ADDL CIT RG 3(1), MUMBAI V. DCW LTD, MUMBAI

ITA 5886/MUM/2010

• Counselvise Citation: 588619914 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 08-12-2011
• Assessment Year: misc
• Appeal Filed On: 23-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C G K NAIK
• Keywords: Set aside
• Section: 80IB; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 5886/MUM./2010 (ASSESSMENT YEAR : 2006-07 ) DY. COMMISSIONER OF INCOME TAX (OSD), CIRCLE-3(1), ROOM NO.609 6 TH FLOOR, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. APPELLANT V/S M/S. DCW LIMITED NIRMAL, 3 RD FLOOR NARIMAN POINT MUMBAI 400 021 PAN AAACD0559N .... RESPONDENT REVENUE BY : MR. C.G.K. NAIK ASSESSEE BY : NONE DATE OF HEARING 12.12.2011 DATE OF ORDER 23.12.2011 O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE, IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 24 TH MARCH 2010, PASSED BY THE COMMISSIONER (APPEALS)-VII, MUMBAI, FOR ASSESSMENT YEAR 2006-07, ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE AMOUNT REA LIZED FROM THE SALE OF SLUDGE SHALL BE INCLUDED IN COMPUTING PROFIT OF THE CAPTIVE POWER M/S. DCW LIMITED ITA NO. 5886/MUM./2010 2 PLANT, WHILE CALCULATING THE AMOUNT ELIGIBLE FOR DE DUCTION U/S 80IB OF THE I.T. ACT WITHOUT APPRECIATING THE FACT THAT ANY RECEIPT FROM THE SALE OF SLUDGE IS A INCOME WHICH IS NOT DERIVED FROM IND USTRIAL UNDERTAKING. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE AMOUNT REA LIZED FROM THE SALE OF SLUDGE SHALL BE INCLUDED IN COMPUTING PROFIT OF THE CAPTIVE POWER PLANT, WHILE CALCULATING THE AMOUNT ELIGIBLE FOR DE DUCTION U/S 80IB OF THE I.T. ACT WITHOUT APPRECIATING THE FACT THAT THE HONBLE ITAT, MUMBAI HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE REVENUE, IN ASSESSEES OWN CASE FOR A.Y. 2003-04. 2. BEFORE US, WHEN THE CASE WAS CALLED FOR HEARING, NO NE APPEARED ON BEHALF OF THE ASSESSEE. THERE WAS A REQUEST FOR ADJ OURNMENT ON THE GROUND THAT THE ASSESSEES COUNCILOR IS OUT OF TOWN. WE RE JECT THIS PRAYER FOR ADJOURNMENT AND DISPOSE OFF THIS APPEAL EX-PARTE ON MERITS, QUA THE RESPONDENT ASSESSEE. 3. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATI VE, MR. C.G.K. NAIK, ON BEHALF OF THE REVENUE. ON A CAREFUL CONSID ERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSAL OF THE P APERS ON RECORD AVAILABLE BEFORE US, WE HOLD AS FOLLOWS:- 4. THERE ARE TWO ISSUES WHICH RELATE TO COMPUTATION OF PROFIT FOR THE PURPOSE OF QUANTIFICATION OF DEDUCTION UNDER SECTIO N 80IB OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). THE FIRST ISSUE IS WHETHER THE SALE OF SLUDGE CAN BE CONSIDERED AS INCOME WHICH DERIVES FROM INDU STRIAL UNDERTAKING. WHEN THIS ISSUE CAME UP BEFORE MUMBAI D BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.126/MUM./2008 AND 394 /MUM./2008, ORDER DATED 29 TH JANUARY 2010, AT PARA-8.7/PAGE-16, THE TRIBUNAL HE LD THAT THE RECEIPT OF SALE OF SLUDGE IS NOT THE INCOME DERIVED FROM INDUSTRIAL UNDERTAKING AND DEDUCTION UNDER SECTION 80IA IS NOT ALLOWABLE. THIS WAS FOLLOWED IN ITA NO.2580/MUM./2008, FOR ASSESSMENT Y EAR 2004-05, ORDER DATED 22 ND MARCH 2010. KEEPING THESE IN VIEW, WE SET ASIDE TH E ORDER PASSED BY THE COMMISSIONER (APPEALS) AND UPHOLD THAT OF TH E ASSESSING OFFICER. THE ASSESSEE WOULD NOT BE ENTITLED TO ANY DEDUCTION ON INCOME FROM SALE OF SLUDGE. THIS GROUND IS, THUS, ALLOWED. M/S. DCW LIMITED ITA NO. 5886/MUM./2010 3 5. THE SECOND ISSUE IS WHETHER THE INCOME FROM SALE OF STEAM IS TO BE CONSIDERED AS INCOME DERIVED FROM AN INDUSTRIAL UND ERTAKING FOR THE PURPOSE OF COMPUTATION OF DEDUCTION UNDER SECTION 80IB. DUR ING THE ASSESSMENT YEAR 2003-04, IN THE ORDERS CITED ABOVE, THE TRIBUNAL AT PAGE-17/PARA-8.9, HELD THAT INCOME FROM SALE OF STEAM IS INCOME DERIVED FR OM INDUSTRIAL UNDERTAKING AND DEDUCTION UNDER SECTION 80IA IS ALLOWABLE. IN V IEW OF THIS, WE UPHOLD THE ORDER PASSED BY THE COMMISSIONER (APPEALS) ON THIS ISSUE. ASSESSEE SUCCEEDS ON THIS GROUND. 6. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER 2011 SD/- V. DURGA RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 23 RD DECEMBER 2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, D BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI