF T HE AUTHORITIES BELOW AND PRAYED FOR DISMISSAL OF THE A PPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE I.T.A. NO. 1052/MDS/2013 :- 4 -: ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE CIT(APPEALS) HAS DISMISSED THE APPEAL OF THE ASSESSEE BY FOLLOWI NG THE DECISION OF THE HONBLE SUPREME COURT OF INDIA IN T HE CASE OF CIT VS. CAMBAY ELECTRIC SUPPLY INDUSTRIAL COMPANY LIMIT ED REPORTED AS 113 ITR 84 (SC) . THE HONBLE SUPREME COURT IN THE SAID CASE HAD EXPLAINED THE TERMS ATTRIBUTABLE TO AND DERI VED FROM AND HAD GIVEN DISTINCTION BETWEEN THE TWO WHILE COMPUTI NG DEDUCTION U/S.80E. WE FIND THAT THE RATIO LAID DOWN BY THE H ONBLE SUPREME COURT IN THE CASE OF CIT VS. CAMBAY ELECTRIC SUPPLY INDUSTRIAL COMPANY LIMITED (SUPRA) IS NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. IN THE INSTANT CASE, THE ASSESSEE IS GENERATING AND SUPPLYING ELECTRICITY TO TNEB AS WELL AS TO SOME THIRD PARTIES. AT THE SAME TIME, THE AS SESSEE IS BUYING ELECTRICITY FROM TNEB. INSTEAD OF MAKING P AYMENT FOR THE UNITS PURCHASED FROM THE ASSESSEE, THE TNEB GIVES CREDIT OF THE UNITS PURCHASED FROM THE ASSESSEE AND RAISES THE NE T BILL. THUS, IT CANNOT BE SAID THAT THE INCOME EARNED BY THE ASS ESSEE BY SUPPLYING THE UNITS TO THE TNEB FALLS WITHIN THE ME ANING OF TERM ATTRIBUTABLE TO AS EXPLAINED BY THE HONBLE APEX COURT. IT IS A CASE WHERE THE ASSESSEE IS DERIVING INCOME FROM GEN ERATION OF I.T.A. NO. 1052/MDS/2013 :- 5 -: ELECTRICITY. THE ASSESSEE INSTEAD OF GETTING CASH BENEFIT, IS GETTING CREDIT FOR THE UNITS SUPPLIED TO THE GOVT. AGENCY. 6. WE ARE OF THE CONSIDERED OPINION THAT THE ASSESS EE IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S.80IB ON TH E ENTIRE UNITS GENERATED AND SOLD TO TNEB AS WELL. WE ARE REMITTI NG THIS ISSUE BACK TO THE ASSESSING OFFICER FOR THE LIMITED PURPO SE OF VERIFYING THE UNITS GENERATED AND SOLD TO TNEB ON WHICH THE A SSESSEE IS ENTITLED TO CLAIM BENEFIT OF DEDUCTION U/S.80IB. 7. NO OTHER GROUND WAS RAISED BY THE LD. COUNSEL FO R THE ASSESSEE DURING THE COURSE OF ARGUMENTS. THE APPEA L OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THURSDAY, THE 21 ST NOVEMBER, 2013 AT CHENNAI. SD/- SD/ - (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (VIKAS AWASTHY) JUDICIAL MEMBER DATED: 21 ST NOVEMBER, 2013 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR