M/s. Tamilnadu Newsprint and Papers Ltd., CHENNAI V. ACIT, CHENNAI

ITA 328/CHNY/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5045 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 23-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Depreciation
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) .. I.T.A. NOS. 328, 329, 330 & 331/MDS/2011 ASSESSMENT YEARS : 2003-04, 2004-05, 2006-07 & 200 7-08 M/S TAMILNADU NEWSPRINT AND PAPERS LTD., 67, ANNASALAI, GUINDY, CHENNAI 600 032. PAN : AAACT2935J (APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(1), CHENNAI 600 034. (RESPONDENT) APPELLANT BY : SHRI R. VIJAYARAGHAVAN RESPONDENT BY : SHRI P.B. SEKARAN O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN ALL THESE APPEALS FILED BY THE ASSESSEE, ITS GR IEVANCE IS THAT IT WAS NOT GIVEN DEDUCTION UNDER SECTION 80-IA OF INCO ME-TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) IN RESPECT OF TWO PO WER UNITS, NAMELY, TG-3 BOILER 4 AND TG-4 BOILER 5, THE POWER FROM WHI CH WAS USED FOR CAPTIVE CONSUMPTION. I.T.A. NOS. 328 TO 331/MDS/11 2 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD IN ALL THE IMPUGNED ASSESSMENT YEARS CLAIMED DEDUCTION UNDER SECTION 80 -IA OF THE ACT IN RESPECT OF ELECTRICITY GENERATED FROM FIVE UNITS SET UP BY IT. THE UNITS SET UP WERE AS UNDER:- (1) WIND FARM PERUNGUDI (TIRUNELVELI DIST) (2) WIND FARM DEVARKULAM UNIT-I (TIRUNELVELI DIST) (3) WIND FARM DEVARKULAM UNIT III (TIRUNELVELI DIST) (4) T.G. 3 BOILER 4 TNPL MAIN SITE (5) T.G. 4 BOILER 5 TNPL MAIN SITE 3. ASSESSEE WAS PUT ON NOTICE BY THE A.O. THAT POWE R GENERATED FOR CAPTIVE CONSUMPTION WOULD NOT BE ELIGIBLE FOR C LAIMING DEDUCTION UNDER SECTION 80-IA OF THE ACT. REPLY OF THE ASSES SEE WAS THAT THOUGH THE POWER WAS USED FOR CAPTIVE CONSUMPTION, IT WAS ACTUALLY A GENERATION OF POWER THROUGH SEPARATE UNITS AND THER E WAS NO BAR IN THE STATUTE FROM POWER BEING USED FOR SELF CONSUMPT ION, FOR CLAIM OF DEDUCTION UNDER SECTION 80-IA OF THE ACT. HOWEVER, THE A.O., RELYING ON THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUN AL IN THE CASE OF PRASAD PRODUCTION (P) LTD. V. DCIT (98 ITD 212) HEL D THAT PROFIT ARISING ON ACCOUNT OF POWER USED FOR CAPTIVE CONSUM PTION WOULD NOT BE ELIGIBLE FOR CALCULATING DEDUCTION UNDER SECTION 80-IA OF THE ACT. THE A.O. ALSO FOUND THAT ASSESSEE WAS HAVING UNABSO RBED DEPRECIATION/LOSSES IN RESPECT OF THE UNITS MANUFAC TURING POWER FOR I.T.A. NOS. 328 TO 331/MDS/11 3 EARLIER YEARS WHICH WAS NOTIONALLY REQUIRED TO BE B ROUGHT FORWARD AND SET OFF BEFORE COMPUTING RELIEF UNDER SECTION 80-IA OF THE ACT. 4. IN ITS APPEALS BEFORE THE CIT(APPEALS), ARGUMENT OF THE ASSESSEE THAT NOTIONAL DEPRECIATION OF EARLIER YEAR S COULD NOT BE CONSIDERED FOR SET OFF BEFORE WORKING OUT ELIGIBLE DEDUCTION UNDER SECTION 80-IA OF THE ACT. THIS WAS ACCEPTED. LD. CIT(APPEALS), FOR THIS PROPOSITION, RELIED ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS V. ACIT (231 CTR 368). NEVERTHELESS, LD. CIT(APPEALS) NOTED THA T OUT OF THE FIVE UNITS ON WHICH ASSESSEE WAS CLAIMING DEDUCTION UNDE R SECTION 80-IA OF THE ACT, ONLY THREE WERE LOCATED ON DISPARATE PL ACES, WHEREAS, TWO OTHER UNITS WERE WITHIN THE MAIN SITE OF THE ASSESS EE. THE THREE WIND FARM UNITS WERE PLACED AT LOCATIONS AWAY FROM THE M AIN SITE OF THE ASSESSEE, WHEREAS, TG-3 BOILER 4 AND TG-4 BOILER 5 UNITS WERE LOCATED WITHIN THE MAIN SITE OF THE ASSESSEE. AS P ER THE LD. CIT(APPEALS), IT WAS ESSENTIAL FOR THE ASSESSEE TO ESTABLISH THAT THE POWER GENERATION WAS FROM A DISTINCT AND SEPARATE U NDERTAKING FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER SECTION 80- IA OF THE ACT. ACCORDING TO HIM, VIS--VIS THE WIND FARMS LOCATED AT DIFFERENT PLACES, ASSESSEE COULD ESTABLISH THESE TO BE SEPARATE UNDER TAKINGS. BUT, IN I.T.A. NOS. 328 TO 331/MDS/11 4 RESPECT OF TG-3 BOILER 4 AND TG-4 BOILER 5 UNITS, A SSESSEE COULD NOT ESTABLISH THESE TO BE SEPARATE AND DISTINCT UNDERTA KINGS. THEREFORE, ACCORDING TO HIM, THOUGH ASSESSEE WAS ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 80-IA OF THE ACT, IN RESPEC T OF CAPTIVE CONSUMPTION OF POWER, IT COULD ESTABLISH EXISTENCE OF SEPARATE UNDERTAKING ONLY IN RESPECT OF THE WIND FARMS AND N OT IN RESPECT OF THE BOILER UNITS. FURTHER AS PER THE CIT(APPEALS), ASS ESSEE WAS OPERATING TG-3 BOILER 4 AND TG-4 BOILER 5 UNITS AS A PART OF ITS MAIN PRODUCTION PROCESS, THEREBY ADMITTING THAT SUCH POW ER UNITS WERE PRODUCING POWER, AS AN INTERMEDIARY PRODUCTION DURI NG THE COURSE OF MANUFACTURER OF FINAL PRODUCT, NAMELY, PAPER. HE W AS THUS OF THE OPINION THAT THESE TWO UNITS WERE INTEGRAL PART OF THE PAPER MANUFACTURING UNDERTAKING AND NOT SEPARATE UNDERTAK ING BY ITSELF. LD. CIT(APPEALS) WAS OF THE OPINION THAT ASSESSEE C OULD NOT BE ALLOWED TO TAKE DIFFERENT STAND FOR THE PURPOSE OF CENTRAL EXCISE LAWS AND FOR THE PURPOSE OF INCOME-TAX LAWS, HAVING CLAI MED CENVAT CREDIT ON THE CAPITAL GOODS ACQUIRED FOR TG-3 BOILE R 4 AND TG-4 BOILER 5 UNITS. RELIANCE WAS ALSO PLACED ON THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF TAMILNADU PET ROPRODUCTS LTD. V. CIT (I.T.A. NO. 1315, 1316 & 1317/MDS/2005 DATED 13 .1.2009) FOR I.T.A. NOS. 328 TO 331/MDS/11 5 HOLDING THAT DEDUCTION UNDER SECTION 80-IA OF THE A CT COULD NOT BE GRANTED TO THE ASSESSEE IN RESPECT OF ITS TG-3 BOIL ER 4 AND TG-4 BOILER 5 UNITS PRODUCING ELECTRICITY FOR CAPTIVE CO NSUMPTION. NEVERTHELESS IT SEEMS THAT THE ASSESSEE WAS ALLOWED SUCH DEDUCTION ON POWER PRODUCED FROM ITS WIND FARM UNITS USED FOR CAPTIVE CONSUMPTION. 5. NOW BEFORE US, THE LEARNED A.R. ASSAILING THE OR DER OF THE CIT(APPEALS), SUBMITTED THAT THERE WAS NO REQUIREME NT UNDER THE ENACTMENT FOR AN ASSESSEE TO PROVE EXISTENCE OF SEP ARATE INDUSTRIAL UNDERTAKING IN RESPECT OF EACH OF THE UNITS PRODUCI NG POWER FOR CAPTIVE CONSUMPTION. ACCORDING TO HIM, UNDISPUTEDL Y TG-3 BOILER 4 AND TG-4 BOILER 5 UNITS WERE TWO DIFFERENT POWER GE NERATION PLANT AND THE LD. CIT(APPEALS) FELL IN ERROR IN VIEWING POWER GENERATED THROUGH WIND FARMS AND POWER GENERATED THROUGH TURBO GENERA TORS SEPARATELY. ACCORDING TO HIM, THE MODE OF GENERATI ON WAS IRRELEVANT SINCE THE PRODUCT WHICH WAS GENERATED WAS ELECTRICI TY AND FOR SUCH GENERATION, INDEPENDENT UNITS WERE THERE. JUST BEC AUSE TG-3 BOILER 4 AND TG-4 BOILER 5 UNITS WERE PLACED IN THE SAME P REMISES FROM WHERE THE MANUFACTURE OF PAPER WAS BEING DONE, WOUL D NOT MAKE THE ELECTRICITY GENERATED THEREFROM INELIGIBLE FOR CLAI M OF DEDUCTION UNDER I.T.A. NOS. 328 TO 331/MDS/11 6 SECTION 80-IA OF THE ACT. AS PER THE LEARNED A.R., ELECTRIC POWER WAS A DISTINCT PRODUCT AND INSTALLATION OF POWER UNITS WHETHER THROUGH WIND FARMS OR THROUGH TURBO GENERATORS INVOLVED INFUSION OF FRESH CAPITAL AND THESE WERE IDENTIFIABLE SEPARATE PRODUCTION UNI TS. ACCORDING TO HIM, ASSESSEES MAIN LINE OF BUSINESS WAS ADMITTEDL Y MANUFACTURE OF POWER AND WHEN ELECTRICITY WAS PRODUCED WHETHER FRO M THE SAME PREMISES OR OTHERWISE, IT WAS A NEW PRODUCT AND EXI STENCE OF UNDERTAKING WOULD STAND BY ITSELF PROVED BY SUCH PR ODUCTION. FURTHER, AS PER THE LEARNED A.R., IT IS NOT NECESSARY THAT A N UNDERTAKING SHOULD BE AN INDEPENDENT ONE OR A NEW ONE BUT WHAT WAS NECESSARY WAS THAT A SEPARATE IDENTIFIABLE PRODUCTION UNIT WA S ESTABLISHED AND THIS ACCORDING TO HIM, WAS ESTABLISHED. LEARNED A. R. ALSO POINTED OUT THAT THE CIT(APPEALS) HAD CONSIDERED POWER AS A SEPARATE REPORTABLE SEGMENT AS PER ACCOUNTING STANDARD 17 MA NDATED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND THI S WAS DISCLOSED BY THE ASSESSEE SEPARATELY IN ITS QUARTERLY AND ANNUAL AUDITED ACCOUNTS. HENCE, ACCORDING TO HIM, THERE COULD NOT BE A DOUBT AS TO WHETHER THE POWER PRODUCTION UNITS WERE DISTINCT. RELIANCE WAS PLACED ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF TAMILNADU PETRO PRODUCTS LTD. V. ACIT [TC(A) NO.896 TO 902 OF 2009 DATED I.T.A. NOS. 328 TO 331/MDS/11 7 2.11.2010] FOR HIS CONTENTION THAT THE DECISION OF THIS TRIBUNAL RELIED ON BY THE CIT(APPEALS) FOR TAKING A VIEW AGAINST TH E ASSESSEE WAS REVERSED BY THE HON'BLE JURISDICTIONAL HIGH COURT. LEARNED A.R. ALSO BROUGHT TO THE ATTENTION OF THE BENCH THAT HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF TANFAC INDUSTRIES LTD. V. CIT (T.C.NO. 1773 OF 2008 DATED NOVEMBER 6, 2008) HAD HELD THAT EVEN WHE RE STEAM WAS USED FOR PRODUCTION OF ELECTRICITY, CLAIM FOR DEDUC TION UNDER SECTION 80-IA OF THE ACT WAS TO BE ALLOWED DESPITE THE STEA M BEING AN INTERMEDIARY OUTPUT OF THE MAIN MANUFACTURING UNIT. 6. PER CONTRA, THE LEARNED D.R. SUBMITTED THAT AS P ER CLAUSE (IV) OF SUB-SECTION (4) OF SECTION 80-IA OF THE ACT, AN ASS ESSEE WOULD BE ELIGIBLE FOR DEDUCTION ONLY IF IT HAS SET UP AN UND ERTAKING FOR GENERATION OR DISTRIBUTION OF POWER. ACCORDING TO HIM, ASSESSEE HERE HAS TO ESTABLISH THAT THERE WAS A SEPARATE OR DISTI NCT UNDERTAKING ESTABLISHED BY IT FOR GENERATING POWER FOR CLAIMING DEDUCTION UNDER SECTION 80-IA OF THE ACT. AS PER LEARNED D.R., THO UGH THE ASSESSEES CLAIM THAT CAPTIVE CONSUMPTION WOULD NOT MAKE IT IN ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 80-IA OF THE ACT M IGHT BE TRUE, IT STILL HAD TO ESTABLISH THAT THERE WERE SEPARATE UNDERTAKI NGS FOR SUCH GENERATION. AGAIN AS PER LEARNED D.R., IN SO FAR A S WIND FARMS ARE I.T.A. NOS. 328 TO 331/MDS/11 8 CONCERNED, THERE WAS NO DISPUTE IN THIS REGARD SINC E THESE WERE SEPARATE UNIT DISPARATELY LOCATED, BUT IN SO FAR AS THE TG-3 BOILER 4 AND TG-4 BOILER 5 UNITS WERE CONCERNED, THESE WERE ONLY A PART OF ITS MAIN UNDERTAKING MANUFACTURING PAPER. 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. IN SO FAR AS POWER PRODUCED FROM WIND FARM UNITS ARE C ONCERNED, CAPTIVELY CONSUMED BY THE ASSESSEE, THERE IS NO DIS PUTE REGARDING ELIGIBILITY FOR CLAIMING DEDUCTION UNDER SECTION 80 -IA OF THE ACT. IN FACT, LD. CIT(APPEALS) HAS ALLOWED THE CLAIM OF THE ASSESSEE IN THIS REGARD. THOUGH THIS TRIBUNAL HAD TAKEN A VIEW AGAI NST SUCH CLAIM OF DEDUCTION UNDER SECTION 80-IA BEING ALLOWED IN THE CASE OF CHETTINAD CEMENT CORPORATION LTD. V. ACIT (I.T.A. NO. 1029/MD S/05 DATED 5.1.2007), IN OUR OPINION, THIS DECISION HAS NOW BE COME IRRELEVANT IN VIEW OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. THIAGARAJAR MILLS LTD. IN T.C.A. NO.68-70 OF 2010 DATED 7.6.2010. THE PERTINENT PART OF THIS ORDER APPEARI NG IN PARA 8 AND 9 ARE PRODUCED HEREUNDER:- 8. THE CONTENTION THAT ONLY WHATEVER POWER GENERAT ED FROM THE SALE TO AN OUTSIDER OF THE ELECTRICITY BOARD, AND T HE PROFIT OR GAIN DERIVED BY SUCH SALE ALONE CAN BE TAKEN AS PROFIT O R GAINS DERIVED BY THE ASSESSEE AS MENTIONED IN SEC. 80IA(1 ) OF THE I.T.A. NOS. 328 TO 331/MDS/11 9 ACT, HAS BEEN REJECTED BY THE TRIBUNAL IN THE ORDER IMPUGNED. IN OUR CONSIDERED VIEW, THE TRIBUNAL WAS WELL JUSTIFIE D IN HAVING REJECTED SUCH A STAND OF THE APPELLANT. HAVING REFE RRED TO SEC. 80IA(1) OF THE ACT, WE ARE ALSO CONVINCED THAT WHAT ARE ALL TO BE SATISFIED IN ORDER TO BE ELIGIBLE FOR THE DEDUCTION AS PROVIDED UNDER SUB-SEC.(1) OF SEC.80IA, THE ASSESSEE SHOULD HAVE SET UP AN UNDERTAKING OR AN ENTERPRISE AND FROM AND OU T OF SUCH AN UNDERTAKING OR AN ENTERPRISE SET UP, ANY PROFIT OR GAIN IS DERIVED, FALLING UNDER ;SUB-SEC. COVERED BY SUB-SEC.(4) OF S EC.80IA OF THE ACT SUCH PROFIT OR GAIN DERIVED BY THE ASSESSEE CAN BE DEDUCTED IN ITS ENTIRETY FOR A PERIOD OF 10 YEARS S TARTING FROM THE DATE OF FUNCTIONING OF THE SET UP. THE CONTENTION T HAT PROFIT OR GAINS CAN BE CLAIMED BY THE ASSESSEE ONLY IF SUCH P ROFIT OR GAIN IS DERIVED BY THE SALE OF ITS PRODUCT OR POWER GENE RATED TO AN OUTSIDER CANNOT BE THE MANNER IN WHICH THE PROVISIO NS CONTAINED IN SEC.80IA(1) CAN BE INTERPRETED. THE EX PRESSION DERIVED; USED IN THE SAID SEC.80IA(1) IN THE BEGI NNING AS WELL AS IN THE LAST PART OF THE SUB-SEC. (4) MAKES IT AB UNDANTLY CLEAR THAT SUCH PROFIT OR GAIN COULD BE OBTAINED BY ONES OWN CONSUMPT8IN OF THE OUTCOME OF ANY SUCH UNDERTAKING OR BUSINESS ENTERPRISES AS REFERRED TO IN ;SUB-SEC.(4) OF SEC.80IA. THE DICTIONARY MEANING OF THE EXPRESSION DERIVE I N THE NEW OXFORD DICTIONARY OF ENGLISH STATES OBTAINING SOME THING FROM A SPECIFIED SOURCE. IN SEC.80IA(1) ALSO NO RESTRICTI ON HAS BEEN IMPOSED AS REGARDS THE DERIVING OF PROFIT OR GAIN I N ORDER TO STATE THAT SUCH PROFIT OR GAIN DERIVED ONLY THROUGH AN OUTSIDE SOURCE ALONE WOULD MAKE ELIGIBLE FOR THE BENEFITS P ROVIDED IN THE SAID SECTION. 9. THEREFORE, THERE IS NO DIFFICULTY IN HOLDING TH AT CAPTIVE CONSUMPTION OF THE POWER GENERATED BY THE ASSESSEE FROM ITS OWN POWER PLANTS WOULD ENABLE THE RESPONDENT/ASSESS EE TO DERIVE PROFIT AND GAINS BY WORKING OUT THE COST OF SUCH CONSUMPTION OF POWER INASMUCH AS THE ASSESSEE IS AB LE TO SAVE TO THAT EXTENT WHICH WOULD CERTAINLY BE COVERE D BY SEC.80IA(1). WHEN SUCH WILL BE THE OUTCOME OF OWN CONSUMPTION OF THE POWER GENERATED AND GAINED BY TH E ASSESSEE BY THE ASSESSEE BY SETTING UP ITS OWN POWE R PLANT, WE DO NOT FIND ANY LACK OF MERIT IN THE CLAIM OF THE RESPONDENT/ASSESSEE WHEN IT CLAIMED BY RELYING UPON SEC. 80IA(1) OF THE ACT BY WAY OF DEDUCTION OF THE VALUE OF SUCH UNITS OF POWER CONSUMED BY ITS OWN PLANT BY WAY OF PROFIT AND GAINS FOR THE RELEVANT ASSESSMENT YEARS. I.T.A. NOS. 328 TO 331/MDS/11 10 8. THE ISSUE HERE THEREFORE BOILS DOWN TO WHETHER P OWER PRODUCED FROM TG-3 BOILER 4 AND TG-4 BOILER 5 UNITS WERE ALSO ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA OF THE A CT, ON PAR WITH THE WIND FARMS. CONTENTION OF THE REVENUE IS THAT THES E TWO UNITS WERE AN INTEGRAL PART OF THE MAIN INDUSTRIAL UNDERTAKING OF THE ASSESSEE PRODUCING PAPER. A.O. HIMSELF AT SL.NO.10 OF THE F ACING SHEET OF THE ASSESSMENT ORDER HAS MENTIONED THE NATURE OF BUSINE SS OF THE ASSESSEE AS MANUFACTURE AND SALE OF NEWSPRINT, PAPE R AND GENERATION OF ELECTRICITY. THERE IS NO DISPUTE THA T TG-3 BOILER 4 AND TG-4 BOILER 5 WERE TURBO GENERATORS. THERE IS ALSO NO DISPUTE THAT SUCH TURBO UNITS WERE PLACED WITHIN THE MAIN PREMIS ES OF THE ASSESSEE FROM WHERE ITS MAIN MANUFACTURING ACTIVITY OF PRODUCTION OF PAPER WAS BEING CARRIED ON. NOW THE QUESTION IS WH ETHER JUST BECAUSE THE TURBO GENERATORS WERE PLACED INSIDE THE MAIN INDUSTRIAL UNDERTAKING MANUFACTURING PAPER, ASSESSEE COULD HAV E BEEN DENIED DEDUCTION UNDER SECTION 80-IA OF THE ACT, IN RESPEC T OF POWER PRODUCED BY SUCH TURBO GENERATORS, USED CAPTIVELY F OR CONSUMPTION. IN THIS REGARD, ONE PERTINENT POINT WE NOTICE IS TH AT THE POWER GENERATED THROUGH SUCH TURBO GENERATORS, THOUGH MAI NLY USED FOR CATERING TO THE REQUIREMENT OF POWER FOR PAPER MANU FACTURING ACTIVITY, I.T.A. NOS. 328 TO 331/MDS/11 11 THE SURPLUS, AS PER THE ASSESSEE, WAS SOLD TO TAMIL NADU ELECTRICITY BOARD. THIS POSITION HAS BEEN NOTED BY LD. CIT(APP EALS) IN HIS ORDER AND IS NOT DISPUTED. IN OUR OPINION, THIS BY ITSEL F WOULD GO TO SHOW THAT SUCH TURBO GENERATORS PRODUCING POWER THOUGH N OT DISPARATELY PLACED, WERE UNDERTAKINGS PRODUCING POWER. CLAUSE (IV) OF SUB- SECTION (4) OF SECTION 80-IA REQUIRES THAT AN UNDER TAKING HAS TO BE SET UP IN ANY PART OF INDIA FOR GENERATION OR GENERATIO N AND DISTRIBUTION OF POWER, FOR BEING ELIGIBLE FOR DEDUCTION UNDER SECTI ON 80-IA OF THE ACT. NOW IF WE LOOK AT SUB-SECTION (1) OF SECTION 80-IA OF THE ACT, PROFITS AND GAINS DERIVED BY AN UNDERTAKING OF AN ASSESSEE WOULD BE ELIGIBLE FOR DEDUCTION SUBJECT TO OTHER SUB-SECTIONS THEREUN DER. THERE IS NO CASE FOR THE REVENUE THAT THE TURBO GENERATOR UNITS WERE NOT SITUATED IN INDIA. DEFINITELY IT WAS SITUATED OR SET UP IN A PART OF INDIAN TERRITORY AND JUST BECAUSE IT WAS PLACED WITHIN THE MAIN UNIT OF THE ASSESSEE PRODUCING PAPER, IN OUR OPINION, COULD NOT BE CITED AS A REASON FOR DENYING THE CLAIM TO THE ASSESSEE. WHETHER PLACED INSIDE THE PREMISES OR OUTSIDE, THE UNIT WAS PRODUCING ELECTRI CITY AND TAKING A DIFFERENT VIEW FOR PRODUCTION OF ELECTRICITY FROM I NSIDE OF THE PREMISES AND OUTSIDE OF THE PREMISES WOULD NOT HAVE ANY RATI ONAL MEANING NOR WOULD IT BE AN INTELLIGIBLE DIFFERENTIATION. EVEN OTHERWISE, HON'BLE I.T.A. NOS. 328 TO 331/MDS/11 12 JURISDICTIONAL HIGH COURT IN THE CASE OF TANFAC IND USTRIES LTD. (SUPRA) HAD HELD THAT POWER PRODUCED USING STEAM WHICH WAS GENERATED IN THE COURSE OF THE MAIN PRODUCTION ACTIVITY OF AN AS SESSEE WOULD STILL BE ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 80 -IA OF THE ACT. IF WE HAVE A LOOK AT PARA 8 OF THE ORDER OF HON'BLE JURIS DICTIONAL HIGH COURT IN THE CASE OF THIAGARAJAR MILLS LTD. (SUPRA) REPRO DUCED BY US AT PARA 7 ABOVE, THEIR LORDSHIP HAS HELD THAT AN ASSESSEE S HOULD HAVE SET UP AN UNDERTAKING OR AN ENTERPRISE AND FROM AND OUT OF WHICH ELECTRICITY SHOULD HAVE BEEN GENERATED WHETHER FOR CAPTIVE USE OR OTHERWISE FOR BEING ELIGIBLE FOR 80-IA DEDUCTION. NO DOUBT, HERE , IT IS NOT COMING OUT OF THE ORDERS OF THE AUTHORITIES BELOW WHETHER THE TURBO GENERATORS WHERE POWERED BY DIESEL OR POWERED BY ST EAM OR POWERED BY ANY OTHER BYE-PRODUCTS PRODUCED BY THE A SSESSEE IN THE COURSE OF ITS MAIN ACTIVITY OF PRODUCING PAPER. BU T, NEVERTHELESS THIS WOULD NOT BY ITSELF BE SUFFICIENT TO HOLD THAT THE TURBO GENERATORS WERE NOT AN UNDERTAKING BY ITSELF ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 80-IA OF THE ACT IN RESPECT OF POWER GENERA TED THEREFROM USED FOR CAPTIVE CONSUMPTION. ESPECIALLY SO, SINCE STEAM BASED GENERATING UNITS, WHERE STEAM WAS ONLY AN INCIDENTA L OUTPUT OF MAIN MANUFACTURING ACTIVITY, WAS HELD BY THE HON'BLE JUR ISDICTIONAL HIGH I.T.A. NOS. 328 TO 331/MDS/11 13 COURT IN THE CASE OF TANFAC INDUSTRIES LTD. (SUPRA) TO BE ELIGIBLE FOR 80-IA DEDUCTION IN RESPECT OF POWER GENERATED AND C APTIVELY USED. WE ARE THEREFORE OF THE OPINION THAT THE ASSESSEE I S BOUND TO SUCCEED IN THESE APPEALS. ITS CLAIM FOR DEDUCTION UNDER SECTION 80- IA OF THE ACT HAS TO BE ALLOWED IN RESPECT OF ITS P OWER GENERATED FROM TG-3 BOILER 4 AND TG-4 BOILER 5 UNITS AS WELL. 9. IN THE RESULT, APPEALS OF THE ASSESSEE FOR ALL T HE ASSESSMENT YEARS STAND ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 13 TH MAY, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 13 TH MAY, 2011. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-III, CHENNAI/ CIT, CHENNAI-I, CHENNAI/D.R./GUARD FILE