GVK Industries Limited, Secunderabad V. Dy.CIT, Circle-2(2), Hyderabad

ITA 848/HYD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5584 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 24-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHARA REDDY
• Assessee Lawyers: V SIVA KUMAR
• Section: 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER. ITA NO.848/HYD/13 (ASSESSMENT YEAR 2009-2010) M/S. G.V.K. INDUSTRIES LIMITED SECUNDERABAD ( PAN - AAACG 7499 J ) V/S. ? DY. COMMISSIONER OF INCOME-TAX CIRCLE 2(2), HYDERABAD (APPELLANT) (RESPONDENT) & ITA NO.919/HYD2013 (ASSESSMENT YEAR 2009-10) ASST. COMMISSIONER OF INCOME- TAX CIRCLE 2(2), HYDERABAD V/S. M/S. G.V.K. INDUSTRIES LTD., SECUNDERABAD ( PAN - AAACG 7499 J ) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.SIVA KUMAR DEPARTMENT BY : SHRI P.SOMASEKHARA REDDY DR DATE OF HEARING 2 . 1 .201 4 DATE OF PRONOUNCEMENT 19.2.2014 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER : THESE ARE CROSS APPEALS FOR THE ASSESSMENT YEAR 2009-10 AN D THEY ARE DIRECTED AGAINST THE ORDER OF THE COMMISSION ER OF INCOME- TAX(APPEALS) III, HYDERABAD DATED 20.3.2013. SINCE TH E FACTUAL BACK GROUND AND THE ISSUES INVOLVED IN THESE APPEALS ARE COMM ON, THESE APPEALS ARE BEING DISPOSED OF, WITH THIS COMMON ORDER FO R THE SAKE OF CONVENIENCE. ITA NO.848 & 919/HYD/20 13 M/S. G.V.K. INDUSTRIES LTD., SECUNDERABAD 2 2. FACTS OF THE CASE IN BRIEF LEADING TO THE FILING OF THE PRESENT APPEALS ARE THAT, THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF GENERATION OF POWER. IT FILED ITS RETURN OF INCOME F ROM THE ASSESSMENT YEAR 2009-10 ON 24.9.2009, ADMITTING A TOTAL INCOME OF RS.1,52,21,770 UNDER NORMAL PROVISIONS AND RS.6,66,44,880 UNDER M.A. T. PROVISIONS. THOUGH THE SAID RETURN WAS ORIGINALLY PROCESSED UNDER S. 143(1), IN THE SCRUTINY ASSESSMENT THAT FOLLOWED THE ASSESSING OFFICER NOTICE D THAT THE ASSESSEE ADMITTED TOTAL GROSS RECEIPTS ON ACCOUNT OF SALE OF P OWER AMOUNTING TO RS.355,60,22,173. THE ONLY CUSTOMER TO T HE ASSESSEE, BEING ANDHRA PRADESH POWER CORPORATION LTD., TO CONFI RM THE CORRECT INCOME OFFERED BY THE ASSESSEE, A LETTER WAS ADDRESSED TO T HE SAID CUSTOMER, CALLING FOR THE DETAILS OF PURCHASES MADE FROM T HE ASSESSEE COMPANY WHICH ACCORDINGLY FURNISHED THE INFORMATION. ON VERIFICATION OF THE CONFIRMATION LETTER, THE ASSESSING OFFICER NOTICED T HAT THE TOTAL PURCHASES MADE FROM THE ASSESSEE WAS SHOWN AT RS.358,49,03,0 81, AND CONSEQUENTLY, OBSERVING THAT THERE WAS UNDER-REPORTING OF INCOME BY RS.2,88,80,908, THE ASSESSING OFFICER ADDED THE SAID AMOUN T TO THE INCOME RETURNED BY THE ASSESSEE. 3. THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSESSEE WAS IN RECEIPT OF INCENTIVE OF RS.4,31,45,862 FOR THE PERIOD FROM 20.6.2008 TO 19.6.2009 BASED ON PLF OF 71.85% AND THE SAME WAS NOT OFFERED TO TAX FOR THE YEAR UNDER APPEAL,. SINCE THE ASSESSEE COMPANY W AS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE SHOULD HAVE OFFERED PROP0ORTIONATE IN CENTIVE TO TAX IN THE YEAR UNDER APPEAL. WHEN THE ASSESSEE WAS CONFRONTED IN THIS BEHALF, IT WAS SUBMITTED THAT THE ENTIRE AMOUNT OF RS.4,31,45, 862 WAS TAKEN INTO ACCOUNT IN THE FINANCIAL YEAR 2009-10 AS REVENUE. IT WAS FURTHER STATED THAT THE INCREASE IN PLF AT 71.857132% FOR THE TARIFF YEAR AS AGAINST 66.888% UPTO 20.06.2008 TO 31.3.2009, AND A WORKING SHEET WAS ALSO ATTACHED IN THAT BEHALF. IT WAS FURTHER POINTED OUT THAT THE INCENTIVE IN ITA NO.848 & 919/HYD/20 13 M/S. G.V.K. INDUSTRIES LTD., SECUNDERABAD 3 QUESTION IS EXEMPT UNDER S.80I OF THE ACT. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE. ACCORDING TO HIM, WHEN THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THE INCENTIVE INCOME OUGHT TO HAVE BEEN OFFERED TO TAX DURING THE YEAR UNDER APPEAL ON PROPORTIONATE BASIS. HE ACCORDINGLY WORKING OUT THE PR OPORTIONATE AMOUNT OF INCENTIVE LIABLE TO BE TAXED IN THE YEAR UNDER AP PEAL AT RS.3,23,29,356, MADE AN ADDITION IN THAT BEHALF TO THE INCOME RETURN ED BY THE ASSESSEE. 4. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE DECLA RED THE FOLLOWING INCOMES UNDER THE HEAD OTHER SOURCES (I) INTEREST ON TERM DEPOSITS AND OTHERS RS. 27,58,247 (II) PROFESSIONAL SERVICES RS.137,04,462 (III) PROFIT ON SALE OF ASSET RS. 40,325 (IV) CREDIT BALANCE WRITTEN BACK RS. 48,567 (V) MISCELLANEOUS INCOME RS. 70,60,764 HE FURTHER NOTED THAT WHILE COMPUTING THE PROFITS AND GAINS FROM UNDERTAKING UNDER S.80IA, THE ASSESSEE EXCLUDED THE INC OME FROM OTHER SOURCES AS SHOWN ABOVE EXCEPT MISCELLANEOUS INCOME AMOUNTING TO RS.70,60,764. AS THE MISCELLANEOUS INCOME CONSIDERED ATTRI BUTABLE TO THE BUSINESS, THE ASSESSING OFFICER REWORKED THE RELIEF UNDER S.80IA OF THE ACT, EXCLUDING THE SAID ITEM FROM THE PROFITS OF THE BU SINESS OF THE ASSESSEE AND WORKED OUT THE PROFITS AND GAINS FROM BUSINESS AT RS.15,45,29,270, AS AGAINST THE AMOUNT OF RS.16,15,90,0 34 DETERMINED BY THE ASSESSEE FOR PURPOSES OF CLAIMING RELIEF UNDER S.80 IA OF THE ACT. WITH THE ABOVE ADDITIONS/ADJUSTMENTS, THE ASSESSING OFFICE R COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF RS.7,74,92,799, VIDE ORDE R OF ASSESSMENT DATED 30.12.2011. ITA NO.848 & 919/HYD/20 13 M/S. G.V.K. INDUSTRIES LTD., SECUNDERABAD 4 5. AGGRIEVED BY THE ABOVE ORDER OF ASSESSMENT, ASSESSEE PREFERRED APPEAL WITH REGARD TO ALL THE THREE ISSUES. WITH REGARD TO RECOMPUTATION/RESTRICTION OF RELIEF UNDER S.80IA OF TH E ACT, BEFORE THE CIT(A) ASSESSEE PLACED RELIANCE ON THE ORDERS OF THE CIT(A ) FOR THE ASSESSMENT YEARS 2002-03 AND 2006-07, AND ALSO PLACED REL IANCE ON A DECISION OF THE APEX COURT IN THE CASE OF ACG ASSOCIATED C APSULES PRIVATE LTD. V/S. CIT(343 ITR 89). IT WAS FURTHER SUBMITTED THAT AN EXAMINATION OF THE DETAILS OF EXPENSES AND INCOME WOULD REVEAL THAT THE ITEMS OF INCOME ARE DIRECT RESULT OF THE ELIGIBLE BUSINESS OF THE ASSESSEE. IN THE WRITTEN SUBMISSIONS FILED BEFORE THE CIT(A), ASSESSEE FU RNISHED A TABLE INDICATING THE ITEMS OF INCOME COMPRISED IN THE MISCELLAN EOUS INCOME IN QUESTION TOGETHER WITH THE RELATABLE BUSINESS EXPENDITU RE, IN A TABULAR FORM, WHICH READS AS UNDER- IN RUPEES SL. NO. PARTICULARS EXPENSES INCURRED INCOME NET 1. SALE OF WASTE OIL 3,01,429 75,905 2,25,824 2. LEASE OF FRUITS 18,44,974 25,000 18,19,974 3. BUILDING RENT FROM BSNL TOWER --- 6,000 (6,000) 4. SALE OF PLASTIC BAGS 14,099 420 13,679 5. 6 DAYS SALARY RECOVERED IN LIEU OF NOTICE PERIOD 1,20,162 4,839 1,15,323 6. CREDIT BALANCE WRITTEN OF ANAGHA EXIMS 3,60,935 20,393 3,40,542 7. SALE OF OLD NEWS PAPER 4,270 130 4,140 8. REFUND O F PREMIUM ON DECLARATION OF ACTUAL GROSS PROFITS OF THE PERIOD FROM 01.10.07 TO 30.09.08 FROM UNITED INDIA INSURANCE CO. LTD. 6,60,41,237 55,07,076 6,05,34,161 9. REVERSAL O F LENDER AGENT FEE TO IDBI FY 06-07 14,21,011 14,21,000 --- 7,01,08,117 70,60,764 6,30,47,353 ITA NO.848 & 919/HYD/20 13 M/S. G.V.K. INDUSTRIES LTD., SECUNDERABAD 5 ON THE BASIS OF THE ABOVE TABULATION, IT IS SUBMITTED T HAT ALL THE ABOVE ITEMS, EXCEPT ITEM NO.3, BUILDING RENT OF RS.6,000 FRO M BSNL TOWER, EXPENSE ARE MORE THAN THE INCOME, AND HENCE THE ASSESSING OFFICER IS NOT JUSTIFIED IN REDUCING RS.70,54,764 FROM THE INCOME FROM BUSINESS WHILE COMPUTING DEDUCTION UNDER S.80IA OF THE ACT. 6. THE CIT(A), ON CONSIDERATION OF THE SUBMISSIONS OF TH E ASSESSEE, IN THE LIGHT OF THE DELHI BENCH DECISION OF THE TRIBUNAL IN THE CASES OF PEROT SYSTEMS TSI (INDIA ) LTD. V/S. ASST. CIT(200 7 TAX PUB(DT) 1280(DEL-TRIB); AND BIRLA SOFT (INDIA) LTD. V/S. DY. CIT(2011) TAX PUB (DT) 0850(DEL-TRIB), RENDERED IN THE CONTEXT OF S.10 A OF THE ACT, OBSERVED THAT IT IS ONLY INCOMES RELATING TO EXPORTS AND ELIGIBL E BUSINESS WHICH HAVE TO BE ALLOWED, IN CONSONANCE WITH THE PRINCIPLE ENUNCIA TED BY THE APEX COURT IN THE CASES OF CAMBAY ELECTRIC SUPPLY INDUSTRIAL COMPANY LIMITED (13 ITR 84) AND STERLING FOODS (237 ITR 579) AND PAN DIAN CHEMICALS (262 ITR 278). THEN REFERRING TO THE ORDERS OF THE CIT(A ) RELIED UPON BY THE ASSESSEE FOR EARLIER YEARS, THE CIT(A) OBSERVED IN THE F IRST PLACE WITH REFERENCE TO REFUND RECEIVED DURING THE YEAR, WHICH WA S ON ACCOUNT OF EXCESS PREMIUMS PAID BY THE ASSESSEE IN EARLIER YEARS, THAT IT WAS HELD IN THOSE YEARS BY THE CIT(A) THAT RECEIPT OF THIS REFUND H AS NO RELEVANCE WITH THE ELIGIBLE BUSINESS OF GENERATION OF POWER OF THE ASSESSEE, AND AS SUCH THE SAID DECISION IS OF NO HELP TO THE ASSESSEE. HE HOWEV ER, HELD THAT SINCE POWER IS GENERATED FROM OIL, ETC., SALE OF WASTE O IL PERTAINS TO THE INCOME DERIVED FROM THE ELIGIBLE BUSINESS. BEYOND THAT , IT IS NOTED THAT LEASE OF FRUITS, BUILDING RENT FROM BSNL TOWER, SALE OF PLASTIC BAGS AND SALE OF OLD NEWSPAPER ARE NOT INCOMES WHICH HAVE A DIRT NEXUS TO THE ELIGIBLE BUSINESS OF GENERATION OF POWER. THEREF ORE, UNDER THESE HEADS, ACCORDING TO THE CIT(A) CANNOT BE ELIGIBLE FOR DEDUCTIO N UNDER S.80IA. WITH THESE OBSERVATIONS, HE DIRECTED THE ASSESSING OFFICER T O RECOMPUTE THE RELIEF UNDER S.80IA OF THE ACT. THOUGH THE CIT( A) HAS DEALT WITH OTHER ITA NO.848 & 919/HYD/20 13 M/S. G.V.K. INDUSTRIES LTD., SECUNDERABAD 6 ISSUES RAISED BEFORE HIM, BUT SINCE ONLY ISSUE BEFORE US IN THESE CROSS- APPEALS RELATES TO ALLOWANCE/DISALLOWANCE OF DEDUCTION U NDER S.80IA ON MISCELLANEOUS INCOME OF RS.70,54,764, IT HAS BECOME UNNECESSA RY TO DEAL WITH OTHER ASPECTS DEALT WITH THE BY THE CIT(A) IN THE IMPUGNED ORDER. 7. AGGRIEVED BY THE ORDER OF THE CIT(A), ASSESSEE AS WE LL AS THE REVENUE PREFERRED THE PRESENT APPEALS BEFORE US. ASSESSEES APPEAL : ITA NO.848/HYD/2013 8. GROUNDS OF THE ASSESSEE IN ITS APPEAL ITA NO.848/HYD/ 2013 READ AS FOLLOWS- 1. THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEAL S) III, HYDERABAD DATED 20-03-2013 IS ERRONEOUS, CONTRARY TO LAW AND FACTS OF THE CASE ON THE ISSUE OF REVERSAL OF PROVISION OF RS.14,21,001/- MADE IN ASST. YEAR 2006-07 AND WRITTEN BACK IN ASST. YEAR 2009-10.WITHOUT STATING ANYTHING AS TO WHY IT IS NOT ELIGIBLE FOR DEDUCTION U/ S. 80IA. 2.A) THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN NOT GRANTING DEDUCTION U/S. 80IA ON REVERSAL OF PROVISION OF RS.14,21,001/- MADE IN FINANCIAL YEAR 2006-07 ON ACCOUNT OF LENDERS AGENT FEE TO IDBI AND WRITTEN BACK I N ASST. YEAR 2009-10 WITHOUT STATING ANYTHING AS TO WHY I T IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IA. B) THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN REDUCING (I) INCOME OF RS.25,000 FROM LEASE OF FRUIT TREES, (II) RS.420 FROM SALE OF PLASTIC BAGS, (III) RS.4,839 OF RECOVERY OF NOTICE PAY FROM AN EMPLOYEE AND (IV) CREDI T BALANCE OF RS.20,393 OF ANAGHA EXIMS WRITTEN BACK TO PROFIT & LOSS ACCOUNT IGNORING THE SUBMISSIONS OF THE APPELLANT THAT EXPENDITURE OF MORE THAN THESE AMOUN TS WERE INCURRED BY THE APPELLANT AND THEREFORE THERE I S NO NET INCOME FROM THOSE ITEMS IGNORING THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULES PRIVATE LTD. VS. CIT(343 ITR 89), ITA NO.848 & 919/HYD/20 13 M/S. G.V.K. INDUSTRIES LTD., SECUNDERABAD 7 WHEREIN IT IS HELD THAT ONLY NET INCOME, IF ANY, ONLY IS TO BE CONSIDERED AS INCOME NOT DERIVED FROM BUSINESS. 3. FOR ALL OF THE ABOVE AND SUCH OTHER GROUNDS 9. IN GROUNDS NO.1 AND 2(A) ABOVE, THE ASSESSEE HAS ASSAIL ED THE DENIAL OF DEDUCTION UNDER S.80IA ON REVERSAL OF PROVI SION OF RS.14,21,001 MADE IN FINANCIAL YEAR 2006-07 AND WRITTEN BACK IN ASSE SSMENT YEAR 2009- 10. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED BEFORE US THAT DURING THE FINANCIAL YEAR 2006-07, R ELEVANT TO ASSESSMENT YEAR 2007-08, THE ASSESSEE COMPANY HAD MADE A PROVISIONS F OR RS.14,21,001 TOWARDS LENDER AGENT FEE TO IDBI WHO IS T HE AGENT FOR TERM LOANS LENDERS FOR THE PROJECT. HOWEVER, THIS AMOUNT WAS REVERSED DURING THE ASSESSMENT YEAR 2009-10 AND CONSIDERED AS MISCELLANEOUS I NCOME, SINCE THE IDBI DID NOT ASK THE PAYMENT SO FAR. IN THIS REGARD, IT WAS SUBMITTED THAT SUCH EXPENDITURE WAS DEBITED TO PROFIT & LOSS ACCOUNT IN THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08 AND THAT DEDUCTION UNDER S.80IA IN THAT ASSESSMENT YEAR TO THAT E XTENT WAS CLAIMED LESS. HENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIE D IN REDUCING THE SAID AMOUNT, WHILE COMPUTING THE INCOME FROM BUSIN ESS, AND THUS NOT GRANTING DEDUCTION UNDER S.80IA WITH REFERENCE TO TH AT AMOUNT. IT WAS ALSO SUBMITTED THAT THE CREDIT BALANCE WRITTEN BACK CONST ITUTES ELIGIBLE INCOME FOR PURPOSES OF DEDUCTION UNDER S.80IA. RELIANC E IN THIS BEHALF WAS PLACED ON THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF SEMANTIC SPACE TECHNOLOGIES LTD., HYDERABAD VIDE ORDER DATED 7.3.2012 IN ITA NO.824/HYD/2010 AND ANR., WHEREIN IT WAS HELD THAT THE CREDIT BALANCES WRITTEN BACK CONSTITUTES ELIGIBLE INCOME FO R PURPOSES OF DEDUCTION UNDER S.10A. IN THE LIGHT OF THE FACT THAT THE CONDITION FOR ALLOWANCE OF DEDUCTION UNDER S.80IA AND S.10A ARE TH AT THE RELEVANT PROFITS AND GAINS SHOULD BE DERIVED FROM THE ELIGIBL E UNDERTAKING, IT WAS SUBMITTED THAT THE RATIO OF THE SAID DECISION APPLIES TO THE FACTS OF THE PRESENT CASE AS WELL, AND THE ASSESSEE IS ENTITLED FOR DEDUCT ION UNDER S.80IA. ITA NO.848 & 919/HYD/20 13 M/S. G.V.K. INDUSTRIES LTD., SECUNDERABAD 8 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON T HE OTHER HAND, SUPPORTED THE ORDER OF THE CIT(A) ON THIS ISSUE. 12. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECOR D. BEFORE GOING INTO THE MERITS OF THE ISSUE, LET US EXAMINE THE PROVIS ION OF S.80IA OF THE ACT. SUB-SECTION (1) OF S.80IA PROVIDES THAT PROFITS A ND GAINS OF AN UNDERTAKING DERIVED FROM AN ELIGIBLE BUSINESS, AS REFER RED TO IN SUB-SECTION (4), WILL BE ELIGIBLE FOR DEDUCTION OF AN AMOUNT EQU AL TO 100% OF PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT YEARS. SUB-SECTION (4) ENUMERATES THE ELIGIBLE BUSINESSES. SUB-SECTION (5) WHICH BEGINS WITH A NON-OBSTANTE CLAUSE PROVIDES THAT FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION, PROFITS AND GAINS OF THE ELIGIBLE BUSINESS SHALL BE TREATED AS THE ONLY SOURCE OF INCOME OF A SSESSEE. IN OTHER WORDS, ONLY PROFITS AND GAINS OF ELIGIBLE BUSINE SS WOULD BE ENTITLED FOR DEDUCTION U/S. 80IA. 13. ON GOING THROUGH THE PROVISIONS OF S.80IA, IT B ECOMES CLEAR THAT IT IS A CODE BY ITSELF AND NOT DEPENDENT UPON OTH ER PROVISIONS OF THE ACT. IN FACT, SUB-SECTION 5 OF S.80IA HAS AN OVERRIDING EFFECT AND EXCLUDES APPLICATION OF ANY OTHER PROVISION OF THE ACT. IF WE EXAMINE ASSESSEES CASE IN THE CONTEXT OF THE AFORESAID STATUTORY PROVISION S, IT IS TO BE NOTED THAT THE ELIGIBLE BUSINESS IS GENERATION OF ELECTRICITY . THEREFORE, ONLY PROFITS DERIVED FROM ANY ACTIVITY DIRECTLY LINKED WITH GENERA TION OF ELECTRICITY WOULD BE ELIGIBLE FOR DEDUCTION UNDER S.80IA. CONSIDE RED IN THE AFORESAID BACKDROP, THE AMOUNT OF RS.14,21,001, WRITTEN BACK ON ACCOUNT OF REVERSAL OF PROVISION MADE IN FINANCIAL YEAR 2006-07 CA NNOT BE HELD TO BE A PROFIT DERIVED FROM ELIGIBLE BUSINESS FOR COMPUTING DEDUCTION UNDER S.80IA. WE, THEREFORE, AGREE WITH THE FINDING OF TH E CIT(A) IN THIS RESPECT. SO FAR AS DECISION OF HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF M/S. SEMANTIC SPACE TECHNOLOGIES LTD. (SUPRA), IS CONCERNED, THE RATIO LAID DOWN THEREIN WILL NOT BE APPLICABLE TO THE FACTS OF TH E PRESENT CASE. IN THE ITA NO.848 & 919/HYD/20 13 M/S. G.V.K. INDUSTRIES LTD., SECUNDERABAD 9 CASE OF SEMANTIC SPACE TECHNOLOGIES (SUPRA), IT WAS IN THE CONTEXT OF DEDUCTION UNDER S.10A OF THE ACT. THERE IS NO SUCH PROVI SION LIKE SUB- SECTION (5) OF S.80IA IN S.10A, WHICH PROVIDES FOR COMPU TATION OF DEDUCTION ONLY FROM PROFIT DERIVED FROM ELIGIBLE BU SINESS. ACCORDINGLY, WE REJECT THE GROUND OF THE ASSESSEE ON THIS ASPECT. 14. IN GROUND NO.2(B), THE ASSESSEE HAS CHALLENGED THE D ENIAL OF DEDUCTION U/S. 80IA ON THE FOLLOWING ITEMS:- (I) INCOME FROM LEASE OF FRUIT TREES RS.25,000 (II) SALE OF PLASTIC BAGS RS. 420 (III) RECOVERY OF NOTICE PAY FROM EMPLOYEE RS. 4,839 (IV) CREDIT BALANCE OF ANAGHA EXIMS WRITTEN BACK TO PROFIT & LOSS ACCOUNT RS. 20,393. 15. IN VIEW OF OUR FINDING IN GROUND NO.1 AND 2(A) , IN THE PRECEDING PARA, WE HOLD THAT ASSESSEE IS NOT ENTITLED TO AVAIL DEDUCTION UNDER S.80IA ON THE AFORESAID ITEMS OF INCOME. THE RA TIO LAID DOWN BY HONBLE APEX COURT IN CASE OF ACG ASSOCIATED CAPSULES (P)LT D. V/S.CIT(343 ITR 89) WILL NOT APPLY TO THE FACTS OF THE ASSESSEES CASE, AS IT IS IN THE CONTEXT OF EXPLANATION (BAA) OF S.80HHC OF TH E ACT. THE GROUND OF THE ASSESSEE ON THIS ASPECT IS ALSO REJECTED. 16. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. REVENUES APPEAL : ITA NO.919/HYD/2013 17. EFFECTIVE GROUNDS OF THE REVENUE IN THIS APPEAL R EAD AS FOLLOWS- 1. CIT(A) ERRED IN LAW IN GRANTING RELIEF TO THE A SSESSEE. 2. CIT(A) ERRED IN LAW AND FACT WHILE CONSIDERING T HE SALE OF WASTE OIL PERTAINS TO INCOME DERIVED FROM THE ELIGI BLE BUSINESS, HOWEVER SALE OF OIL HAS NO DIRECT NEXUS WITH MAIN BUSINESS. 3. CIT(A) ERRED IN LAW AND FACT WHILE ALLOWING THE BENEFIT OF NETTING OFF EXCESS PREMIUM AMOUNT PAID DURING THE Y EAR FOR ITA NO.848 & 919/HYD/20 13 M/S. G.V.K. INDUSTRIES LTD., SECUNDERABAD 10 TAKING INTO ACCOUNT ONLY THE DIFFERENTIAL AMOUNT FO R EXCLUSION FOR THE INCOME ELIGIBLE FOR RELIEF U/S. 80IA 4. . 18. GROUND NO.1 OF DEPARTMENTS APPEAL RELATES TO DE DUCTION ALLOWED UNDER S.80IA OF THE ACT ON SALE OF WASTE OIL OF RS.75,905. 19. HAVING HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CI T(A). UNDISPUTEDLY, WASTE OIL IS BYE-PRODUCT OR WASTE PRODUCT IN THE PROCESS OF GENERATION OF POWER AND HAS DIRECT LINK WITH THE ELIGIBLE BUSINESS OF THE ASSESSEE. THEREFORE, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT I NCOME FROM SALE OF WASTE OIL WILL BE ELIGIBLE FOR DEDUCTION UNDER S.80- IA OF THE ACT. THE GROUND RAISED IN THIS BEHALF IS REJECTED. 20. GROUND NO.2 RELATES TO CIT(A) ALLOWING NETTING OF EXCESS PREMIUM PAID DURING THE YEAR AGAINST REFUND OF PREM IUM AND TO EXCLUDE FROM INCOME THE DIFFERENTIAL AMOUNT FOR COMPUTING DED UCTION UNDER S.80- IA. 21. ON A PERUSAL OF THE ORDER OF THE CIT(A), IT IS T O BE NOTED THAT, THE CIT(A) HAS ALLOWED THE NETTING OFF FOLLOWING THE ORDER PASSED BY HIS PREDECESSOR IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2002-0 3 AND 2006-07. THE FINDINGS OF THE CIT(A) IN THIS RESPECT IN ASSESSMENT YEAR 2006-07 WAS CHALLENGED BY THE REVENUE BEFORE THE ITAT . THE TRIBUNAL, HOWEVER, IN ITA NO.1579/HYD/2008, VIDE ORDER DATED 2 0.3.2012, HAS UPHELD THE ORDER OF THE CIT(A). SINCE THE ISSUE IS COVER ED BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE, THE ORDER PASSED BY THE CIT(A) ON THIS ISSUE DESERVES TO BE UPHELD. ACCORDINGLY, WE DO SO, BY REJECTING THE GROUND RAISED BY THE DEPARTMEN T. 22. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 23. TO SUM UP, APPEAL OF THE ASSESSEE AS WELL AS REVENUE ARE DISMISSED. ITA NO.848 & 919/HYD/20 13 M/S. G.V.K. INDUSTRIES LTD., SECUNDERABAD 11 ORDER PRONOUNCED IN THE COURT ON 19 TH FEBRUARY, 2014 SD/- SD/- (B.RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/- 19 TH FEBRUARY, 2014 COPY FORWARDED TO: 1. M/S. GVK INDUSTRIES LTD., PAIGAH HOUSE, 156-159, S.P . ROAD, SECUDNERABAD. 2. 3. 4. 5. DY./ASST. COMMISSIONER OF INCOME-TAX CIRCLE 2(2), HYDERABAD COMMISSIONER OF INCOME-TAX(APPEALS) III, HYDERABAD COMMISSIONER OF INCOME-TAX II, HYDERABAD DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.