DCIT, CHENNAI V. K.A.Infrastructure P Ltd., CHENNAI

ITA 1176/CHNY/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4565 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 13-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 18-05-2015
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: AJITH CHORADIA
• Keywords: Depreciation; Scheme of amalgamation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , '.. % , * BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NOS.1176, 1177 & 1178/MDS/2015 + + /ASSESSMENT YEARS: 2008-09, 2010-11 & 2011-12 THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-4(2), CHENNAI. VS. M/S.KA INFRASTRUCTURE PVT. LTD., (PRESENTLY KNOWN AS M/S.KIVRAJ AUTOMOBILES & INFRASTRUCTURE PVT. LTD.,) BHARAT KUMAR BHAVAN, ANNA SALAI, CHENNAI-600 006. [PAN: AABCK 6189 L ] ( . /APPELLANT) ( /0. /RESPONDENT) . 1 / APPELLANT BY : MR.SUPRIYO PAL, JCIT / 0. 1 /RESPONDENT BY : MR.AJITH CHORADIA, CA 1 /DATE OF HEARING : 13.03.2017 1 /DATE OF PRONOUNCEMENT : 03.05.2017 / 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 ITA NOS.1176 TO 1178/MDS/2016 :- 2 -: ABOVE APPEAL THE APPEALS ARE CLUBBED AND HEARD TOGE THER AND DISPOSED OFF IN A COMMON ORDER AS UNDER: THE COMMON GROUNDS RAISED BY THE ASSESSEE IN THIS A PPEAL ARE AS FOLLOWS: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW A ND FACTS OF THE CASE. 2.1 THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANC E ON DEDUCTION U/S.80IA(4)(IV). 2.2 HAVING REGARD TO THE HONBLE ITATS DECISION IN THE CASE ARMSTRONG KNITTING MILLS (P.) LTD VS. DCIT (2013) 56 SOT 334, (CHENNAI TRIB), THE LEA RNED CIT(A) OUGHT TO HAVE UPHELD THE ACTION OF THE AO IN REJECTING THE ASSESSEES CLA IM ON DEDUCTION U/S.80IA(4). 2.3 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE FIN DINGS 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 TAKE N ON LEASE, THE ASSESSEES CASE IS HIT BY SECTION 80IA(3)(II). 2.4 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE FIN DINGS OF THE AO THAT AS THE ASSESSEE IS NOT THE OWNER OF THE WINDMILLS, HE RUNS THE WINDMIL LS 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 D EDUCTION U/S.80- IA(4)(IV) OF INCOME TAX ACT (IN SHORT THE ACT). T HE 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 ASSESSEES 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 ITA NOS.1176 TO 1178/MDS/2016 :- 3 -: 3.0 THE ASSESSING OFFICER (IN SHORT AO) DISALLOWED T HE 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 V IEW THAT THE GENERATION OF WIND ENERGY BY TAKING WIND MILLS ON L EASE WILL AMOUNT TO SPLITTING OF THE BUSINESS, AND HENCE THE ASSESSEE I S NOT THE OWNER OF THE WIND MILLS: ON THE TWO ABOVE PRESUMPTIONS, THE AO DI SALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE. FOR READY REFERENCE AND C LARITY WE EXTRACT THE RELEVANT PARA NO.3.3 TO 3.8 OF ASSESSMENT ORDER: 3.3 THE ASSESSEE BROUGHT THE ABOVE WINDMILLS FROM I TS GROUP CONCERN AND FROM ONE OF THE DIRECTOR OF THE COMPANY. AS PER LEASE DEED, THE OWN ERSHIP 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 G ETS THE BENEFIT OF DEPRECIATION AND LESSEE WITHOUT OWING THE WINDMILLS GETS THE BENEFIT OF DED UCTION U/S.80IA(4)(IV). THAT IS NOT THE INTENTION OF THE LEGISLATURE. NOW THE ISSUE IS WHET HER 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 GENERA TION OR GENERATION AND DISTRIBUTION OF POWER.. 80IA(3) PRESCRIBES CERTAIN CONDITIONS TO B E FULFILLED IN ORDER TO CLAIM DEDUCTION U/S.80IA(4)(IV). AN EXTRACT OF SECTION 80IA(3) IS REPRO DUCED 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 CONDITIO NS, NAMELY :- (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECONST RUCTION, OF A BUSINESS ALREADY IN EXISTENCE. PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RES PECT OF AN UNDERTAKING WHICH FORMED AS A RESULT OF THE REESTABLISHMENT, RECONSTR UCTION 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 TH AT SECTION (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLAN T 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 A ND TO AN AASESSEE OR AN UNDERTAKING WHO IS INVOLVED IN THE OPERATION AND MAINTENANCE OF WIN D MILLS TAKEN ON LEASE. SECTION 80IA(4)(IV) DOES NOT HAVE ANY PROVISION TO GRANT DEDU CTION 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 REVEAL ED 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. E VEN PARA 19 OF THE TEASE AGREEMENT ITA NOS.1176 TO 1178/MDS/2016 :- 4 -: SAYS THAT THE LESSEE SHALL HAND OVER POSSESSION OF THE WIND MILL WITH ALL RELATED EQUIPMENTS, FITTINGS ETC. ON COMPLETION OF THE LEAS E 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 ALLOWE D 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 P URPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUB SECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMEN T YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSE SSEE 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 ACC OUNT OF THE ABOVE WINDMILLS. THIS GOES TO SHOW THAT HE IS NOT THE OWNER OF THE WINDMILL. H E ONLY PAYS THE LEASE CHARGES TO THE OWNER I.E. LESSOR OF THE WIND MILLS. IN ORDER TO CL AIM DEDUCTION U/S.80IA(4)(IV), ONE SHOULD BE A OWNER OF THE WINDMILL. IT IS STRENGTHENED BY S ECTION 80IA(3). ACCORDING TO THIS SECTION, THE UNDERTAKING SHOULD NOT BE FORMED BY SPLITTING U P 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 SECTI ON 80IA(3). 3.8 THE STATUS OF THE ASSESSEE IS ONLY IN THE NATUR E 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 I S REPRODUCED BELOW: FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED T HAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY IN RELATION TO A BUSINESS REFER RED TO IN SUB SECTION (4) WHICH IS IN THE NATURE OF A WORKS CONTRACT AWARDED BY ANY PERSO N (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 WEN T 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 H OLDING THAT THERE IS NO REQUIREMENT IN LAW TO OWN THE ASSETS TO CLAIM TH E DEDUCTION U/S 80IA. THE ASSETS TAKEN ON LEASE BY THE ASSESSEE FOR GENER ATION OF POWER WERE NOT USED BY THE LESSORS AND THE ASSESSEE IS USING T HE WIND MILLS FROM THE DAY ONE OF ITS INSTALLATION HENCE IT CANNOT BE HEL D AS FORMED BY SPLITTING. THE LD.CIT(A) OBSERVED THAT THE ASSESSEE HAS SATISF IED ALL THE CONDITIONS LAID DOWN BY SECTION 80IA AND HENCE ELIGIBLE FOR TH E DEDUCTION. THE LD.CIT(A) ALSO RELIED ON THE DECISION OF THE HONBL E MADRAS HIGH COURT IN WP NO.11871/2011 IN THE ASSESSEES OWN CASE DATED 2 8.10.2011. ITA NOS.1176 TO 1178/MDS/2016 :- 5 -: 5.0 AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE DEPAR TMENT 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 GE NERATING THE POWER. THE WIND MILLS WERE PURCHASED BY THE M/S.KHIVRAJ HO LDINGS PVT. LTD., AND OTHER GROUP CONCERNS AND GIVEN ON LEASE TO THE ASSE SSEE BEFORE BEING PUT TO USE. THE ASSESSEE HAS INSTALLED THE MACHINERY, COMPLETED ALL THE FORMALITIES SUCH AS REGISTRATION WITH ELECTRICITY B OARD 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 WE RE CONFIRMED BY THE BOTH THE PARTIES AND WAS ALSO IN THE ASSESSMENT ORDER DA TED 22.03.2016. THE LD.CIT(A) IN HIS ORDER ALLOWED THE ASSESSEES APPEA L HOLDING THAT THERE WAS NO REQUIREMENT TO OWN THE ASSETS FOR CLAIMING T HE 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 OU T ALL THE FACTS IN HIS APPELLATE ORDER AND DISCUSSED THE ISSUE ELABORATELY . FOR THE SAKE OF CONVENIENCE AND CLARITY, WE EXTRACT RELEVANT PARAGR APHS OF THE LD.CIT(A) ORDER (FOR THE AY 2008-09) AS UNDER: 4.2. I HAVE CONSIDERED THE ASSESSEES SUBMISSIONS A S WELL AS THE CONTENTS OF THE ASSESSMENT ORDER CAREFULLY. THE ASSESSING OFFICER IN HIS ASSESSMENT ORDERS DISALLOWED THE ASSESSEES CLAIM OF DEDUCTION U/S.80IA(4)(IV) OF THE I NCOME TAX ACT, MAINLY FOR TWO REASONS, I.E. (I) THAT THE ASSESSEE IS NOT THE OWNER OF THE WINDMI LLS, AND (II) THAT THE ASSESSEES BUSINESS OF POWER GENERATIO N FROM WINDMILLS WAS SPLITTING UP OF THE BUSINESS. ITA NOS.1176 TO 1178/MDS/2016 :- 6 -: 4.3 ON THE OTHER HAND, THE ASSESSEES CLAIM IS THAT THERE IS NO PROVISION IN THE I.T. ACT, THAT MANDATES THE OWNERSHIP OVER THE WINDMILLS FOR CLA IMING 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-USE D ONES. HENCE, THE QUESTION OF SPLITTING UP OF BUSINESS DOES NOT APPLY IN ITS CASE. 4.4 IN THE CASE OF UNDERTAKINGS ENGAGED IN GENER ATION, 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 UN DERTAKING SHOULD BE ENGAGED IN GENERATION OR GENERATION AND DISTRIBUTION OF EL ECTRICITY. NOWHERE IN THE STATUTES IT WAS PRESCRIBED THAT THE UNDERTAKINGS SHOULD OWN THE AS SETS (I.E. WINDMILLS) UNDER CONSIDERATION. THE RELEVANT PROVISIONS ARE AS UNDER : DEDUCTIONS IN RESPECT OF PROFITS AND GAINS FROM IND USTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTURE DEVELOPMENT, ETC. SEC.80-IA. (1) WHERE THE GROSS TOTAL INCOME OF AN AS SESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRIS E 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 SUBJ ECT 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 T HE FOLLOWING CONDITIONS, NAMELY : (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECONS TRUCTION, OF A BUSINESS ALREADY IN EXISTENCE: PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RES PECT OF AN UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE-ESTABLISHMENT, RECONST RUCTION 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 I N THAT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSI NESS 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 SECTI ON 2 OF THE ELECTRICITY ACT, 2003 (36 OF 2003), WHETHER OR NOT SUCH TRANSFER IS IN PU RSUANCE OF THE SPLITTING UP OR RECONSTRUCTION OR RE-ORGANISATION OF THE BOARD UNDE R 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 ASS ESSEE 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 PRE VIOUS TO THE DATE OF THE INSTALLATION BY THE ASSESSEE, USED IN INDIA; (B)SUCH MACHINERY OR PLANT IS IMPORTED INTO INDIA FR OM ANY COUNTRY OUTSIDE INDIA; AND (C) NO DEDUCTION ON ACCOUNT OF DEPRECIATION IN RESPE CT OF SUCH MACHINERY OR PLANT HAS BEEN ALLOWED OR IS ALLOWABLE UNDER THE PROVISIO NS 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. ITA NOS.1176 TO 1178/MDS/2016 :- 7 -: 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 PA RT 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-SE CTION, 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 GENERATIO N OR GENERATION AND DISTRIBUTION OF POWER IF II BEGINS TO GENERATE POWER AT ANY TIME DU RING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1993 AND ENDING ON THE 31 ST 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 ER ECTED BY VARIOUS CONCERNS OF THE KHIVRAJ GROUP (OR THE ASSESSEE GROUP). ON ERECTION, BUT BEFOR E PUTTING THEM TO USE, THESE WINDMILLS HAVE BEEN LEASED OUT TO M/S. K.A. INFRASTR UCTURE 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 CLAIME D 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 GENERATIO N OF WIND ENERGY FROM THE WINDMILLS AND THE WINDMILLS WERE NOT PRE-USED BEFORE. THE CLAIM O F DEDUCTION U/S.80IA(4)(IV) ON THE ABOVE WINDMILLS, IN THE HANDS OF THE PRESENT ASSESS EE (I.E. M/S.K.A. INFRASTRUCTURE P. LTD) CONTINUED UP TO THE A.Y;2009- 10. (CONSEQUENT TO TH E SCHEME OF AMALGAMATION APPROVED BY THE HONBLE HIGH COURT OF MADRAS, BUSINESS OF O PERATING 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 AUTOMOBI LE 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 HONBLE HIGH COURT OF MADRAS, IN THE ASSESSEES 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 APPLICA TION FOR RECOGNITION U/S.10(23G) ACT, TO THE CENTRAL BOARD OF DIRECT TAXES. ONE OF THE CONDIT IONS FOR RECOGNITION S.10(23G) IS THAT THE UNDERTAKING SHOULD FULFILL ALL THE CONDITIONS M ENTIONED 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 WI NDMILLS 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 HONBLE HIGH COURT OF MADRAS. THE HONBLE HIGH COUR T, WHILE DISPOSING OF THE ABOVE WRIT PETITION (IN WP 11871 OF 2011 ON 28.10.2011) HAS OBS ERVED THAT THERE IS NO PROHIBITION IN THE ACT THAT POWER GENERATED FROM THE WINDMILLS TA KEN ON LEASE IS NOT ELIGIBLE FOR DEDUCTION U/S.80IA(4)(IV) OF THE ACT. ACCORDINGLY, THE HONBLE 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 FULFIL LED THE REQUISITE CONDITIONS OF SECTION 80-IA(4) OF THE ACT AND CONSEQUENTLY ENTITLED FOR RE COGNITION U/S.10(23G) OF THE ACT. THE RELEVANT PORTION OF THE JUDGMENT IS AS UNDER: ITA NOS.1176 TO 1178/MDS/2016 :- 8 -: 17. SECTION 80 IA APPEARING IN CHAPTER VA, DEALS WI TH STRAIGHT DEDUCTION TO BE MADE IN COMPUTING TOTAL INCOME. A READING OF THE PR OVISIONS 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 C ONSECUTIVE ASSESSMENT YEARS. SUB-SECTION (3) GIVES THE QUALIFICATION OF THE UNDER TAKING WHICH ARE ELIGIBLE TO HAVE THE BENEFIT UNDER SECTION 80IA. 18. 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 SPLITTI NG UP, OR THE RE-CONSTRUCTION, OF A BUSINESS ALREADY IN EXISTENCE, AND NEW BUSINESS W HICH IS FORMED BY THE TRANSFER OF THE PLANT AND MACHINERY ALREADY IN USE FOR ANY P URPOSE. EXPLANATION (1) THERE UNDER STATES THAT MACHINERY USED OUTSIDE INDIA BY A NY PERSON OTHER THAN THE ASSESSEE SHALL NOT BE REGARDED AS MACHINERY OR PLAN T PREVIOUSLY USED FOR ANY PURPOSE, SUBJECT TO THE STATED CONDITIONS. WE ARE N OT CONCERNED ABOUT THIS IN THE PRESENT CASE BEFORE US. SUB-CLAUSE (IV) TO SUB-SECTI ON (4) OF THE SECTION 80-IA IS A SPECIFIC PROVISION ON ENTERPRISES ENGAGED IN GENERA TION 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 GENERA TION 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 SU B SECTION (4) OF SECTION OF 80 IA IS WITH REFERENCE TO LAYING A NETWORK OF NEW TRA NSMISSION 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 DEDUC TION 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 DISTRIBUTI ON. THE THIRD CLAUSE RELATES TO RENOVATION AND MODERNIZATION OF THE EXISTING NETWOR K. 19. THE READING OF THE ABOVE SAID CLAUSES THUS MAKE S IT CLEAR THAT AS FAR AS DEDUCTION UNDER SECTION 80-IA WITH REFERENCE TO UND ERTAKINGS 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 US ED FOR ANY PURPOSE TO A NEW BUSINESS. THUS AN ENTERPRISE WHICH IS ENGAGED IN TH E GENERATION OR GENERATION AND DISTRIBUTION OF POWER QUALIFIES FOR A DEDUCTION, SU BJECT TO SATISFYING SUB-CLAUSES IN THE SECTION. CONSIDERING THE FACT THAT THE DEDUCTIO N IS WITH REFERENCE TO THE UNDERTAKING GENERATING OR GENERATING AND DISTRIBUTI NG OF POWER, THE DEDUCTION WOULD BE AVAILABLE AT THE HANDS OF THE LESSEE ASSES SEE, 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 UNDERTAKIN G WOULD BE DEPRIVED ON A LEASE GIVEN IN CONTRADISTINCTION TO A CASE OF NEW INDUSTR Y 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 NO THING ABOUT LEASE OF THE UNDERTAKING. AS ALREADY POINTED OUT BY THE LEARNED COUNSEL APPEARING FOR THE PETITIONER, THE SECTION ITSELF BEING VERY CLEAR THA T THE QUALIFICATION FOR DEDUCTION IS AVAILABLE TO AN UNDERTAKING ENGAGED IN THE GENERATI ON 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. 20. 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 C LAIM THE BENEFIT UNDER SECTION 80IA. CONTRARY TO THE ASSERTION OF THE LEARNED STAN DING 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 T HE MERE FACT THAT THE ASSESSEE IS A LESSEE, PER SE, DOES NOT RESULT IN ANY DISQUALIFI CATION TO REJECT THE DEDUCTION CLAIM FALLING UNDER SECTION 80IA. THE FACTS HEREIN ARE TH AT 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 ITA NOS.1176 TO 1178/MDS/2016 :- 9 -: THE WINDMILL IS ONE ALREADY SET UP FROM THE QUALIFY ING 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 G RANT OF APPROVAL UNDER SECTION 10(23G) OF THE INCOME TAX ACT. 21. A READING OF SECTION 10(23G) OF THE INCOME TAX A CT SHOWS THAT WHERE AN ASSESSEE MAKES AN APPLICATION IN RESPECT OF THE INC OME BY WAY OF DIVIDEND OR BY WAY OF TONG TERM FUNDING IN ANY ENTERPRISE OR UNDER TAKING 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 T HE COMPUTATION OF INCOME. EXPLANATION (1) TO SECTION 10(23G) DEFINES INFRASTRU CTURE CAPITAL COMPANY AND INFRASTRUCTURE CAPITAL FUND. AS FAR AS INFRASTRUCT URE CAPITAL COMPANY IS CONCERNED, IT IS DEFINED TO MEAN COMPANY, WHICH HAD MADE INVESTME NT BY WAY OF ACQUIRING SHARES OR PROVIDING LONG TERM FINANCE TO AN ENTERPR ISE WHOLLY ENGAGED IN THE BUSINESS OF REFERRED TO IN THIS CLAUSE. IT IS NO DO UBT TRUE THAT SECTION 10(23G), INSERTED, WITH EFFECT FROM 01.04.1997, WAS SUBSEQUE NTLY OMITTED FROM THE STATUTE. AS THE LAW THEN STOOD, GIVEN THE DEFINITION OF AN E LIGIBLE BUSINESS UNDER THE PROVISIONS OF SECTION 80IA AND THE FACT THAT THE AS SESSEE 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. 22. TOUCHING ON THE SCOPE OF SECTION 84 AS IT ORDIN ARILY 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 TH E 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 ENTITLE D FOR THE UNEXPIRED PERIOD OF FIVE YEARS PROVIDED THE UNDERTAKING IS TAKEN OVER AS A R UNNING CONCERN. AS FAR AS THE PRESENT CASE IS CONCERNED, THE REASONING OF THE BOA RD WENT ON THE ASPECT OF LEASE, A FACT WHICH DOES NOT STAND IN THE WAY OF THE ASSES SEE CLAIMING APPROVAL UNDER SECTION 10(23G) OR THE RELIEF UNDER SECTION 80IA(4). 4.8 THUS, FROM THE ABOVE, IT IS CLEAR THAT OWNERSH IP 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 GE NERATING THE WIND ENERGY OR NOT. THEREFORE, THE ABOVE DECISION OF HIGH COURT MAKES I T CLEAR THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80-IA(4) OF THE ACT, EVEN ON INCOME DER IVED FROM GENERATION OF POWER FROM THE WINDMILLS TAKEN ON LEASE. 4.9 THE NEXT CONTENTION OF THE ASSESSING OFFICER IS THAT THE ASSESSEES GENERATION OF WIND ENERGY BY TAKING THE WINDMILLS ON LEASE WILL AMOUN T TO SPLITTING UP OF THE BUSINESS. AS PER THE ASSESSING OFFICER, THE WINDMILLS ARE OWNED BY SO ME 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 I S ALSO NOT WELL FOUNDED. AS PER THE STATUTES, ONE OF THE REQUIREMENTS U/S.80IA(4)(IV) IS T HAT IT SHOULD NOT BE BY SPLITTING UP OF THE EXISTING BUSINESS. HERE, SPLITTING UP OF BUSIN ESS IS WITH RESPECT TO THE EXISTING BUSINESS. IN OTHER WORDS, IF THERE IS AN EXISTING B USINESS, ANY NEW BRANCH/UNIT BY SPLITTING UP OF SUCH EXISTING BUSINESS WILL NOT BE ELIGIBLE F OR 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 OWN ED THE WINDMILLS (WHICH ARE THE SUBJECT MATTER OF PRESENT LEASE TO THE ASSESSEE COMPANY) HA VE 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 WINDMILL S TO USE. THUS, THE BUSINESS OF POWER GENERATION FROM THE WIND MILLS NEVER CAME INTO EXI STENCE IN THE HANDS OF OWNERS. IMMEDIATELY AFTER ACQUIRING THE WINDMILLS, THE OWNE RS 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, F OR 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 COMPAN Y ONLY. IN OTHER WORDS, AS FAR THE ITA NOS.1176 TO 1178/MDS/2016 :- 10 -: GENERATION WIND ENERGY IS CONCERNED, THERE IS NO SP LITTING 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) GENE RATION AND DISTRIBUTION OF POWER COMMENCING FROM THE A.Y. 1993-94, IS ELIGIBLE FOR 1 00% DEDUCTION OF ITS PROFITS FOR A PERIOD OF 10 SUCCESSIVE ASSESSMENT YEARS. SUB-SECTION (3) O F 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 PREVI OUSLY USED PLANT AND MACHINERY. 4.12 AS MENTIONED ABOVE, THE PRESENT WINDMILLS (WHI CH 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 PA RAGRAPHS, THERE WAS NO BUSINESS OF GENERATING OR GENERATION AND DISTRIBUTION OF PO WER 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 COM PANY FROM THE ABOVE WINDMILLS IS FOR THE FIRST TIME, AND HENCE, FORMS A NEW BUSINESS. ME RE 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 PO WER. IT ONLY CONSTITUTES A BUSINESS OF LEASING. THUS, LETTING OUT/ LEASING OUT OF BRAND NE W 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 CONDIT ION IMPOSED BY THE SUB-SECTION (3) OF SECTION 80IA STANDS SATISFIED IN FAVOUR OF THE ASSE SSEE. THUS, THE ASSESSING OFFICERS OBSERVATIONS THAT THE ASSESSEES BUSINESS OF GENERA TION 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 HONBLE HIGH COURT OF MADRAS WHILE DECIDING THE ABO VE MENTIONED WRIT PETITION IN WP.11871 OF 2011. IN THE SAID ORDER, THE HONBLE HIGH COURT HAD CLEARLY HELD THAT OF POWER BY TAKING THE WINDMILLS ON LEASE IS ALSO ENTITLED FOR DEDUCT ION S.80IA(4)(IV) OF THE ACT. AS HELD BY THE COURT, THERE ARE NO CONDITIONS IMPOSED BY THE STATU TES THAT THE WINDMILLS SHOULD BE OWNED BY THE UNDERTAKING. THERE IS A CLEAR UNDERLYING PRI NCIPLE IN THIS JUDGMENT. WHEN GENERATION OF POWER BY TAKING THE WINDMILLS ON LE ASE IS HELD TO BE ENTITLED FOR DEDUCTION U/S.80IA(4)(IV) OF THE ACT IT ALSO IMPLIES AND CLARIFI ES THAT THE LEASING OUT OF BRAND NEW WINDMILLS WILL NOT AMOUNT TO SPLITTING UP OF BUSINE SS 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 A N EXISTING BUSINESS. 4.14 IN VIEW OF THE ABOVE DISCUSSIONS AND THE JUDGM ENT OF THE JURISDICTIONAL HIGH COURT IN THE ASSESSEES 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 ASSESSI NG OFFICER IS DIRECTED TO ALLOW THE ASSESSEES CLAIM OF DEDUCTION U/S.80IA(4)(IV) OF THE A CT. 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) GENE RATION OF POWER (II) THE ITA NOS.1176 TO 1178/MDS/2016 :- 11 -: UNIT SHOULD NOT FORMED BY THE SPLITTING UP OF BUSIN ESS 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 F ILING OF THE TAX AUDIT REPORT AND FILING THE RETURN OF INCOME BEFORE THE D UE 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 ASSESSE E 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 H ONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE IN WP 11871 OF 20 11 FILED IN CONNECTION WITH GRANTING APPROVAL U/S.10(23G) OF IT ACT RELIED UPON BY THE CIT(A). THE REVENUES APPEALS FOR THE AYS 2008-09, 2010-11 & 2011-12 ARE DISMISSED. 6.0 IN THE RESULT, THE APPEALS OF THE REVENUE ARE DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD MAY, 2017, AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ' . . % ) (D.S.SUNDER SINGH) /ACCOUNTANT MEMBER /CHENNAI, 6 /DATED: 3 RD MAY, 2017. TLN 1 /%7 87 /COPY TO: 1. . /APPELLANT 4. 9 /CIT 2. /0. /RESPONDENT 5. 7 / /DR 3. 9 ( ) /CIT(A) 6. + /GF