Deputy Commissioner of Income Tax Central Circle-1(3), Bangalore V. M/s Davangere Sugars Company Limited , Davangere

ITA 22/BANG/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7661 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-03-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 04-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEETHAL S BORKAR
• Section: 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI. B.R BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NOS.22 TO 24/BANG/2019 ASSESSMENT YEAR : 2012-13, 2013-14 & 2014-15 THE DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1(3), BENGALURU. VS. M/S DAVANGERE SUGARS COMPANY LTD., NO.73/1, LFM BUILDING, SHAMANUR ROAD, NIJALINGAPPA LAYOUT, DAVANGERE-577 004. PAN - AAACD 7302 D APPELLANT RESPONDENT ASSESSEE BY : SHRI PRADEEP KUMAR, CIT-DR REVENUE BY : SMT. SHEETHAL S BORKAR, ADVOCATE DATE OF HEARING : 25-03-2021 DATE OF PRONOUNCEMENT : 29-03-2021 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEALS HAVE BEEN FILED BY REVENUE AGAINST INDEPENDENT ORDER IS DATED 04/10/2018 PASSED BY THE LD.CIT(A), DAVANGERE FOR ASSESSMENT YEARS UNDER CONSIDERATION. IT HAS BEEN SUBMITTED THAT THE ISSUE RAISED BY REVENUE IN ALL T HESE APPEALS ARE COMMON AND IDENTICAL. THEREFORE GROUNDS PERTAIN ING TO ASSESSMENT YEAR 2012-13 ARE BEING CONSIDERED: PAGE 2 OF 7 ITA NO.22 TO 24/BANG/2019 1. THE ORDER OF THE CIT(A) IS OPPOSED TO THE FACTS AND POSITION OF THE LAW. 2. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) IN ALLOWING THE DEDUCTION U/S 80 IA OF RS. 18,11,97,73 6/- EVEN THOUGH THE ASSESSEE HAS NOT FULFILLED THE BASIC CONDITION AS P ER THE SECTION 801A(3)? 3. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) IS CORRECT IN ALLOWING THE ASSESSEE APPEAL WHEN THE AS SESSEE HAS EXPANDED ITS BUSINESS AND NOT ESTABLISHED A NEW POW ER PLANT. 4. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) IS CORRECT IN ALLOWING DEDUCTION U/S 801A(3) TO THE AS SESSEE COMPANY EVEN WHEN THE ASSESSEE HAD INITIAL POWER PRODUCTION FROM ITS PLANT STARTED IN THE YEAR 1996-97 AND THE PERIOD OF 15 YEARS ENDED I N THE YEAR 2010? 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR TO DELETE ANY OF THE GROUNDS OF APPEAL. BRIEF FACTS OF THE CASE ARE AS UNDER: 2. THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE MANUFACTURING OF SUGAR AND OTHER PRODUCTS AND ALSO GENERATION OF POWER. IT FILED ITS RETURN OF INCOME ON 30/09/20 12 DECLARING TOTAL INCOME OF RS.8,44,170/-AFTER CLAIMING DEDUCTI ON UNDER SECTION 80IA AMOUNTING TO RS.18,11,97,736/-. THE LD .AO OBSERVED THAT BOOKS OF ACCOUNTS WERE AUDITED UNDER SECTION 44 AB OF THE ACT. 3. DURING THE ASSESSMENT PROCEEDINGS LD.AO DISALLOW ED THE DEDUCTION UNDER SECTION 80 IA BY CONSIDERING IT EXC ESSIVE AND NOT ACCEPTABLE. THE LD.AO DISALLOWED THE CLAIM OF ASSES SEE FOR THE REASON THAT ASSESSEE HAD MANUFACTURED POWER SINCE A SSESSMENT YEAR 1997-98. 4. AGGRIEVED BY THE ORDERS OF LD.AO, ASSESSEE PREFE RRED APPEAL BEFORE THE LD.CIT (A). 5. BEFORE LD.CIT(A), THE ASSESSEE SUBMITTED THAT IT WAS HAVING A STEAM GENERATION UNIT FOR RUNNING THE SUGAR MILL MACHINERIES BUT ASSESSEE WAS NOT HAVING ANY POWER GENERATION UN IT DURING PAGE 3 OF 7 ITA NO.22 TO 24/BANG/2019 THE PERIOD FOLLOWING ASSESSMENT YEAR 1997-98. IT WA S SUBMITTED THAT POWER GENERATION FOR CAPTIVE CONSUMPTION THROU GH STEAM TURBINE WAS CARRIED OUT BY ASSESSEE WHICH HAS BEEN IGNORED BY THE LD.AO. ASSESSEE BEFORE LD.CIT(A) FILED SUPPORTI NG DOCUMENTS REGARDING THE START OF YOU WHO GENERATION OF POWER UNIT. ASSESSEE ALSO SUBMITTED THE PERMISSION OBTAINED FROM KP TCL, GOVERNMENT OF KARNATAKA UNDERTAKING AND NECESSARY B ILLS FOR ERECTION OF NEW COGENERATION UNIT WHICH WAS STARTED FOR TRANSMISSION OF POWER FROM 25/03/2004 ONWARDS AND T HE COMMISSIONING CERTIFICATE OF 20 MW. 6. BASED ON THE ABOVE FACTS THE LD.CIT(A) IS OBSERV ED AS UNDER: 6A. THE AO HAS DISALLOWED RS.18,20,41,909/- BEING DEDUCTION CLAIMED BY THE APPELLANT U/S 80A1 OF THE ACT ON THE FOLLOWI NG GROUNDS. [I] ASSESSEE HAS BEEN INVOLVED IN PRODUCTION OF POW ER EVEN BEFORE 1996- 97 RELEVANT TO AN 1997-98. [II] THE ASSESSEE'S CLAIM IS NOT MADE WITHIN 15 YEA RS AS PRESCRIBED UNDER THE ACT. I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE A PPELLANT AND THE ASSESSING OFFICER. I FIND THAT THE AO HAS NOT APPRE CIATED THAT THE ASSESSEE HAS UNDERTAKEN COMMISSIONING OF NEW UNDERT AKING FOR GENERATION OF POWER. THE OPINION OF THE AO IS THAT THE ASSESSEE WAS GENERATING POWER FROM F.Y 1996-97. HE HAD NOT APPR ECIATED THAT THIS GENERATION WAS NOT THROUGH THE SAME SOURCE FOR WHIC H DEDUCTION U/S 801A WAS CLAIMED. THE GENERATION OF POWER FROM AY 1 997-98 WAS THROUGH DIESEL GENERATOR AND CAPTIVE STEAM POWER. B E THAT AS IT MAY BE, WHAT IS RELEVANT IS WHETHER A NEW UNDERTAKING W AS ESTABLISHED OR NOT. ALSO RELEVANT IS, WHETHER DEDUCTION U/S 801A IS CLA IMED IN CONNECTION WITH THAT UNDERTAKING. THE AR FILED BEFORE ME, THE SALE INVOICES OF STEAM BOILER AND OTHER MACHINERIES AS PROOF OF OLD SYSTEM HAVING BEEN DISM ANTLED. THE SAME WAS FILED BEFORE THE AO TOO. THE AO HAS NOT BOTHERE D TO APPLY HIMSELF ON THAT. HAD HE CONSIDERED THE SAME, HE WOULD NOT HAVE COME TO THE OPINION THAT THIS UNDERTAKING CLAIMED IS ONLY AN EXPANSION. THE AR FURTHER SUBMITS THE FOLLOWING DOCUMENTS, [1] APPROVAL OF THE GOVERNMENT OF KARNATAKA DATED 1 2/09/2001 FOR ESTABLISHING A 24 MW CO-GENERATION PLANT. PAGE 4 OF 7 ITA NO.22 TO 24/BANG/2019 [2] COPY OF GOVERNMENT OF KARNATAKA'S 'IN PRINCIPLE CLEARANCE' FOR SETTING UP CO-GENERATION POWER PLANT VIDE LETTER NO.DE.38NC E200 1 DATED 07/11/2001. [3] COMMISSIONING CERTIFICATE ISSUED BY KARNATAKA P OWER TRANSMISSION CORPORATION LIMITED DATED 25/03/2004. [4] COPY OF COMMISSIONING APPROVAL OF 1X24.45 MW TG SET, 1X30 MVA, 66/11 KV SWITCH. [5] APPROVAL OF DRAWINGS FOR EVACUATION OF 20 MWS P OWER FROM THE CO- GENERATION PLANT DATED 11/04/2003. CONSIDERING ALL THE ABOVE, I AM OF THE OPINION THAT THE APPELLANT HAS CREATED A NEW UNDERTAKING AND NOT RESTRUCTURING OF EXISTING UNIT. THEREFORE, THE APPELLANT COMPANY IS ELIGIBLE FOR DE DUCTION U/S 801A OF THE ACT. THUS, THE GROUND SUCCEEDS. THE LD.CIT(A) THUS ALLOWED THE CLAIM OF ASSESSEE. 7. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS IN APPEAL BEFORE US NOW. 8. THE LD.CIT.DR HAS FILED WRITTEN SUBMISSION DATED 25/03/2021 WHEREIN IT HAS BEEN SUBMITTED THAT ASSES SEE WAS JUST GENERATING POWER FROM FINANCIAL YEAR 1995-96 A ND THROUGH DIESEL GENERATOR AND CAPTIVE STEAM POWER. LD.CIT.DR SUBMITTED THAT, WHEN THE COGENERATION POWER PLANT WAS INSTALL ED BY ASSESSEE, THE PRODUCTION DIESEL GENERATOR ALSO EXIS TED. IT HE THUS SUBMITTED THAT IT IS AN EXTENSION OF THE AVAILABLE FACILITY WITH THE ASSESSEE AND NOT A NEW PRODUCTION UNIT. HE THUS SUP PORTED THE ORDER PASSED BY THE LD.AO. ON THE CONTRARY, THE LD. COUNSEL SUBMITTED THAT THERE IS NO EXTENSION OF EXISTING AC TIVITY. SHE SUBMITTED THAT THE POWER GENERATION WAS FOR THE CAP TIVE CONSUMPTION THROUGH STEAM TURBINE AND THAT ASSESSEE HAD FURNISHED ALL INFORMATION/DOCUMENTS WHICH WAS VERY WELL REQUIRED FOR ALLOWABILITY OF DEDUCTION UNDER SECTIO N 80 IA DURING THE RELEVANT PERIOD. PAGE 5 OF 7 ITA NO.22 TO 24/BANG/2019 SHE THUS RELIED ON THE OBSERVATIONS OF LEARN CIT (A ). 9. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SID ES IN THE LIGHT OF RECORDS PLACED BEFORE US. THERE IS A CATEGORICAL FACTUAL OBSERVATION MADE BY THE LD. CIT (A) IN HIS ORDER THAT ASSESSEE WAS GENERATING POWER FRO M THE NEW COGENERATION UNIT WHICH WAS STARTED FROM 25/03/2004 ONWARDS WHICH WAS BASED ON THE COMMISSIONING CERTIFICATE. 10. THE LD.CIT(A) HAS RETURNED SUCH FINDINGS BASED ON ALLOWING STATUTORY DOCUMENTS: (1) APPROVAL OF GOVERNMENT OF KARNATAKA DATED 12/09/200 1 FOR ESTABLISHING A 24 MW CO-GENETRATION PLANT; (2) REPRODUCE FROM PAGE 8 AT THE BOTTOM OF CIT APPEAL ORDER (3) REPRODUCE FROM PAGE 9 OF THE TOP OF THE CIT APPEAL ORDER (4) REPRODUCE FROM PAGE 9 OF THE TOP OF THE CIT APPEAL ORDER (5) REPRODUCE FROM PAGE 9 OF THE TOP OF THE CIT APPEAL ORDER 11. THE LD.CIT(A) BASED ON THE ABOVE DOCUMENTS RETU RNED A FINDING THAT THERE WAS NO RESTRUCTURING OF EXISTING UNIT. NOTHING CONTRARY IS BOUGHT BEFORE US BY THE LD.CIT.DR IN SU PPORT OF HIS ARGUMENT. WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE OBSERVATIONS OF LD.CIT(A) AND THE SAME IS UPHELD. ACCORDINGLY GROUNDS RAISED BY REVENUE FOR ASSESSMEN T YEAR 2012-13 STANDS DISMISSED. 12. FACTS FOR THE SUBSEQUENT ASSESSMENT YEARS BEING 2013-14 AND 2014-15 ARE IDENTICAL AND THE ISSUES RAISED BY REVENUE ARE SIMILAR WITH ASSESSMENT YEAR 2012-13. PAGE 6 OF 7 ITA NO.22 TO 24/BANG/2019 13. WE THEREFORE APPLY OUR OBSERVATIONS FOR ASSESSM ENT YEAR 2012-13 MUTATIS MUTANDIS TO ASSESSMENT YEARS 2013-1 4 AND 2014-15. ACCORDINGLY GROUNDS RAISED BY REVENUE FOR ASSESSMEN T YEARS 2013-14 AND 2014-15 STANDS DISMISSED. IN THE RESULT APPEALS FILED BY REVENUE FOR ALL YEAR S UNDER CONSIDERATION ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH MARCH, 2021 SD/- SD/- (B.R BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 29 TH MARCH, 2021. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE