ACIT, New Delhi V. M/s SBEC Bioenergy Ltd., New Delhi

ITA 3440/DEL/2011

• Counselvise Citation: 344020114 RSA 2011
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 07-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRANJAN KOULI
• Assessee Lawyers: PREMJIT S KASHAPAR
• Keywords: Retrospective amendment; Wholly owned subsidiary
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI G BENC H BEFORE SMT. DIVA SINGH, JM & SHRI A.N. PAHUJA, AM ITA NO.3440/DEL/2011 ASSESSMENT YEAR: 2007-08 A.C.I.T.,CIRCLE-7(1), ROOM NO. 312,3 RD FLOOR, CR BUILDING, IP ESTATE,NEW DELHI V/S . M/S SBEC BIOENERGY LTD. (FORMERLY KNOWN AS SIAL SBEC BIONERGY LTD.), 1400 HEMKUNT TOWERS, 98, NEHRU PLACE, NEW DELHI [PAN : AADCS 9993 C] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI PREMJIT S. KASHAP,AR REVENUE BY SHRI NIRANJAN KOULI, DR DATE OF HEARING 07-03-2012 DATE OF PRONOUNCEMENT 07-03-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 06.07.2011 BY THE REVENUE AGAI NST AN ORDER DATED 20 TH APRIL, 2011 OF THE LD. CIT(A)-X, NEW DELHI, RAISES THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN LAW AND MERIT OF THE CASE IN DELETING THE ADDITION OF ` `6,82,84,240/- MADE BY AO ON ACCOUNT OF SALE VALUE OF EXHAUST STEAM SUPPLIED TO SSL. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN LAW AND MERIT OF THE CASE IN HOLDING THAT STEAM IS ONE OF THE FORM OF POWER AND AS IS ELIGIBLE FOR DEDUCTION U/S 80IA. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN LAW AND MERIT OF THE CASE IN HOLDING THAT 50% OF RECEIPTS FROM I.T.A. NO.3440/DEL./2011 2 UPSEB ` 4,81,89,797/- ARE ELIGIBLE FOR COMPUTATION OF DEDUCTION U/S 80IA. 4. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. ADVERTING FIRST TO GROUND NOS. 1 TO3 IN THE APP EAL, FACTS IN BRIEF, AS PER RELEVANT ORDERS ARE THAT THE RETURN DECLARING I NCOME OF ` ` 35,19,791/- AFTER CLAIMING DEDUCTION OF ` `1,49,09,636/- U/S 80-IA OF THE INCOME-TAX ACT,1961[HEREINAFTER REFERRED TO AS THE ACT] UND ER THE NORMAL PROVISIONS OF THE ACT AND BOOK PROFIT OF ` `1,55,10,901/- U/S 115JB OF THE ACT, FILED ON 30.10 .2007 BY THE ASSESSEE, GENERATING POWER, AFTER BEING PROCESS ED ON 06.10.2008 U/S 143(1) OF THE ACT, WAS SELECTED FOR SCRUTINY WITH THE SERV ICE OF A NOTICE ISSUED U/S 143(2) OF THE ACT ON 15.09.2008. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE HAD SHOWN PRODUCTION OF 2,89,240 TONNE OF STEAM, WHICH WAS SUPPLIED TO SBEC SUGAR LTD.[ SSL IN SHORT] FREE OF COST INSTEAD OF @` ` 236 PER TONNE AND ` ` 75 PER TONNE , IN EARLIER YEARS. TO A QUERY BY THE AO AS TO WHY NO INCOME ON ACCOUNT OF SALE OF STEAM TO SBEC SUGAR LTD. WAS SHOWN AND WHY RATE OF STEAM SOL D TO SSL BE NOT TAKEN AT ` ` 236 PER TONNE AS IN EARLIER YEARS, THE ASSESSEE REP LIED VIDE LETTER DATED 14.12.2009 THAT THE ASSESSEE RECEIVED A COMMUNICATI ON FROM SSL, INFORMING THEIR DECISION NOT TO PAY FOR ANY EXHAUST STEAM UN DER THE CONVERSION AGREEMENT SINCE OCTOBER, 2001. IT WAS FURTHER POINTED OUT TH AT SSL SUPPLIED BAGGASE AND WATER FREE OF CHARGE TO THE ASSESSEE BESIDE STEAM C ONDENSATE. IN THESE CIRCUMSTANCES, NO ADJUSTMENT ON ACCOUNT OF SUPPLY O F STEAM BY THE ASSESSEE WAS NECESSARY, IT WAS PLEADED. AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE AND IN THE LIGHT OF HIS OWN FINDINGS FOR THE PRECEDING YEARS, THE AO ADDED AN AMOUNT OF ` 68,284,240/-(289340 X 236) TO THE INCOME OF THE ASS ESSEE. INTER ALIA, THE ASSESSEES CLAIM FOR DEDUCTION U/ S 80IA ON SALE OF STEAM WAS ALSO DISALLOWED ON THE GROUND THAT STEAM WAS NOT POWER W ITHIN THE MEANING OF PROVISIONS OF SECTION 80-IA OF THE ACT. BESIDES, ON THE BASIS OF HIS FINDINGS IN THE PRECEDING YEARS, THE AO DISALLOWED THE CLAIM FOR DE DUCTION U/S 80IA OF THE ACT ON I.T.A. NO.3440/DEL./2011 3 THE 50% OF THE RECEIPTS ON SALE OF POWER TO UPSEB, EXPENDITURE INCURRED BEING HIGHER THAN THE NET SALE PROCEEDS OF POWER. 3. ON APPEAL, THE LEARNED CIT(A) FOLLOWING T HE DECISION OF THE ITAT IN THE PRECEDING ASSESSMENT YEAR 2000-01, FOLLOWED IN AYS. 1999-00, 2001-02 ,2003- 04 TO 2006-07, ALLOWED THE CLAIMS OF THE ASSESSEE I N THE FOLLOWING TERMS:- 5. GROUND NO.2 IS AQAINST ADDITION OF RS 6,82,84,240/- BEING ESTIMATED RECEIPTS FROM SSL AGAINST SUPPLY OF EXHAU ST STEAM. THE APPELLANT HAD ADMITTEDLY NOT SHOWN ANY I NCOME FROM SUPPLY OF STEAM TO SSL BECAUSE NO REAL INCOME ACCRUED TO OR WAS ADMITTEDLY RECEIVED BY THE APPELL ANT. IT IS NOTED THAT SIMILAR ADDITIONS WERE MADE IN AY 2006-0 7, AY 2005-06, AY 04-05 AND AY 03-04 IN THE CASE OF APPEL LANT WHICH WERE DISPUTED IN APPEAL AND WERE DECIDED BY C IT(A) BY ORDER DATED 23/03/2009, 26/02/2008, 12/04/07 AND 10/10106 RESPECTIVELY. THE ISSUE WAS DISCUSSED IN D ETAIL AT PARA 2.1 TO 2.12 IN THE APPEAL FOR AY 04-05 (FROM P AGE 2 TO PAGE 7) AND THE ADDITION MADE WAS DELETED. FOR READ Y REFERENCE THE RELEVANT PARAS OF THE SAID ORDER ARE REPRODUCED AS UNDER: EXTRACT FROM THE ORDER OF THE CIT(A) IN APPEAL NO.2 11/06- 07 DATED 12-04-2007) '2.1 GROUND NO.2 IS AGAINST ADDITION RS 9,93,41,508 /- BEING THE SALE VALUE OF STEAM SUPPLIED TO SSL WORKED BY THE AD @ OF RS.236/- PER TON. THE APPELLANT HAD SHOWN SALE PROCEEDS IN RESPE CT OF SUPPLY OF POWER TO UPSEB AND SSL AGGREGATING TO RS.11,59,51,5 75/- HOWEVER NO SALE PROCEEDS IN RESPECT OF EXHAUST STEAM SUPPLIED TO SSL WERE SHOWN IN THE ACCOUNTS. THE AO NOTED THAT IN THE EAR LIER YEARS THE APPELLANT HAD SOLD EXHAUST STEAM TO SSL @ RS.236 & RS.75 PER TON FOR VARYING PERIODS. DURING THIS YEAR HOWEVER THE S TEAM WAS SUPPLIED FREE OF COST. THE AO THEREFORE PROPOSED TO TREAT THE SALE PROCEEDS OF EXHAUST STEAM WORKED OUT AT THE RATE OF RS.236 PER TON CLAIMED INCOME FROM THE APPELLANT IN THE SAME WAS A S IN EARLIER YEARS. IN RESPONSE TO SHOW CAUSE NOTICE THE APPELLA NT MADE WRITTEN SUBMISSIONS BY LETTER DATED 3/2/06 AND THEREAFTER B Y LETTER DATED 13/3/06. THE CONTENTS OF LETTER DATED 13/3/06 HAVE BEEN REPRODUCED BY THE AO ON PAGE 4 OF THE ASSESSMENT ORDER. SINCE THE I.T.A. NO.3440/DEL./2011 4 SAID LETTER GIVES GIST OF HISTORY OF THIS ISSUE BUT SAME IS REPRODUCED IN THIS ORDER ALSO EVEN AT THE COST OF REPETITION: I. RECEIPTS FROM STEAM DURING A Y 2000-01 WERE RECOGNIZED IN THE BOOKS @ RS.236 PER TON. HOWEVER, DUE TO REVISION OF RATES, IN A Y 01-02 A REVERSAL ENTRY WAS PASSED IN THE BOOKS REDUCING THE RECEIPTS EXCESS ACCOUNTED FOR IN A Y 2000-01. II. IN THE ASSESSMENT PROCEEDINGS FOR A Y 2000-01 THE ASSESSEE COMPANY CLAIMED THAT THE RECEIPTS BE REDUCED BY RS. 3,82,59,074/- SINCE THE RATE OF STEAM WITH RETROSPECTIVE EFFECT HAD BEEN REVISED TO RS.75 PER TON. III. THE AO HAS REJECTED THIS CLAIM OF THE ASSESSEE COMPANY BY OBSERVING IN THE ORDER PASSED U/S 143(3) DATED 28/0 2/03 FOR A Y 2000-01 THAT 'THE EFFECT FOR WHAT HAS HAPPENED IN T HE NEXT ASSESSMENT YEAR WOULD BE SEEN NEXT YEAR DURING THE COURSE OF FURTHER PROCEEDINGS. IV. THE ASSESSEE WENT IN APPEAL BEFORE CIT (A) AN D THEREAFTER TO ITAT AGAINST THIS REJECTION. V. ITAT WHICH IS THE FINAL FACT FINDING AUTHORITY HAS MENTIONED THE FOLLOWING FACTS IN ITS ORDER IN ITA NO.5461/DE1/200 3 & 1007/DEL/2004 DATED 26.3.04 AS UNDER (COPY ENCLOSED AS ANNEXURE B): A. THE ASSESSEE COMPANY HAD ENTERED INTO A CONVERSION CONTRACT DATED 1/10/98 WITH SBEC SUGAR UD (SSL). TH IS AGREEMENT WAS SUBJECT TO PICUP'S APPROVAL. B. IN VIEW OF PICUP'S OBJECTION, AN INTERIM ARRANGEMENT DATED 26 TH AUGUST 99 WAS AGREED. UNDER THIS INTERIM ARRANGEM ENT, THE PARTIES AGREED THAT THEY WOULD PAY AND RECEIVE RS.236 PER METRIC TON FOR STEAM. FOR ELECTRICAL ENERGY IT WAS TO CHARGE AT THE SAME RATE AT WHICH ELECTRICITY WAS SU PPLIED TO UPSEB. C. REVENUE IN THE BOOKS OF ACCOUNTS WAS RECOGNIZED ON THE BASIS OF THIS INTERIM ARRANGEMENT. D. THE INTERIM ARRANGEMENT WAS SUBSEQUENTLY REVISED AND UNDER THE REVISED ARRANGEMENT IT WAS AGREED THAT TH E RECEIPT FROM STEAM WOULD BE @ RS 75 PER METRIC TON. E. THE REVENUE HAS NOT DOUBTED THE GENUINENESS OF THES E AGREEMENTS. F. NO MATERIAL HAS BEEN PLACED BY THE REVENUE TO HOLD THAT THIS I.T.A. NO.3440/DEL./2011 5 AGREEMENT OF REVISION WAS NOT GENUINE AND WAS PROSPECTIVE AND NOT RETROSPECTIVE. THUS THE FACT THAT THE RATE OF STEAM WAS RS.75 PER METRIC TON AS PER SECOND ARRANGEMENT LETTER DATED 20/6/01 WAS ACC EPTED AND NOT SUBJECT MATTER OF DISPUTE. IN A Y 2000-01 THE D EPARTMENT HAS NEVER DOUBTED THE GENUINENESS OF THIS AGREEMENT . THE ONLY DISPUTE WAS REGARDING RETROSPECTIVE APPLICABILITY O F THIS ARRANGEMENT SINCE THE ARRANGEMENT WAS ENTERED AFTER THE CLOSE OF THE PREVIOUS YEAR VIDE LETTER DATED 20/6/01. IN THIS REGARD WE WOULD LIKE TO BRING TO YOUR NOTICE THAT QUESTION SO UGHT TO BE REFERRED BY THE DEPARTMENT TO THE HON. DELHI HIGH C OURT IN A Y 2000-01 READS AS UNDER: 'BECAUSE RETROSPECTIVE PROVISO OF ARRANGEMENT BY WH ICH RATES PER UNIT WERE REVISED BY SUBSEQUENT LETTER DATED 20 /6/01 CANNOT EXEMPT THE INCOME ALREADY ACCRUED UPTO31/3/2 000.' FURTHER AS SUBMITTED IN OUR LETTER DATED 3/2/06 ONL Y REAL INCOME COULD BE TAXED. SSL HAS STOPPED PAYING FOR CHARGES OF EXHAUST STEAM WITH EFFECT FROM OCT. 2001. THUS NO RECEIPT S HOULD BE ESTIMATED AND TAXED ON ACCOUNT OF STEAM IN THE PRES ENT ASSESSMENT YEAR. THE PROPOSED ESTIMATED INCOME OF S TEAM COMPUTED @ RS 236 PER TONE IS UNJUSTIFIED AND AGAIN ST THE PRINCIPLES LAID DOWN BY THE SUPREME COURT AND VARIO US HIGH COURTS INCLUDING THE TERRITORIAL JUDICIAL HIGH COUR T. 2.2 AS CAN BE SEEN THE APPELLANT AGREED THAT IN THE EARLIE R YEARS STEAM WAS SOLD @ RS.236 PER TON AND THAT RATE WAS RETROSPECTIVELY CHANGED TO RS. 75 PER TON. HOWEVER WITH EFFECT FROM OCT. 2001 SSL HAS REFUSED TO MAKE ANY PAYMENT TOWARDS SUPPLY OF STEAM. SINCE THERE WAS UNCERTAINTY ABOUT REALIZATION OF ANY SALE PRICE OF SUPPLY OF STEAM THE APPELLANT DID NOT RECOGNIZE THE VALUE FOLLOWING THE ACCOUNTING STANDARD 9 AS NO TIFIED U/S 145(2) OF THE INCOME TAX ACT. SINCE THERE WAS NO RI GHT TO RECEIVE ANY AMOUNT FOR SUPPLY OF STEAM AND NEITHER WAS ANY AMOUNT ACTUALLY RECEIVED THERE CANNOT BE ANY INCOME FROM S ALE OF STEAM. IT WAS CONTENDED THAT ONLY THE REAL INCOME CAN BE T AXED UNDER IT PROVISION. THE AO DID NOT ACCEPT THE EXPLANATION SU BMITTED BY THE APPELLANT ON THE GROUND THAT THE STEAM DEFINITE LY HAS A VALUE AND THE APPELLANT WAS RECOGNIZING THE RECEIPTS FROM SALE OF STEAM IN EARLIER YEARS. HE MENTIONED THAT THE RATES REGARDING SUPPLY TO SSL WERE NEVER FINALIZED AS THE CONVERSIO N CONTRACT WAS I.T.A. NO.3440/DEL./2011 6 SUBJECT TO APPROVAL BY PICUP. SALE VALUE OF STEAM W AS ALWAYS RECOGNIZED AS PER INTERIM ARRANGEMENTS. THE AO HAS MENTIONED THAT ALTHOUGH ADDITION ON THIS ISSUE MADE IN EARLIE R YEARS WERE DECIDED BY THE APPELLATE AUTHORITIES IN FAVOR OF AP PELLANT, DEPARTMENT HAD NOT ACCEPTED REDUCTION OF PRICE OF S TEAM FOR RS.236 PER TON TO RS.75AND HAS FILED FURTHER APPEAL BEFORE ITAT IN AY 2001-02 & HIGH COURT IN AY 2000-01. HENCE THERE WAS NO QUESTION OF ACCEPTING THE APPELLANT'S CONTENTION RE GARDING SUPPLY OF STEAM FREE OF COST. IN VIEW OF THIS THE A D WORKED OUT SALE PROCEEDS OF STEAM SUPPLIED BY THE APPELLANT TO SSL AT RS. 9,93,41,5081- AND ADDED TO THE TOTAL INCOME. 2.3 IN THE APPEAL PROCEEDINGS PAPER BOOK RUNNING INTO 447 ODD PAGES WAS FILED ALONG WITH WRITTEN SUBMISSIONS FOR ALL THE GROUNDS. IN THE WRITTEN REPLY THE APPELLANTS AR EXP LAINED THE BACKGROUND, FACTS RELATING TO THE DISPUTE BETWEEN T HE APPELLANT COMPANY AND SSL REGARDING PRICE PAPER FOR SUPPLY OF STEAM. CORRESPONDENCE BETWEEN THE APPELLANT AND SSL ON THI S ISSUE BY WAY OF VARIOUS LETTERS EXCHANGED WAS SUBMITTED IN T HE PAPER BOOK. THE FACTS STATING TO THIS ISSUE IN SIMPLE TER MS WERE EXPLAINED LIKE THIS. THE POWER PLANT OF THE APPELLA NT COMPANY AND SUGAR FACTORY OF SSL ARE LOCATED AT THE SAME PL ACE SIDE BY SIDE. SSL SUPPLIES BAGASSE (SUGARCANE REMAINS AFTER EXTRACTION OF JUICE) AND WATER TO THE APPELLANT COMPANY FREE OF C OST. THE BAGASSE IS USED AS FUEL AND BURNT TO PRODUCE STEAM FROM WATER. THE STEAM IS USED TO PRODUCE ELECTRICITY USING STEA M TURBINES BY APPELLANT COMPANY. THE ELECTRICITY GENERATED IS SUP PLIED TO SSL AND SURPLUS, IF ANY, TO UPSEB. THE EXHAUST STEAM AF TER RUNNING THE TURBINES IS ALSO SUPPLIED TO SSL. INITIALLY IT WAS AGREED BETWEEN THE TWO COMPANIES THAT THE APPELLANT COMPAN Y WOULD RECEIVE CONVERSION CHARGES FROM SSL FOR CONVERTING BAGASSE AND WATER INTO ELECTRIC POWER AND EXHAUST STEAM WHICH W ILL BE SUPPLIED TO SSL. FOR THIS PURPOSE A CONVERSION CONT RACT DATED 10112198 WAS EXECUTED. ACCORDING TO THIS CONVERSION CONTRACT FOLLOWING PAYMENTS WERE TO BE RECEIVED BY THE APPEL LANT FROM SSL AS CONVERSION CHARGES: A FIXED FEE OF RS.19.75/- MILLION PER MONTH DURING TH E PRODUCTION SEASON. VARIABLE CHARGES IN PROPORTION TO THE QUANTITIES OF ELECTRICITY AND STEAM SUPPLIED: RS. 0.521 PER UNIT OF ELECTRICITY ENERGY, I.E. ELEC TRICITY RS.40 PER TON OF THERMAL ENERGY, I.E. STEAM I.T.A. NO.3440/DEL./2011 7 2.4 THE FIXED FEE OF RS.19.75 MILLION PER MONTH INCLUDE D 50% OF INCOME RECEIVED FROM SALE OF SURPLUS ELECTRICITY TO UPSEB. THEREFORE, IT WAS PROVIDED IN CLAUSE 7.11 THAT 50% OF SUCH REALIZATION FROM UPSEB WOULD BE RETURNED TO SSL. AS PER ARTICLE 18 OF THE CONVERSION CONTRACT THE SAID AGREEMENT WA S TO BE APPROVED BY PICUP WHO HAD GIVEN LOAN OF RS 8 CRORES TO SSL. PICUP STRONGLY OBJECTED TO PAYMENT TERMS AS PER CONVERSION CONTRACT AND DID NOT GIVE ITS APPROVAL. IN VIEW OF PICUP'S O BJECTION RE- NEGOTIATION OF THE PAYMENT TERMS WERE PROPOSED BETW EEN THE APPELLANT & SSL. PENDING THE NEGOTIATIONS, INTERIM ARRANGEMENT DATED 26/8/99 FOR PAYMENT WAS AGREED TO. ACCORDING TO THIS, RS 236 PER TON WAS TO BE PAID FOR STEAM AND SUPPLY TO SSL. FOR ELECTRICAL ENERGY THE SAME RATE AS FOR UPSEB WAS TO BE CHARGED BY APPELLANT FROM SSL. FOR SOME PERIOD THE APPELLAN T RAISED THE BILLS AND SSL MADE PAYMENT FOR SUPPLY OF STEAM AS P ER THIS ARRANGEMENT. HOWEVER EVEN THIS ARRANGEMENT WAS OBJE CTED TO BY PICUP ON THE GROUND THAT ACCEPTED RATE OF RETURN JUSTIFIED IN POWER INDUSTRY WAS 16% OF CAPITAL EMPLOYED AS AGAIN ST 21% ADOPTED FOR MAKING THE INTERIM ARRANGEMENT. IN VIEW OF THIS SSL INFORMED THE APPELLANT COMPANY THAT THE PROPER RATE OF STEAM WOULD BE RS. 75 PER TON AS AGAINST RS 236 APPLIED E ARLIER. THE RATE OF RS 75 PER TON WAS AGREED TO RETROSPECTIVELY I.E. FROM THE 1ST YEAR OF OPERATION. THE EARLIER INVOICES RAISED @ RS 236 PER TON WERE ALSO REVISED IN VIEW OF THIS RETROSPECTIVE AMENDMENT TO THE INTERIM ARRANGEMENT. THE APPELLANT PASSED REVER SAL ENTRY IN SUBSEQUENT YEAR AND CLAIMED REDUCTION OF INCOME FRO M SALE OF STEAM IN AY 2000-01, BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. THE AO AS ALSO CIT(A) DID NOT ALLOW TH E REDUCTION OF RECEIPT ON THE GROUND THAT IT HAD ALREADY ACCRUED. HOWEVER ITA T DELHI IN THEIR ORDER DATED 26/3/04 HELD THAT THE IN COME CANNOT BE SAID TO ACCRUE @ RS. 236 PER TON IN VIEW OF RETR OSPECTIVE AMENDMENT TO THE SAID AGREEMENT. 2.5 SUBSEQUENTLY SSL INFORMED THE APPELLANT COMPA NY BY LETTER DATED 2/11/02 THE DECISION NOT TO PAY ANYTHING FOR EXHAUST STEAM SINCE OCT 2001. IT WAS FURTHER FOLLOWED BY AN OTHER LETTER DATED 21/2/03 WHEREIN THE MAIN REASONS FOR THIS DEC ISION WERE STATED TO BE AS UNDER: THE CONVERSION AGREEMENT DATED 10/12/98 NEVER CAME INTO OPERATION, AS PICUP HAS NOT APPROVED THE CONTRACT. THE SSL SUPPLIES BAGGASE AND WATER FREE OF ANY CHAR GE TO SIAL. I.T.A. NO.3440/DEL./2011 8 WITHOUT THESE SIAL CANNOT GENERATE POWER. IN ADDITI ON WATER AND STEAM CONDENSATE ARE ALSO SUPPLIED FREE OF ANY CHARGE. THE STEAM THAT IS SUPPLIED IS EXHAUST STEAM, WHICH HAS NO VALUE AND CANNOT OTHERWISE BE USED OR SOLD. ON THE OTHER HAND, THE BAGGASE SUPPLIED TO SIAL FREE OF ANY CHARGE IS EASI LY SALEABLE BY SSL, FOR WHICH IT DOES NOT GET ANY COMPENSATION. NO REDUCTION/ADJUSTMENTS ARE ALSO ON THAT ACCOUNT IN T HE CHARGES FOR ELECTRIC POWER THAT ARE BEING PAID BY SSL. 2.6 IN VIEW OF THIS SSL STOPPED PAYING ANYTHING FOR EXHAUST STEAM FROM OCT. 2001.SINCE THERE WAS A LOT OF UNCERTAINTY REGARDING REALIZATION OF ANY AMOUNT FOR STEAM SUPPLIED FROM O CT. 01, THE APPELLANT DID NOT RAISE ANY INVOICE TO RECOGNIZE RE VENUE FOR THE SAME. THE APPELLANT RELIED ON ACCOUNTING STANDARD 9 (AS 9) ISSUED BY ICAI ON REVENUE RECOGNITION. IT IS NOW MA NDATORY TO FOLLOW SUCH STANDARDS AS ACCOUNTING PRACTICE. THE R ELEVANT CLAUSE IS 10 TO 12 OF AS 9 WERE REPRODUCED IN THE SUBMISS IONS IT WAS THEREFORE STATED THAT THE APPELLANT WAS FULLY JUSTI FIED IN NOT RECOGNIZING ANY SALE PROCEEDS OF STEAM APPLIED TO S SL. THE MAIN CONTENTION WAS THAT ONLY REAL INCOME CAN BE TAXED U NDER IT ACT. NOTIONAL INCOME ON ESTIMATED BASIS CANNOT BE BROUGH T TO TAX. IN SUPPORT OF THIS LEGAL CONTENTION ALSO THE APPELLANT RELIED ON A FEW JUDICIAL DECISIONS. THEREFORE ACCORDING TO APPELLAN T THE INCOME ESTIMATED BY AO FROM SUPPLY OF STEAM TO SSL AND AT THE RATE OF 236 PER TON WAS HIGHLY UNJUSTIFIED AND AGAINST THE JUDICIAL PRINCIPLES. WITHOUT PREJUDICE, IT WAS ALSO STATED T HAT THE AO HAS NOT GIVEN JUSTIFICATION FOR ADOPTING THE RATE OF ST EAM AT THE RATE OF 236 PER METRIC TON WHEN ONLY RS 75 WAS CHARGEABL E BY THE APPELLANT AS PER THE REVISED INTERIM ARRANGEMENTS M ADE WITH SSL. IT WAS MENTIONED BY THE APPELLANT THAT THE ADD ITION MADE IN EARLIER YEARS WHEN THE RATE OF STEAM WAS REDUCED FR OM RS 236 PER METRIC TON TO RS 75 PER METRIC TON WAS DELETED BY ITAT IN A Y 00-01 WHOSE ORDER HAS BEEN FOLLOWED BY THE CLT (A) IN A Y 01- 02 ORDER DATED 26/7/04 AND 99-00 ORDER DATED 4/1/06. 2. 7 SUBSEQUENTLY BY LETTER DATED 5/9/06 THE APPELLANT F URTHER SUBMITTED THAT BAGASSE SUPPLIED BY SSL TO THE APPEL LANT WAS A MARKETABLE COMMODITY WHICH COULD BE SOLD @ AROUND R S 500 PER TON. IF THE MARKET VALUE OF BAGASSE SUPPLIED BY SSL TO APPELLANT, FREE OF COST, WAS WORKED OUT IT WOULD BE ABOUT RS 6 .28 CRORES. AS AGAINST THIS, EVEN IF THE COST OF 2,89,340 TONS OF STEAM SUPPLIED BY APPELLANT TO SSL IS DETERMINED @ 236 IT WOULD AM OUNT TO 6.83 I.T.A. NO.3440/DEL./2011 9 CRORES. HENCE IT WAS NOT THAT THE ARGUMENTS OF SSL IN DENYING ANY PAYMENT FOR STEAM SUPPLIED BY THE APPELLANT WER E WITHOUT ANY BASIS. ACCORDING TO SSL THE BAGASSE SUPPLIED BY THEM TO APPELLANT DID HAVE A MARKETABLE VALUE WHEREAS STEAM SUPPLIED BY SSL WAS NOT OF ANY USE AS IT WAS NOT A FREELY MA RKETABLE COMMODITY. 2.8 I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE ON BE HALF OF THE APPELLANTS. THERE IS NO DISPUTE TO THE FACT THA T THE APPELLANT HAS NOT CREDITED ANY SALE PROCEEDS IN RESPECT OF ST EAM SUPPLIED TO IT AND HAS ALSO NOT ACTUALLY PAID ANYTHING FOR T HAT. THE AO HAS ESTIMATED THE SALE VALUE OF STEAM AT THE RATE O F RS 236 PER METRIC TON WHICH ACCORDING TO HIM WAS THE REAL RATE OF STEAM IN VIEW OF AGREEMENT APPLICABLE IN EARLIER YEARS. SO FA R AS ESTIMATING THE VALUE OF STEAM @ 236 PER TON AGAINST RS.75 IN EARLIER YEAR IS CONCERNED, THE ISSUE IS COVERED IN FAVOUR OF APPELLANT BY ORDER OF ITAT IN AY 00-01. HENCE THE O NLY ISSUE TO BE DECIDED IS WHETHER THE APPELLANT WAS RIGHT IN NOT SHOWING ANY REVENUE AT ALL FROM SUPPLY OF STEAM TO SSL IT I S TO BE NOTED THAT TRANSACTION OF PURCHASE/SALE IS IN THE FORM OF CONTRACT BETWEEN TO THE TWO PARTIES. SALE PRICE IS THE INCOME OF SELLER & LIABILITY BEING PURCHASE PRICE TO THE PURCHASER. IT CAN BE TREATED AS INCOME ACCRUED IN THE HANDS OF THE SELLER (AND L IABILITY CRYSTALLIZED IN THE HANDS OF THE PURCHASER) ONLY IF THE RELEVANT CONTRACT IS ACCEPTED BY BOTH THE PARTIES TO CONTRACT . THERE IS NO DOUBT THAT THE STEAM WAS SUPPLIED BY THE SSL AS IT W AS DONE IN EARLIER YEARS. HOWEVER, EARLIER THE INCOME (BEING SA LE VALUE OF STEAM) WAS CREDITED IN THE ACCOUNTS AT THE RATE AGR EED AND CONFIRMED BY THE SSL. IN FACT THE RATE WAS RETROSPE CTIVELY RENDERED & SUCH REDUCTION WAS AGREED TO BY BOTH THE PARTIES. ON THIS BASIS ITSELF THE ITAT IN A Y 00-01 ALLOWED REDU CTION OF INCOME FROM SALE OF STEAM. THE POINT TO BE NOTED IS THAT THE INCOME FROM ANY CONTRACT (SALE) CAN BE SAID TO ACCRU E AS PER AGREED TERMS OF SUCH CONTRACT. IF THERE IS ANY DISP UTE BY ETHER PARTY THE ACCRUAL OF INCOME (OF EXPENDITURE IN THE HANDS OF OTHER PARTY) WILL BE SUBJECT TO THE OUTCOME OF SUCH DISPUTE & ACCORDINGLY CONTINGENT. NORMALLY THE INCOME IN SUCH CASES CAN BE SAID TO ACCRUE IN THE YEAR IN WHICH THE DISPUTE I S RESOLVED & OTHER PARTY ACKNOWLEDGES THE DEBT. EVEN IN SUCH CASE S SOME PARTY MAY CHOOSE TO RECOGNIZE ITS INCOME OR LIABILI TY AS ACCRUED ACCORDINGLY TO FACTS & CIRCUMSTANCES WHEREBY IT IS CERTAIN TO BE ABLE TO ENFORCE THE TERMS OF THE CONTRACT. HOWEVER, THE APPELLANT DID NOT RECOGNIZE ANY REVENUE FROM SALE O F STEAM IN CURRENT YEAR ACCORDING TO AS-9, SINCE SSL HAD CATEG ORICALLY REFUSED TO MAKE ANY PAYMENT FOR SUPPLY OF STEAM. TH EREFORE, I.T.A. NO.3440/DEL./2011 10 NON-RECOGNITION OF ANY ACCRUAL OF INCOME FROM SUPPL Y OF STEAM DOES NOT APPEAR TO BE, UNJUSTIFIED. 2.9 IT MAY BE NOTED THAT NORMALLY IF SOME BUYER REFUSES TO MAKE PAYMENT FOR GOODS SUPPLIED TO IT; THE SELLER WOULD IMMEDIATELY STOP SUPPLY OF GOODS. HOWEVER THE APPELLANT DID NOT STOP SUPPLY OF STEAM TO SSL EVEN IN THE FACE OF CLEAR DECLARATI ON OF NOT GETTING ANY PAYMENT FOR THE SAME. THIS APPEARS TO BE UNUSUAL UNLESS THE APPELLANT BEING OTHER PARTY TO CONTRACT A LSO ACCEPTED THE SAID PROPOSAL FINALLY. SINCE APPELLANT'S STAND ON CONTENTION OF SSL WAS NOT SPECIFIED THE APPELLANTS AR WAS REQU ESTED TO CLARIFY THE STAND OF THE APPELLANT COMPANY ON THE P ROPOSAL OF SSL NOT TO PAY ANY PRICE FOR SUPPLY OF STEAM. IN RE SPONSE TO THIS IT WAS SUBMITTED BY THE APPELLANT'S AR THAT THE MATT ER WAS DISCUSSED BY THE BOARD OF DIRECTORS OF THE APPELLAN T COMPANY IN THEIR MEETING ON 8/7/03. A COPY OF THE MINUTES OF THE BOARD MEETING FOR THAT DAY WAS SUBMITTED WHEN ASKED TO DO SO .IT WAS STATED THAT IN THE SAID MEETING IT WAS DECIDED NOT TO RAISE ANY INVOICE FOR SUPPLY OF STEAM AS IT WOULD UNNECESSARI LY RESULT INTO UNREALISTIC RECEIVABLES. THE BOARD ALSO DECIDED TO R EVERSE THE BILLING MADE IN THE FY 01-02 AND REVISE THE INCOME T AX RETURN. THE AR WAS FURTHER ASKED TO CLARIFY AS TO WHETHER A PART FROM NOT RAISING ANY BILLS, THE DECISION OF SSL HAS BEEN A CCEPTED BY THE COMPANY OR STILL THE MATTER WAS BEING PURSUED WI TH THEM FOR PAYMENT OF STEAM CHARGES. IT WAS THEN STATED TH AT SOME DISPUTE IN RESPECT OF ALLOTMENT OF SHARES TO FOREIG N COLLABORATOR OF THE JOINT VENTURE WAS PENDING BEFORE COMPANY LAW BOARD. THE SAID MATTER HAS BEEN SINCE DECIDED AND AFTER THA T APPELLANT COMPANY HAS CONFIRMED BY LETTER DATED 9/1/06 TO SSL THAT NO CONVERSION CHARGES IN RESPECT OF STEAM WOULD BE CLA IMED FROM THEM W.E.F 1/10/01. ON ASKING A COPY OF SAID LETTER DATED 9/1/06 WAS FILED. 2.10 IN VIEW OF THE CLARIFICATION ABOVE THERE DOES NOT REMAIN ANY DOUBT THAT BOTH THE PARTIES TO CONTRACT H AVE AGREED THAT NO PAYMENT IN RESPECT OF SUPPLY OF STEAM WAS T O BE MADE TO APPELLANT BY SSL. THEREFORE THERE CANNOT BE SAID TO BE ANY ACCRUAL OF INCOME FOR SUPPLY OF STEAM. THE BASIS FOR THIS ARRANGEMENT IS ALSO CLEAR SINCE IT IS A KIND OF BART ER SYSTEM WHERE BAGASSE AND WATER IS SUPPLIED BY SSL TO APPELL ANT COMPANY FREE OF CHARGES WHILE THE APPELLANT SUPPLIE S ELECTRICITY AND STEAM TO SSL. THE APPELLANT'S INCOME IS FROM SA LE OF SURPLUS POWER TO UPSEB. EVEN IF THEORETICALLY THE PRICE OF STEAM IS COMPUTED AT RS. 236/- PER TON (WHICH HOWEVER WAS NE VER AGREED AND ACTED UPON BETWEEN THE TWO PARTIES) IT IS ALMOST EQUIVALENT TO THE COST OF BAGASSE WORKED OUT AT THE MARKET I.T.A. NO.3440/DEL./2011 11 PRICE. THEREFORE IN THIS KIND OF TRANSACTION THERE IS NO PROFIT OR LOSS IN MONEY TERMS TO ANY OF THE COMPANY. HOWEVER TRANSACTION OF EXCHANGE OF BAGASSE & WATER FOR POWER & STEAM IS FOR MUTUAL BENEFIT AND CONVENIENCE. 2.11 EVEN IF WE LOOK AT THINGS FROM A DIFFERENT PERSPECTIVE, THE INCOME OF ONE COMPANY WILL BE A DEDUCTIBLE EXPENDITURE FOR THE OTHER AND BETWEEN THE TWO THERE IS NO TAX GAIN FROM THIS TRANSACTION. THE INCOME IN THE CASE OF APPELLANT IS ELIGIBLE TO 100% DEDUCTION U/S80 LA ALSO. HENCE N O ALLEGATION OF TAX PLANNING CAN BE ATTRIBUTED IN THIS TRANSACTIO N, WHICH APPEARS TO BE WHOLLY FOR BUSINESS CONSIDERATIONS. IT MAY NOT BE OUT OF PLACE TO REPRODUCE HEREUNDER A PART OF LETTE R DATED 2/11/02 WRITTEN BY SSL TO THE APPELLANT COMPANY. 'THE SUGAR AND POWER GENERATION PROJECT ARE FOR ALL PRACTICAL PURPOSES TWO LIMBS OF A SINGLE PROJECT ON E CANNOT SURVIVE WITHOUT THE OTHER. IN 1994, WHEN THE CONSTRUCTION OF THE SUGAR PLANT WAS FIRST TAKEN UP, THE POWER GENERATION FACILITY WAS AN INTEGRAL PART OF T HE PROJECT AND OWNED BY THE COMPANY ITSELF. SUBSEQUENTLY IN 1995 AIR LIQUIDE OFFERED TO INVEST SUBSTANTIAL MONIES IN THE POWER PROJECT AND FOR DOING SO INSISTED THAT THE POWER PROJECT BE TRANSFERRED T O AND OWNED BY A SEPARATE COMPANY, INDEPENDENT FROM SSL. THE OWNERSHIP OF THE PLANT &MACHINERY THEN CAME TO BE DIVIDED. UNDER THIS ARRANGEMENT, THE POWER GENERATING FACILITY WAS AGREED TO BE TRANSFERRED TO A ND OWNED BY SI*AL SBEC BIOENERGY LIMITED, WHICH WAS TO BE THE JOINT VENTURE BETWEEN THE MODI GROUP AND AIR LIQUIDELSIDEC. IN 1997 AFTER THE PROJECT HAD BEEN IMPLEMENTED AND THE JC COMPANY INCORPORATED, SERIOUS DISPUTES AROSE WITH AIR LIQUIDE AND SIDEC WHICH EXPOSED BOTH COMPANIES TO BE RISK OF LIQUIDATION, IN THOSE COMPELLING CIRCUMSTANCES, A COMPROMISE WAS WORKED OUT WHEREIN VARIOUS UNREASONABLE TERMS INSISTED UPON BY AIR LIQUIDE AND SIDEC HAD TO BE ACCEPTED TO PROTECT THE COMPANIES FROM LIQUIDATION, TO . I.T.A. NO.3440/DEL./2011 12 AVOID CANCELLATION OF THE LOAN SANCTIONED BY IREDA AN D TO ENABLE THE TWO PROJECTS TO BE COMPLETED. THE TERMS FOR THE CONVERSION CONTRACT THEN STIPULATE D BY AIR LIQUIDE AND SIDEC THROUGH THE JV COMPANY WERE TOTALLY ONE SIDED AND IN FAVOUR OF THE POWER COMPANY FOR THE SOLE PURPOSE OF ENSURING AN ADEQUATE FLOW OF FUNDS TO FACILITATE THE REPAYMENT OF THE INVESTMENTS MADE BY SIAL IN THE SHARE CAPITAL OF THE JC COMPANY. SIAL HAD MADE IT CLEAR THAT IT WAS IN FACT A LENDER AND NOT AN INVESTOR. THIS IS EVIDENT FROM THE DOCUMENTS SIGNED THEN IN PARTICULAR THE AGREEMENTS WHERE UNDER IT WAS AGREED THAT THE SIAL SHAREHOLDINGS WOULD BE BROUGHT OUT. PLEASE NOTE THAT IT IS OUR DECISION THAT ON RESOLUTI ON OF THE CONTROVERSIES WITH SI*AL BIOENERGIE, FRANCE, SS L WILL ACQUIRE THE ENTIRE SHARE CAPITAL THE JV COMPANY AND MAKE IT ITS WHOLLY OWNED SUBSIDIARY UNLESS OF COURSE IT THEN DECIDED TO AMALGAMATE THE JV COMPANY WITH THIS COMPANY AND BRING THE POWER PROJECT ALSO DIRECTLY INTO THE OWNERSHIP OF SSL. (EMPHASIS SUPPLI ED). 2.12 FROM THE ABOVE, IT CAN BE SEEN THAT THE ENTIRE PROJECT OF SUGAR PRODUCTION PLANT OF SSL AS WELL AS POWER GENERATION UNIT OF THE APPELLANT WAS INFACT P ART OF SAME PROJECT OWNED BY ONE COMPANY. THE POWER GENERATION UNIT WAS SEPARATED TO GET INVESTMENT FRO M FRENCH COMPANY AIR-LIQUIDE, WHICH AGREED TO JOIN AS JV (JOINT VENTURE) PARTNER. THEREFORE THE TRANSACTION OF EXCHANGE OF BAGASSE & WATER WITH POWER & STEAM IS IN FACT BETWEEN TWO LIMBS OF SAME PROJECT. IF THE WHOLE PROJECT WAS OWNED BY ONE COMPANY (AS IN FACT IT WAS INITIALLY) ONLY THE NET PROFIT OF THE ENTIRE PROJEC T HAD BEEN TAXABLE. AS CAN BE SEEN IN THE LAST PARAGRAPH REPRO DUCED ABOVE FROM THE LETTER OF SSL, THE APPELLANT COMPANY PROPOSED TO BE MADE THE SUBSIDIARY OF SSL (AND IN FA CT HAS ALREADY BECOME SO ). LOOKED FROM THIS ANGLE, THE TRANSACTION IS BETWEEN THE HOLDING AND SUBSIDIARY COMPANY. THEREFORE IN MY OPINION THE ACTION OF THE I.T.A. NO.3440/DEL./2011 13 APPELLANT COMPANY IN NOT CHARGING FOR STEAM SUPPLIE D TO SSL IS QUITE JUSTIFIED ON FACT AND CAN NOT BE SAID T O BE DELIBERATE OR MOTIVATED. MOREOVER EVEN IF AN ASSESSEE GIVES (SELLS) HIS GOODS FREE OF COST TO OTHER, THER E IS NO PROVISION IN THE IT ACT TO TAX ITS SALE VALUE AS IN COME ON PRESUMPTIVE BASIS. LEGALLY SPEAKING SINCE NO INCOME HAS ACCRUED & NEITHER ANY PAYMENT HAS ACTUALLY BEEN RECEIVED BY THE APPELLANT COMPANY, MAKING ADDITION IN RESPECT OF ESTIMATED PRICE OF STEAM AMOUNTS TO TAXING OF NOTIONAL INCOME WHICH IS NOT PERMISSIBLE. IN VIEW OF THIS ADDITION OF RS. 9,93,41,508/-(RS.8,49,14,188/-AFTER RECTIFICATION) IS DELETED. 5.1. THE ABOVE ORDER FOR THE A Y 2004-05 HAS BEEN F OLLOWED BY THE CIT (A) FOR THE A Y 2005-06 AND A. Y 2006-07 ALSO. IT MAY BE NOTED THAT ITAT IN AY 01-02 AND AY 99-00 HAS FOLLOWED ITS ORDER FOR AY 00-01 WHERE IN IT HAS BEE N HELD THAT APPELLANT HAD ACTUALLY REALIZED SALE PROCEEDS OF ST EAM @ RS.75 PER TON AND NOT RS.236/- PER TON IN THE RELEV ANT YEARS AND ACCORDINGLY NOTIONAL INCOME CANT BE TAXED. FUR THER IT MAY BE MENTIONED THAT THE ITAT IN AY 2003-04, AY 20 04-05 A. Y. 2005-06 AND A. Y 2006-07 ALSO HAS DISMISSED T HE APPEAL OF THE REVENUE AND HAS UPHELD THE ORDER OF T HE CIT (A). IT IS FURTHER TO BE NOTED THIS YEAR ALSO THE A DDITION WAS MADE ON THE SIMILAR BASIS AS WAS DONE IN EARLIER YE ARS. THE FACTS RELATED TO THE ISSUE ARE SAME BASED ON THE SA ME SET OF AGREEMENTS. THE APPELLANT'S SUBMISSIONS ARE ALSO ON THE SAME LINES AS IN LAST YEAR. THEREFORE FOLLOWING THE DISCUSSION MADE IN A Y 2004-05 AND SUBSEQUENT ORDERS, THE ADDI TION MADE ON THIS ACCOUNT DURING THE YEAR UNDER CONSIDER ATION IS DELETED. 6. GROUND NO.3 IS TAKEN WITHOUT PREJUDICE TO THE GROUND NO.2. IN THIS GROUND IT IS CLAIMED THAT STEAM WAS A FORM OF POWER AND THEREFORE EVEN IF SOME INCOME WAS ESTIMAT ED FROM SALE OF STEAM, IT WAS ELIGIBLE FOR 100% DEDUCT ION U/S80 IA (4) (IV). IT IS NOTED THAT EVEN THESE GROUNDS AR E SIMILAR TO GROUNDS NO.3 & 4 IN THE APPEAL FOR AY 2004-05 REFER RED TO ABOVE. IT WAS POINTED OUT IN THAT ORDER THAT THIS I SSUE WAS DECIDED IN APPELLANT'S OWN CASE BY ITAT IN AY 2000- 01 REPORTED IN 83 TT J 866. IN PARA 34 TO 36 OF THAT O RDER THE HON'BLE IT AT HELD THAT STEAM WAS ANOTHER FORM OF P OWER AND INCOME FROM SALE OF THE SAME WAS ELIGIBLE FOR D EDUCTION U/S 80 IA (4) (IV). IT IS ALSO TO BE NOTED THAT THE SIM ILAR ISSUE WAS DECIDED BY ITAT IN AY 99-00 AND AY 01-02. THE I TAT I.T.A. NO.3440/DEL./2011 14 FOLLOWED ITS ORDER FOR AY 00-01 WHEREIN IT HAS BEEN HELD THAT STEAM IS A FORM OF POWER. HOWEVER, SINCE THE ESTIMA TED ADDITION IN RESPECT OF SALE OF STEAM ITSELF HAS BEE N DELETED FULLY, THESE GROUNDS BECOME INFRUCTUOUS & HENCE DIS MISSED FOR STATISTICAL PURPOSES. 7. GROUND NO.4 IS AGAINST EXCLUDING 50% OF RECEIPTS FROM UPSEB IN RESPECT OF SALE OF SURPLUS POWER' FOR THE PURPOSE OF COMPUTATION U/S 80 IA. THIS GROUND IS ALSO WITHOUT REJUDICE TO GROUND NO. 2 AS IT WAS ALTERNATIVE CLAIM IN RESP ECT OF THE SAME ADDITION. IT IS FOUND THAT THIS GROUND IS SIMI LAR TO GROUND NO. 4 IN APPEAL ORDER FOR AY 05-06. THE ISSUE WAS D ECIDED IN FAVOUR OF APPELLANT IN VIEW OF EARLIER YEARS' DECIS IONS OF CIT (A) IN AY 99-00 AND 01-02. THE SIMILAR ISSUE HAS BE EN DECIDED BY THE ITAT IN FAVOUR OF APPELLANT IN AY 99 -00 AND AY 01-02. IN THE SAID YEARS, THE ITAT HAS FOLLOWED ITS OWN ORDER FOR A Y 00-01 AND HAS HELD THAT AD WAS NOT JU STIFIED IN REDUCING THE AMOUNT RECEIVED BY APPELLANT FROM THE GROSS RECEIPT ELIGIBLE FOR DEDUCTION U/S 80 IA. HOWEVER, BECAUSE THE ENTIRE ADDITION IN RESPECT OF SALE OF STEAM WAS DEL ETED, THIS ALTERNATE GROUND BECOMES INFRUCTUOUS AND HENCE DISM ISSED FOR STATISTICAL PURPOSES. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).AT THE OUT SET, THE LD. AR ON BEHA LF OF THE ASSESSEE WHILE INVITING OUR ATTENTION TO THE IMPUGNED ORDER CONTENDED THAT SINCE THE LD. CIT(A) HAVE DECIDED THE ISSUES ON THE BASIS OF ORDERS OF THE I TAT IN THE PRECEDING YEARS, NO INTERFERENCE IS WARRANTED. THE LD. DR, ON THE OTHE R HAND, DID NOT OPPOSE THESE SUBMISSIONS OF THE LD. AR WHILE CONTENDING THAT MAT TER IS PENDING BEFORE THE HONBLE HIGH COURT. 5 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE . AS IS APPARENT FROM THE AFORESAID FINDINGS O F THE LD. CIT(A) ON EACH OF THE THREE ISSUES, HE MERELY FOLLOWED THE DECISIONS OF THE ITAT IN THE PRECEDING ASSESSMENT YEARS AND DECIDED IN FAVOUR OF THE ASSE SSEE. THE LD. DR DID NOT PLACE BEFORE US ANY CONTRARY DECISION NOR ANY OTHER MATERIAL IN ORDER TO CONTROVERT THE FINDINGS OF THE LD. CIT(A) SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER. IN THESE CIRCUMSTANCES, WE HAVE NO A LTERNATIVE BUT TO REJECT GROUND NOS. 1 TO 3 IN THE APPEAL. I.T.A. NO.3440/DEL./2011 15 6.. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.4 IN THE APPEAL, ACCORDINGLY TH IS GROUND IS DISMISSED. 7. IN RESULT, APPEAL IS DISMISSED. SD/- SD/- (DIVA SINGH) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. M/S SBEC BIONERGY LTD.(FORMERLY KNOWN AS SIAL SBEC BIONERGY LTD.),1400 HEMKUNT TOWERS, 98, NEHRU PLACE , N.D. 2. A.C.I.T., CIRCLE-7(1), NEW DELHI 3. CIT CONCERNED. 4. CIT(A)-X, NEW DELHI 5. DR, ITAT,G BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT