Nava Bharat Ventures Limited, Hyderabad V. DCIT, Hyderabad

ITA 1095/HYD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61960 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 06-11-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V SIVA KUMAR
• Assessee Lawyers: K GYANA PRAKASH
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DAY, JUDICIAL MEMBER ITA NOS. 37 & 1108/HYD/2009 ASSESSMENT YEARS: 2005-06 & 2006-07 DY. CIT, CIR-16(1), APPELLANT HYDERABAD. VS. NAVA BHARAT VENTURES LTD., ... RESP ONDENT HYDERABAD. PAN: AAACN 7327 C ITA NOS. 61 & 1095/HYD/2009 ASSESSMENT YEARS: 2005-06 & 2006-07 NAVA BHARAT VENTURES LTD., ... APPE LLANT HYDERABAD. PAN: AAACN 7327 C -VS- DY. CIT, CIR-16(1), .. RESPONDENT HYDERABAD. APPELLANT BY : SHRI K. GYANA PRAKA SH RESPONDENT BY : SHRI V. SIVA KUMAR DATE OF HEARING : 28-06-2012 DATE OF PRONOUNCEMENT : 20/07/2 012 ORDER PER SAKTIJIT DEY, J.M.: THESE FOUR APPEALS, TWO BY THE REVENUE AND OTHER TWO BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS O F CIT (A)-V, HYDERABAD AND THEY PERTAIN TO THE ASSESSMENT YEARS 2005-06 & 2006-07. SINCE COMMON POINTS ARE INVOLVED IN ALL THESE APPEALS, .2 ITA NOS.61 & 1095/09 AND OTHERS NAVBHARAT VENTURES, HYD. THESE ARE CLUBBED TOGETHER AND DISPOSED OF BY THIS COMBINED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST LET US DEAL WITH ASSESSES APPEALS VIZ., ITA NOS. 61 AND 1095/HYD/09 PERTAINING TO ASSESSMENT YEARS 2005 - AND 2006-07. GROUND NOS. 2(A) & 2(B) IN ITA NO. 61/HYD/ 2009 AND GROUND NOS. 2(A), 2(B) AND 2 (C) IN ITA NO.1095/HYD /09 ARE IDENTICAL. HENCE, FOR SAKE OF CONVENIENCE, WE DEAL WITH THE FACTS INVOLVED IN ITA NO.61/HYD/09. 3. BRIEF FACTS OF THE CASE ARE, THE ASSESSEE IS A L IMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF F ERRO ALLOYS, SUGAR, FABRICATION OF EQUIPMENT AND GENERATION OF P OWER. THE ASSESSEE CLAIMED DEDUCTION/S 80IA OF THE ACT ON PRO FIT GENERATED FROM POWER PLANT. THE AO IN COURSE OF ASSESSMENT PR OCEEDINGS HELD THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTIO N U/S 80IA SINCE IT IS A THERMAL POWER PLANT ONLY FOR CAPTIVE CONSUM PTION AND NOT FOR SALE OF POWER TO ANY OUTSIDE PARTIES. THE AO F URTHER CAME TO A CONCLUSION THAT IF AT ALL DEDUCTION U/S 80IA IS A LLOWABLE, IT SHOULD ONLY BE RESTRICTED TO RS.2,01,74,404/- AND N OT RS.22,87,38,445 CLAIMED BY THE ASSESSEE BY CHARGING @ OF RS.2.53 PER UNIT. 4. THE ASSESSEE BEING AGGRIEVED OF THE DISALLOWANCE MADE BY THE AO, CHALLENGED THE SAME BY FILING AN APPEAL BEF ORE THE CIT (A). BEFORE THE CIT (A), THE ASSESSEE CONTENDED TH AT THE AOS ALLEGATION THAT THE ASSESSEE HAS MADE EXCESS CLAIM OF DEDUCTION BY CHARGING PRICE AT RS.2.53 PER UNIT IS NOT CORREC T. THE ASSESSEE CONTENDED THAT THE RATE OF RS.2.53 PER UNIT OF POWE R AT WHICH POWER WAS TRANSFERRED FROM POWER UNIT TO FERRO ALL OYS, IS TO BE .3 ITA NOS.61 & 1095/09 AND OTHERS NAVBHARAT VENTURES, HYD. CHARGED WITH THE MARKET RATE OF POWER AND NOT AT R S.1.76 PER UNIT AT WHICH POWER IS PURCHASED BY APTRANSCO FROM THE ASSESSEE. IT WAS CONTENDED THAT VARIOUS POWER GENE RATING COMPANIES ARE SUPPLYING POWER AT RATES VARYING BETW EEN RS.2.21 TO 3.15 PER UNIT. THE CIT (A) AGREED WITH THE ASSE SSEES CONTENTION THAT THE ASSESSEE IS ENTITLED TO AVAIL D EDUCTION/S 80IA ON THE PROFIT EARNED FROM THE CAPTIVE POWER PLANT . THE CIT (A) HOWEVER DID NOT ACCEPT THE ASSESEES CONTENTION THA T THE ASESSEE DURING THE RELEVANT ASSESSMENT YEAR HAS SUPPLIED PO WER AT RS.2.53 PER UNIT. FOLLOWING THE ORDER OF THE ITAT PASSED IN ASSESSEES OWN CASE IN ITA NO.1077/HYD/2007 DATED 7 -2-2008, THE CIT (A) CAME TO HOLD THAT THE RATE OF POWER PE R UNIT SHOULD BE ADOPTED AT RS.2.12 FOR THE PURPOSE OF CALCULATI NG DEDUCTION U/S 80IA OF THE ACT. THE LEARNED AR SUBMITTED BEFO RE US THAT THE ITAT WHILE DECIDING SIMILAR ISSUE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 IN ITS ORDER DATED 7-2-200 8 PASSED IN ITA NO.1077/HYD/07 HAD HELD THAT RATE PER UNIT CHA RGED BY THE ASSESSEE IN RESPECT OF ITS OWN UNIT IS AT THE PREVA ILING MARKET RATE AND THE SAME IS IN ACCORDANCE WITH SUB-SECTION (8) OF SECTION 80IA AND DIRECTED DEDUCTION U/S 80IA(8) SHOULD BE ALLOWED AS CLAIMED BY THE ASSESSEE. IT IS SEEN FROM THE AFORE SAID ORDER OF THE ITAT. THE RATE OF RS.2.12 PER UNIT CHARGED FOR THAT ASSESSMENT YEAR IS AS PER THE PREVAILING MARKET RAT E. FROM THE WORK-SHEET GIVEN BY THE ASSESSEE IN THE PAPER BOOK, . IT IS SEEN THAT THE UNIT PRICE CHARGED AT RS.2.53 PER UNIT IS AS PER THE PREVAILING MARKET RATE. THEREFORE, FOLLOWING THE DECISION OF THE ITAT, HYDERABAD BENCH IN ASSESSEES OWN CASE (SUPRA ) WE DIRECT THE AO TO RECOMPUTED DEDUCTION U/S 80IA(8) BY TAKIN G THE RATE OF RS.2.53 PER UNIT. HENCE, WE DECIDE THIS ISSUE I N FAVOUR OF THE ASSESSEE. .4 ITA NOS.61 & 1095/09 AND OTHERS NAVBHARAT VENTURES, HYD. 5. SO FAR AS GROUND NOS. 3 (A) & 3(B) ARE CONCERNED , IT RELATE TO DISALLOWANCE OF PAYMENT OF RS. 16,06,142/- TOWA RDS GROUP GRATUITY PREMIUM AND RS.33,07,712/- TOWARDS SUPERAN NUATION FUND. THE AO HAS DISALLOWED THE SAME ON THE GROUND THAT THE FUNDS ARE NOT APPROVED BY THE CIT. THE ASSESSEE CH ALLENGED THE DISALLOWANCES BEFORE THE CIT (A). THE CIT (A) ALSO UPHELD THE DISALLOWANCES ON THE GROUND THAT THE FUNDS HAVE NOT BEEN APPROVED BY THE CIT. BEFORE US, THE ASSESSEE HAS S UBMITTED THAT AFTER THE ORDER IN APPEAL WAS PASSED BY THE CIT (A ), CIT-IV, HYDERABAD HAS PASSED AN ORDER APPROVING THE SUPERAN NUATION AND GRATUITY FUND. 6. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THE AP PROVAL ORDERS OF THE CIT ALONG WITH PETITION SEEKING ADMIS SION OF THEM UNDER RULE 29 OF INCOME-TAX APPELLATE TRIBUNAL RULE S. 7. WE HAVE PERUSED THE ORDERS DATED 12-12-2008 PASS ED BY THE CIT. IT IS SEEN FROM THE ORDER THAT THE FUND H AS BEEN APPROVED W.E.F. 1-6-1988. SINCE THE FUND HAS BEEN APPROVED BY THE CIT W.E.F. 1-6-1988, ASSESSEE IS ENTITLED FOR DEDUCTION CLAIMED. HOWEVER, SINCE THE AFORESAID FACTS WERE N OT BEFORE THE CIT (A) OR THE AO WHEN THE ORDERS WERE PASSED BY T HEM, THIS ISSUE IS SET ASIDE TO THE FILE OF THE AO WHO SHALL EXAMINE THE ADDITIONAL EVIDENCE PRODUCED BEFORE US AND ALLOW DE DUCTION CLAIMED BY THE ASSESSEE ACCORDINGLY IN ACCORDANCE W ITH LAW. 8. AS FAR AS DEPARTMENTAL APPEALS ARE CONCERNED, I N VIEW OF OUR FINDING GIVEN IN ASSESSEES APPEAL, IN GROUND N O. 2(A) & 2(B) MENTIONED ABOVE IN THIS ORDER, GROUNDS RAISED BY TH E REVENUE FOR THE TWO YEARS UNDER CONSIDERATION ARE REJECTED. .5 ITA NOS.61 & 1095/09 AND OTHERS NAVBHARAT VENTURES, HYD. 9. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ITA NOS. 61 AND 1095/HYD/09 ARE PARTLY ALLOWED AND DEPARTMENTAL AP PEALS IN ITA NOS. 37 AND 1108/HYD/09 ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 20-7-2012. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 20 TH JULY, 2012 JMR* COPY TO:- 1) DCIT, CIR-16(1), HYDERABAD. 2) NAVABHARAT VENTURES LTD., RAJBHAVAN ROAD, SOMAJI GUDA, HYDERABAD. 3) THE CIT (A)-V, HYDERABAD 4) THE CIT CONCERNED, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D.