Tata Sponge Iron Ltd, Keonjhar V. DCIT, Sambalpur

ITA 138/CTK/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52368 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 27-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 21-04-2010
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: N P JAIN
• Keywords: Depreciation; Principle of natural justice; Revised return
• Section: 143(3); 142(1); 37(1)

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 138/CTK/2010 (ASSESSMENT YEAR 2006 - 07) TATA SPONGE IRONLIMITED, P.O.JODA, DIST. KEONJKHAR, ORISSA 758 034 PAN: AABCT 0230 D VERSUS DY.COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), SAMBALPUR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI N.P.JAIN, AR FOR THE RESPONDENT SMT. PARAMITA TRIPATHY, DR DATE OF HEARING : 27.07.2011 DATE OF PRONOUNCEMENT : 12.08.2011 ORDER SHRI K.S.S.PRASAD RAO, JM : THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.20.1.2010 IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006 - 07. 2. THE ASSESSEE HAS RAISED THE FOLLOW ING GROUNDS OF APPEAL . 1. THAT THE ORDER OF THE ID. CIT (APPEALS) IS BAD IN LAW AS THE L D. CIT (A) HAS IGNORED TO PROPERLY ADJUDICATE GROUND NO.1 OF APPEAL BEFORE HIM, WHICH READ AS : THAT THE ASSESSMENT IS BAD IN LAW AS THE SAME HAS BEEN COMPLETED IN AN ARBITRARY MANNER, IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, IGNORING THE BOOKS OF ACCOUNT, DOCUMENTS & MATERIAL PRODUCED AND WITHOUT APPLICATION OF JUDICIAL MIND . 2. (A) THAT THE L D. CIT (APPEALS) WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE OF THE CLAIM OF DEDUCTION OF 7,59,17,674 U/S 80 - IA IN RESPECT OF THE INCOME FROM THE POWER PLANT UNDERTAKING OF THE ASSESSEE COMPANY. (B) THAT THE ID. CIT (APPEALS) WAS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT DID NOT COMPLY WITH THE REQUIREMENTS OF SECTION 80 - IA(7), BY MISQUOTIN G THE PROVISION AND THE FORM OF AUDIT REPORT. 3. (A) WITHOUT PREJUDICE TO GROUND 2 (A) AND (B) ABOVE, THE ID. CIT (APPEALS) WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO RECOMPUTE THE INCOME FROM POWER PLANT BY LOOKING ITA NO.138/CTK/2010 2 INTO AND EXAMINING THE IND IRECT EXPENSES FOR ALLOCATING PART OF IT TO POWER PLANT IN CASE IT IS HELD THAT DEDUCTION U/S 80 - IA IS ADMISSIBLE TO THE POWER PLANT. (B) THAT WITHOUT PREJUDICE TO GROUND 2 (A) AND (B) ABOVE, THAT THE L D. CIT (APPEALS) WAS NOT JUSTIFIED IN DIRECTING THE AS SESSING OFFICER TO RECOMPUTE THE INCOME FROM POWER PLANT BY LOOKING INTO AND EXAMINING THE RATE AT WHICH ELECTRICITY IS BEING CHARGED FOR COMPUTATION U/S 80 - IA, IN CASE IT IS HELD THAT DEDUCTION U/S 80 - IA IS ADMISSIBLE TO THE POWER PLANT. 4. THAT THE L D. C IT (APPEALS) WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE TO THE EXTENT OF 10,01,592 OUT OF THE CLAIM OF DEDUCTION OF EXPENDITURE AMOUNTING TO 10,57 , 792 RELATING TO PERIPHERAL DEVELOPMENT, WHICH IS ADMISSIBLE U/S 37(1) OF THE I NCOME TAX AC T. 5. THAT THE L D. CIT (APPEALS) WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE TO THE EXTENT OF 5,06,276 ON VEGETABLE GARDEN FROM THE DISALLOWANCE OF GARDEN EXPENDITURE AMOUNTING TO 11,19,048 MADE IN ASSESSMENT, DESPITE THE FACT THAT THESE WERE INCURRED FOR THE PURPOSE 6I BUSINESS, FOR MAINTAINING AMBIENCE AND GOOD ENVIRONMENT AND ALLO WABLE U/S . 37(1). 6. A) THAT THE LEARNED CIT (APPEALS) HAS ERRED BY NOT ADMITTING THE PLEA OF THE APPELLANT FOR PROPERLY COMPUTING THE DEPRECIATION AS REQUIRED UNDER THE INCOME TAX ACT AND NOT ALLOWING THE D EPRECIATION TO THE EXTENT OF 16,92,39,751 ALLO WABLE AS PER ANNEXURE 3 TO TAX AUDIT REPORT IN FORM 3CD. B) THAT, WITHOUT PREJUDICE TO GROUND 6(A), THE CIT (APPEALS) HAS ERRED BY NOT ADMITTING TO ALLOW THE DEPRECIATION OF 36,21,510 ON ACCOUNT OF POWER PLANT UNDERTAKING, THOUGH THE DEPRECIATION OF 1 ,68,55,274 FOR POWER PLANT AS PER BOOKS WAS ADDED BACK IN COMPUTATION OF INCOME FURNISHED BY THE ASSESSEE COMPANY. 7. TH AT THE LD. CIT (APPEAL) WAS NOT JUSTIFIED IN IGNORING AND NOT PROPERLY & JUDICIALLY C ONSIDERING THE PLEA THAT THE REVISED COMPUTATION OF INCOME FURNISHED BEFORE THE LD. ASSESSING OFFICER IN COURSE OF HEARING ON 11TH NOVEMBER, 2008 IN WHICH INCOME ITA NO.138/CTK/2010 3 WAS RECOMPUTED AND ALSO SEGREGATED IN RESPECT OF POWER PLANT UNDERTAKING AND OF SPONGE IRON UNDERTAKING. 8. A) THAT THE CIT (APPEALS) WAS NOT JU STIFIED IN HOLDING THAT THE A.O. WAS RIGHT IN COMPUTING THE INCOME IN ORDER U/S 143(3) BY IGNORING THE RETURNED INCOME AND TAKING THE INCOME AS PER INTIMATION U/S 143(1)(A) AS A STARTING POINT. B) THAT AS A RESULT OF THE CIT(APPEALS) UPHOLDING THE ASSESSME NT ON THE BASIS OF INCOME COMPUTED IN INTIMATION U/S 143(1), THE ID. CIT (APPEALS) ERRED] / FAILED TO APPLY HIS MIND THAT THE ADJUSTMENT/ADDITIONS OF FOLLOWING ITEMS (RELATING TO POWER PLANT) TO THE INCOME AS MADE IN THE ORIGINAL COMPUTATION AND NOT ALLOWING THE SAME THOUGH THESE ARE OTHERWISE ALLOWABLE, TANTAMOUNT TO UNCALLED FOR ADDITION I) SALARY & WAGES .. 54,96,820 II) INSURANCE .. 7,88,456 III) ADMINISTRATIVE EXPENSES 4,22,166 IV) REPAIRS & MAINTENANCE 42,34,666 L,09,42,108 C) THAT THE LD.CIT (APPEALS) OMITTED TO CONSIDER AND ADJUDICATE THE ADJUSTMENT /REDUCTION FROM THE INCOME OF A SUM OF 74,03,840 BEING REVENUE FROM SATE OF POWER TO THIRD PARTIES AS MADE IN THE ORIGINAL COMPUTATION AND TAKEN IN INTIMATION U/S 143(1) BY THE LD. A.O . AND THE INCOME SHOULD HAVE BEEN RECOMPUTED BY THE LD. CIT (APPEALS) AFTER IGNORING THE SAME. 9. THAT THE LD.CIT(A PPEALS) ERRED IN REJECTING THE APPELLANTS PLEA THAT FOR THE ENDS OF JUSTICE THE INCOME OF THE POWER PLANT UNDERTAKING AND THE OTHER INCOME OF THE COMPANY SHOULD HAVE BEEN PROPERLY COMPUTED AS PER LAW AND THEN DEDUCTION U/S 80 IA SHOULD HAVE BEEN ALLOWED. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE ASSESSEE AND THEIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF T HE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE RIVAL SUBMISSIONS OF BOTH ITA NO.138/CTK/2010 4 THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE COMPANIES ACT AND DERIVES INC OME FROM MANUFACTURING AND SALE OF SPONGE IRON. IT HAS ALSO INSTALLED A POWER PLANT TO PRODUCE LCD BASING ON THE H OT GAS EMITTED FROM THE FURNACE USED IN THE SPONGE IRON SMELTER PLANT. THE ASSESSEE HAD ORIGINALLY FILED RETURN BY ELECTRONIC MEDIA SHOWING TO TAL INCOME OF 17,22,50,.294 ON 25.9.2007. THE PRINTOUT COPY OF THE RETURN WAS FILED ON 8.10.2007. SUBSEQUENTLY THE ASSESSEE FILED REVISED RETURN ON 15.11.2007 AND 21.11.2007 SHOWING TOTAL INCOME OF 17,43,13,477.THE SAID RETURN WAS PROCESSED BY THE ASSES SING OFFICER BY ISSUING INTIMATION U/S.143(1). THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY BY ISSUING NOTICES U/S.143(2) AND 142(1) OF THE INCOME - TAX ACT,1961. A DETAILED QUESTIONNAIRE DT.23.9.2008 WAS SERVED ON THE ASSESSEE ALONG WITH THE NOTICE U/S.142 (1). IT WAS COMP LIED BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND FROM THE AUDITED PROFIT & LOSS ACCOUNT AND COMPUTATION OF TOTAL INCOME/STATEMENT OF INCOME FURNISHED BY THE ASSESSEE THE NET PROFIT WAS 34,25,63,787. AFTER MAKING VARIOUS ADJUSTMENT AND CLAIMING DEDUCTION U/S.80IA THE NET TAXABLE INCOME WAS ARRIVED AT 17,43,13,477. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT MAINTAINED SEPARATE BOOKS OF ACCOUNT IN RESPECT OF POWER PLANT AND THE EXPENSES INCURRED FOR RUNNING THE POWER PLANT AND INCOME RECEIVED FROM SUCH POWER PLANT WAS DEDUCTED FROM THE NET PROFIT OF CONSOLIDATED P & L ACCOUNT AMOUNTING TO 34,25,63,787. ACCORDINGLY GROSS TOTAL INCOME WAS ARRIVED AT 24,13,99, 264 AFTER TAKING VARIOUS ADJUSTMENTS AND WITHDRAWING THE RECEIPT AND EXPENDITURE IN RESPECT OF POWER PLANT. THE ASSESSEE WAS FOUND TO HAVE AGAIN DEDUCTED A SUM OF 7,59,27,674 AS DEDUCTION U/S.80IA TOWARDS 100% DEDUCTION OF INCOME FROM POWER PLANT. THIS AMO UNT OF 7,59,27,674 WAS NOT INCLUDED IN THE TOTAL INCOME RETURNED BY THE ASSESSEE. ITA NO.138/CTK/2010 5 THEREFORE, THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM MADE BY THE ASSESSEE U/S.80IA OF THE I.T.ACT. THE ASSESSING OFFICER HAS ALSO DENIED A SUM OF 120,57,792 WHICH WAS STATED TO HAVE BEEN INCURRED FOR PERIPHERAL DEVELOPMENT BY THE ASSESSEE. THE ASSESSING OFFICER HAS ALSO DISALLOWED A SUM OF 11,19,048 OUT OF EXPENSES CLAIMED UNDER THE HEAD GARDEN, PARK, LAKE AND GARDEN EXPENSES, VEGETABLE. HAVING BEEN AGGRIEVED WITH THI S ASSESSMENT ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND IS UNSUCCESSFUL AND HENCE, THE PRESENT APPEAL IS FILED BY THE ASSESSEE BEFORE THE TRIBUNAL. 5. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE HAS VEHEMENTLY ARGUED REITERAT ING THE CONTENTIONS RAISED BEFORE THE LOWER AUTHORITIES WITH REFERENCE TO THE VARIOUS CITATIONS RELIED ON IN SUPPORT OF HIS CONTENTIONS. HE FURTHER SUBMITTED THAT THE DEPARTMENTAL AUTHORITIES HAVE ERRED IN NOT APPRECIATING THE CONTENTION OF THE ASSESSEE TH AT THE COST OF PRODUCTION OF POWER PRODUCED BY POWER PLANT UNIT VALUED AT THE MARKET RATE AT WHICH THE POWER IS BEING SUPPLIED TO THE GENERAL PUBLIC BY THE STATE ELECTRICITY BOARD. THE PROVISIONS CONTAINED IN SECTION 80IA(7) CLEARLY MANDATES THAT THE VALUA TION OF THE PROJECT BY THE INDIVIDUAL UNIT WHICH THE INPUTS OF THE UNITS OF THE POWER PLANT ARE TO BE VALUED AT CURRENT PREVAILING MARKET RATE ONLY. IN THAT WAY, THE ASSESSEE HAS VALUED THE POWER PRODUCED BY THE ASSESSEE AT THE MARKET RATE OF POWER IN WHIC H THE STATE ELECTRICITY BOARD IS CONCERNED SUPPLYING THE POWER. THEREFORE, THE DEPARTMENTAL AUTHORITIES ARE NOT AT ALL APPRECIATED THE METHOD FOLLOWED BY THE ASSESSEE IN ITS RIGHT PER SPECTIVE IN THE LIGHT OF THE PROVISIONS CONTAINED IN SECTION 80IA(7). THE OBSERVATION OF THE LOWER AUTHORITIES THAT THE ASSESSEE HAS NOT SHOWN THE INCOME FROM POWER PLANT IN THE CONSOLIDATED P & L ACCOUNT WHILE CALCULATING THE INCOME TAXABLE IN ITS HANDS IS NOT CORRECT IN AS MUCH AS THE ASSESSEE HAS ITA NO.138/CTK/2010 6 COMPUTED THE TOTAL EXPENDITU RE INCURRED IN THE POWER PLANT UNIT DEBITED TO THE P & L ACCOUNT AND THEREBY BALANCE IN THE FIGURE WILL NOT HAVE, IN FACT, TO THE RESULTANT FIGURE TAXABLE IN THE HANDS OF THE ASSESSEE. THE ASSESSEE HAS VALUED THE POWER PRODUCED BY THE POWER PLANT AT THE RA TE ON WHICH THE POWER IS BEING SUPPLIED BY THE STATE ELECTRICITY BOARD WHICH IS NOT DISPUTED BY THE LOWER AUTHORITIES IS CORRECT AND THEREFORE THE CLAIM MADE U/S.80IA IS CORRECT AND THE DENIAL OF SUCH DEDUCTION OF THE ASSESSEE BY THE DEPARTMENTAL AUTHORITI ES IS NOT PROPER AND JUSTIFIED. 6. REGARDING THE DENIAL OF PERIPHERAL EXPENSES THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT UNDISPUTEDLY THE ASSESSEE HAS INCURRED THE EXPENSES ON PERIPHERAL DEVELOPMENT ON THE BASIS OF PROJECT APPROVED BY THE NATIONAL COMM ITTEE FOR PROMOTION OF SOCIAL & ECONOMIC WELFARE. HENCE, THE DEDUCTION CLAIMED U/S.35AC OF THE ACT IS VERY MUCH RIGHT. THE SAID AMOUNT ALSO INCLUDED THE SUM OF 120,57,792 BEING EXPENSES INCURRED VOLUNTARILY BY THE ASSESSEE TOWARDS PERIPHERAL DEVELOPMENT. THE DETAILS WERE ALSO SUBMITTED TO THE DEPARTMENTAL AUTHORITIES. THE CONTENTION OF THE ASSESSEE IS THAT THESE EXPENSES WERE INCURRED FOR PAYMENT TO PERSONS FOR PERIPHERAL JOB AND TO ASSIST IN PERIPHERAL ACTIVITIES. THEREFORE THEY ARE VERY MUCH ALLOWABLE UNDER THE ACT. BUT THE DEPARTMENTAL AUTHORITIES HAVE DENIED AND DISALLOWED THAT CLAIM ON THE GROUND THAT THE EXPENDITURE IS NOT SUPPORTED BY ANY PROJECT APPROVED BY THE NATIONAL COMMITTEE FOR PROMOTION OF SOCIAL & ECONOMIC WELFARE. ALL THE DETAILS FURNISHED BY THE ASSESSEE DISCLOSED THAT THEY ARE INCURRED TOWARDS CELEBRATION OF FESTIVALS AND PANCHAYAT LEVEL SPORTS ETC., WHICH REPRESENTS ONLY CHARITY AND DONATION A ND THEREFORE, THE DEPARTMENTAL AUTHORITIES HAVE DISALLOWED THE SAME. APART FROM THAT THE CLAIM OF THE ASSESSEE FOR A SUM OF 11,19,048 CONSISTING OF EXPENSES RELATING TO GARDEN, PARK AND LAKE AND GARDEN EXPENSES (VEGETABLES). THE CLAIM OF THE ASSESSEE ITA NO.138/CTK/2010 7 IS T HAT THE GARDEN EXPENSES FOR VEGETABLE WERE FOR CONVERSION OF WASTE GENERATED FROM THE FACTORY OPERATION MANURE FOR CULTIVATING VEGETABLES. BUT THE ASSESSEE IS NOT ABLE TO GIVE EXPLANATION REGARDING THE INCOME FROM VEGETABLES THOUGH EXPENDITURE INCURRED FOR THE CULTIVATION OF VEGETABLES WAS SHOWN. AS THIS INCOME FROM VEGETABLE WAS NOT DISCLOSED IN THE P & L ACCOUNT, THE DEPARTMENTAL AUTHORITIES HAVE DISALLOWED THE EXPENSES OF 11,19,048. 7. THE LEARNED AR OF THE ASSESSEE HAS CONTENDED THAT THE EXPENSES OF 10,57,792 WAS INCURRED BY THE ASSESSEE TOWARDS PERIPHERAL DEVELOPMENT IS ALLOWABLE EXPENDITURE AS THIS AMOUNT WAS SPENT FOR CARRYING OUT THE APPROVED PROJECT BY THE NATIONAL COMMITTEE FOR PROMOTION OF SOCIAL & ECONOMIC WELFARE. SO, THE ASSESSEE IS ENTITLED FOR CLAIM OF THE SAID AMOUNT. HE FURTHER CONTENDED THAT TO MAINTAIN ECOLOGICAL BALANCE , THE ASSESSEE IS BOUND TO MAINTAIN GARDENS, PARKS AND LAKES AND THEREIN THE ASSESSEE H AS GROWN VEGETABLES ALSO. AS THE EXPENSES WERE MAINTAINED FOR ECOLOGICAL BALANCE, THE EXPENSES ARE ALLOWABLE DEDUCTION. WHILE EXPLAINING THE NON - INCLUSION OF INCOME FROM VEGETABLE , IT WAS S TATED THAT VEGETABLES BEING UTI LISED BY THE EMPLOYEES OF THE ASSES SEE WHO ARE RESIDING IN THAT AREA FOR THEIR HOUSE HOLD PURPOSE AND THE COMPANY IS NOT CHARGING ANYTHING BECAUSE THEY ARE GROWING THEM WITHOUT CHARGING EXTRA AND THE REFORE, THERE IS NO RECEIPTS FROM THOSE VEGETABLES AND THEREFORE, THERE IS NO MENTION IN THE P & L ACCOUNT. THIS CONTENTION OF THE ASSESSEE WAS NOT FOUND FAVOUR BY THE DEPARTMENTAL AUTHORITIES AND THEY DISALLOWED THE EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF MAINTENANCE OF GARDEN, PARK, LAKE AND GARDEN EXPENSES. THEREFORE, HE CONTENDED THAT THE DISALLOWANCE MADE BY THE DEPARTMENTAL AUTHORITIES IS UNJUSTIFIED TAKING INTO CONSIDERATION OF THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, HE SOUGHT FOR ITA NO.138/CTK/2010 8 ALLOWING THE APPEAL OF THE ASSESSEE BY SETTING ASIDE THE ORDER OF THE DEPA RTMENTAL AUTHORITIES. 8. CONTRARY TO THIS, THE LEARNED DR HAS VEMENTLY ARGUED SUPPORTING THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES AND CONTEND ING INTER ALIA THAT BOTH THE DEPARTMENTAL AUTHORITIES HAD THREAD BARE EXAMINED THE ISSUES RAISED BY THE A SSESSEE AND AFTER ANALYZING THE FACTS IN THE LIGHT OF THE SUBMISSIONS OF THE ASSESSEE HAVE COME TO A RIGHT CONCLUSION THAT THE ASSESSEE IS NOT ENTITLED TO THE CLAIM S . THEREFORE , THE ORDER S PASSED BY THE DEPARTMENTAL AUTHORITIES ARE VERY MUCH JUST AND JUSTI FIABLE UNDER THE LAW . A S THEY ARE NOT INFIRM IN ANY WAY, THEREFORE DOES NOT WARRANT ANY INTERFERENCE. SINCE THE ASSESSEE HAS NOT SHOWN THE INCOME DERIVED FROM THE POWER PLANT UNIT FOR COMPUTATION OF THE INCOME TAX IN THE HANDS OF THE ASSESSEE, THE ASSESSEE IS NOT ENTITLED TO ANY DEDUCTION U/S.80IA AS SECTION 80IA CLEARLY MANDATE THAT WHEN THE GROSS TOTAL INCOME OF THE ASSESSEE CO NSISTS OF INCOME DERIVED FROM ELIGIBLE BUSINESS THEN ONLY THE ASSESSEE IS ENTITLED TO DEDUCTION/S.80 IA. APPLYING THE SAID PROVI SION , THE LOWER AUTHORITIES HAVE CORRECTLY FOUND THAT AS THE ASSESSEE HAS NOT SHOWN THE INCOME IN THE P & L ACCOUNT, IT IS NOT ENTITLED TO CLAIM THE BENEFIT UNDER SECTION 80IA. THERE AFTERWARDS IT WAS CONTENDED BY THE LEARNED DR THAT AS THE ASSESSEE HAS SP ENT 10,57,792 FOR DIFFERENT FESTIVAL AND PANCHAYAT SPORTS ETC., WHICH IS NOT AT ALL FORM PART AND PARCEL OF THE PROJECT APPROVED BY NATIONAL COMMITTEE FOR PROMOTION OF SOCIAL & ECONOMIC WELFARE, THE DEPARTMENTAL AUTHORITIES ARE WITHIN THEIR COVER IN DISAL LOWING THESE EXPENSES. NOW COMING TO THE DISALLOWANCE OF GARDEN, PARK, LAKE AND VEGETABLES OF 11,19,048, THE DEPARTMENTAL AUTHORITIES HAVE NOTICED THAT ADMITTEDLY THE ASSESSEE GROWING VEGETABLES IN THE PARKS AND GARDENS AND AT THE SAME TIME IT HAS NOT SH OWN RECEIPTS FROM SALE OF VEGETABLES AND THEREFORE, THE DEPARTMENTAL AUTHORITIES ITA NO.138/CTK/2010 9 ARE WELL WITHIN THEIR POWERS FOR NOT ALLOWING THE INCURRED EXPENDITURE. IN THAT VIEW OF THE MATER, THE DEPARTMENTAL AUTHORITIES HAS PASSED WELL REASONED ORDER AND IT DOES NOT WARRANT ANY INTERFERENCE. HENCE, THE LEARNED DR SOUGHT FOR DISMISSAL OF THE APPEAL BY UPHOLDING THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES. 9. ON CAREFUL ANALYSIS OF THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMIS SIONS OF BOTH THE PARTIES, IT IS FOUND THAT UNDISPUTEDLY THE ASSESSEE HAS NOT SHOWN THE INCOME DERIVED BY IT FROM THE POWER PLANT UNIT IN THE GROSS TOTAL INCOME SHOWN BY THE ASSESSEE FOR TAXATION PURPOSES. THEREFORE, THE ASSESSEES COMPUTATION OF DEDUCTION U/S.80IA IS NOT IN CONFORMITY WITH SECTION 80AB AS WELL. THE CONTENTION RAISED BY THE ASSESSEE REGARDING THE CLAIM U/S.80IA MADE BEFORE THE AUTHORITIES BELOW IS ONLY OF ACADEMIC INTEREST WHEREAS THE FUNDAMENTAL REQUIREMENT OF SHOWING THE INCOME FROM ELIGI BLE UNIT IN THE GROSS TOTAL INCOME IS MANDATORY WHICH WAS NOT COMPLIED BY THE ASSESSEE IN ORDER TO CLAIM DEDUCTION U/S.80IA OF THE AMOUNT EQUAL TO THE INCOME GENERATED BY THE ELIGIBLE UNIT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE REJECTION OF THE CLAIM OF THE ASSESSEE U/S.80IA IS JUSTIFIED IN THE FACTS AND CIRCUMSTANCES NARRATED IN DETAIL IN THE IMPUGNED ORDERS OF THE DEPARTMENTAL AUTHORITIES. 10. NOW COMING TO THE DISALLOWANCE OF PERIPHERAL EXPENSES OF 10,57,792, IT IS SEEN THAT THE ASSESSEE HAS CLAIMED A SUM OF 37,26,330.03 WAS INCURRED ON THE BASIS OF PROJECT APPROVED BY NATIONAL COMMITTEE FOR PROMOTION OF SOCIAL & ECONOMIC WELFARE. THE OTHER EXPENSES OF RS.10,57,792, THE ASSESSEE EXPLAINED BEFORE THE DEPARTMENTAL AUTHORITIES THAT THEY WERE P AYMENTS MADE TO DIFFERENT PERSONS FOR PERIPHERAL JOBS AND ASSIST THEM IN PERIPHERAL ACTIVITIES. THE DEPARTMENTAL AUTHORITIES FOUND THAT THESE EXPENSES WERE INCURRED TOWARDS CELEBRATION OF DIFFERENT FESTIVALS AND PANCHAYAT LEVEL ITA NO.138/CTK/2010 10 SPORTS ETC., WHICH ARE NOT A T ALL CONNECTED TO THE PROJECT APPROVED BY NATIONAL COMMITTEE FOR PROMOTION OF SOCIAL & ECONOMIC WELFARE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE DISALLOWANCE OF SUCH EXPENDITURE BY THE DEPARTMENTAL AUTHORITIES IS VERY MUCH RIGHT AND WE UPHOLD T HE FINDINGS OF THE DEPARTMENTAL AUTHORITIES FINDING THE GROUNDS OF APPEAL OF THE ASSESSEE DEVOID OF MERITS. 11. NOW COMING TO THE OTHER ISSUE OF DISALLOWANCE OF 11,19,048 BEING EXPENSES UNDER THE HEAD GARDEN, PARK, LAKE AND VEGETABLE, UNDISPUTEDLY THE ASS ESSEE HAS INCURRED THIS AMOUNT FOR MAINTAINING THE GARDEN, PARK, LAKE AND GARDEN EXPENSES AND GROWING VEGETABLES DIRECTLY. THE FACTS MADE OUT BY THE DEPARTMENTAL AUTHORITIES ARE THAT THE SALE PROCEEDS OF VEGETABLE GROWN WAS NOT BROUGHT TO ACCOUNT BY THE AS SESSEE. THEREFORE, THE DEPARTMENTAL AUTHORITIES HAVE DISALLOWED THE SAME, WHICH IN OUR VIEW RIGHTLY. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE ACTION TAKEN BY THE DEPARTMENTAL AUTHORITIES IS NOT AT ALL UNJUSTIFIED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 12. FOR THE REASONS DISCUSSED ABOVE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE HAVING FOUND THE ISSUES RAISED BY THE ASSESSEE TO BE DEVOID OF MERITS. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER (K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 12.08.2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. ITA NO.138/CTK/2010 11 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: TATA SPONGE IRONLIMITED, P.O.JODA, DIST. KEONJKHAR, ORISSA 758 034 2. THE RESPONDENT: DY.COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), SAMBALPUR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.