Addl. CIT, Hyderabad v. M/s Deccan Cements Ltd., Hyderabad

ITA 149/HYD/2009 | 2005-2006
Pronouncement Date: 14-05-2010 | Result: Allowed

Appeal Details

RSA Number 14922514 RSA 2009
Assessee PAN AAACD8406G
Bench Hyderabad
Appeal Number ITA 149/HYD/2009
Duration Of Justice 1 year(s) 3 month(s) 15 day(s)
Appellant Addl. CIT, Hyderabad
Respondent M/s Deccan Cements Ltd., Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 14-05-2010
Date Of Final Hearing 06-05-2010
Next Hearing Date 06-05-2010
Assessment Year 2005-2006
Appeal Filed On 29-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.:149/HYD/2009 ASSTT. YEAR 2005-0 6 THE ADDL. CIT RANGE 1 HYDERABAD VS M/S DECCAN CEMENTS LTD. HYDERABAD (D-98/AAACD 8406 G) (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. VASUNDHARA SINHA DR RESPONDENT BY : SHRI C.S. SUBRAMANIYAM & SHRI V. SIVA KUMAR O R D E R PER: CHANDRA POOJARI ACCOUNTANT MEMBER: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER PASSED BY THE CIT(A)-II HYDERABAD DATED 25.11.2 008 AND PERTAINS TO THE ASSESSMENT YEAR 2005-06. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS: 1. THE CIT(A) ERRED ON BOTH FACTS AND LAW AS THE D IRECTIONS GIVEN WERE BEYOND THE PROVISIONS OF SECTION 154 OF THE INCOME TAX ACT 1961. 2. THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFF ICER TO ADOPT THE REALISTIC UNIT RATE BASED ON THE POWER PURCHASE AGR EEMENTS. 3. THE CIT(A) ERRED IN STATING THE EXPENDITURE OF RS.10 00 000 RELATES TO 80IA UNIT AND THE EXPENDITURE IN NON 80IA UNIT AUTOMATICALLY BY REDUCED. ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD 2 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME ON 26.10.2005 FOR THE ASSESSME NT YEAR 2005- 06 DECLARING AN INCOME OF RS.1 92 65 136/-. IN THE CO URSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE TH E FOLLOWING DISALLOWANCE/ADDITIONS TO THE RETURN OF INCOM E: A) EXCESS DEDUCTION U/S 80 IA RS.1 02 72 933/- B) DEDUCTION U/S 40A(9) - RS.74 273/- 3.1. THE AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUB MITTED THAT WHILE DISALLOWING THE EXCESS DEDUCTION CLAIMED U/S 80 IA (4) (V) THE ASSESSING OFFICER HAD MADE CERTAIN ADJUSTMENTS RELATI NG TO NUMBER OF HYDEL POWER UNITS THE UNIT PRICE FOR EACH HYDEL UN IT AND HAS ALSO ALLOCATED AN EXPENDITURE OF RS.10 LAKHS TO POWER GENER ATION UNITS. THIS RESULTED IN A DEDUCTION ALLOWABLE U/S 80IA AT RS.2 63 1 5 259/- AS AGAINST RS.3 55 25 692/- CLAIMED BY THE ASSESSEE. AGAINST THE ORDER U/S 143(3) THE ASSESSEE HAD FILED A RECTIFICATION PETITI ON BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS PASSED A RECTIFICATI ON ORDER U/S 154 OF THE ACT. AFTER TAKING INTO CONSIDERATION TH E SUBMISSION OF THE ASSESSEE THE ASSESSING OFFICER REVISED THE NUMBER OF HYDEL UN ITS AND ACCEPTED THE CONTENTION OF THE ASSESSEE. HOWEVER THE ASSESSI NG OFFICER DID NOT INTERFERE WITH THE UNIT RATE OF THE HYDEL UN IT ADOPTED IN THE ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD 3 3 ASSESSMENT ORDER U/S 143(3). THE ASSESSING OFFICER ALSO REJE CTED THE CONTENTION OF THE ASSESSEE RELATING TO ADDITION OF RS.10 LAKHS AS EXPENDITURE FURTHER ALLOCATED TO THE POWER GENERATIO N UNIT. THUS IN THE ORDER U/S 154 THE ASSESSING OFFICER ALLOWED DEDUCTION U/S 80IA TO THE TUNE OF RS.2 95 98 997/- AS AGAINST RS.2 63 15 259/- A LLOWED IN THE ORDER U/S 143(3). 4. ON APPEAL CIT(A) DIRECTED THE ASSESSING OFFICER NOT TO ADOPT THE ESTIMATED RATE OF 2.6 PER UNIT AND HAS TO ADOPT T HE REALISTIC UNIT RATE BASED ON THE POWER PURCHASE AGREEMENTS SUBJECT TO MAXI MUM TARIFF AS FIXED BY THE ELECTRICITY REGULATORY COMMISSION AND THE ASSESSING OFFICER MAY FACTUALLY VERIFY THE AGREEMENT AS APPLICABLE FOR T HE YEAR UNDER CONSIDERATION FOR THIS PURPOSE. 4.1. REGARDING DISALLOWANCE OF RS.10 LAKHS THE CIT(A ) AGREED WITH THE CONTENTION OF THE ASSESSING OFFICER. HOWEVER HE HAS GIVEN DIRECTION TO THE ASSESSING OFFICER TO EXAMINE THE CASE AFRE SH ON THE REASON THAT IF AN ADDITIONAL OF RS.10 LAKHS IS ALLOTTED TO THE UNIT ELIGIBLE FOR DEDUCTION U/S 80 IA THIS WILL AUTOMATICALLY REDUCE THE EXPENDITURE ALLOCATED UNIT NON ELIGIBLE DEDUCTION U/S 80IA. AGAIN ST THIS FINDINGS OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD 4 4 5. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT WHILE PASSING THE ASSESSMENT ORDER U/S 143(3) OF THE ACT THE A SSESSING OFFICER EXAMINED THE FACTS AND CIRCUMSTANCES OF THE CASE H E CAME TO THE CONSCIOUS DECISION THAT THE RATE OF POWER PER UNIT IS 2.60 WHICH IS ON ESTIMATED BASIS. IT IS ALSO A DELIBERATE DECISION OF THE ASSESSING OFFICER AND THE CIT(A) CANNOT SAY THAT THE ASSESSING OFFICER HAS T O ADOPT A PARTICULAR COURSE OF ACTION WHILE PROCEEDING U/S 154 OF T HE IT ACT. HE CANNOT REVIEW THE ORDER OF THE ASSESSING OFFICER AS IT IS N OT PERMISSIBLE U/S 154 OF THE ACT. IF AT ALL THE ASSESSEE HAVE ANY GRIE VANCE AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT THE NEXT PERMISSIBLE COURSE OF ACTION AVAILABLE TO THE ASSESSEE IS TO FILE AN APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER BEFORE CIT(A ) AS PERMISSIBLE UNDER U/S 246 OF THE ACT. THE ACTION OF THE CIT (A) IS NOT FALLS UNDER THE PURVIEW OF THE PROVISIONS OF SEC.154 OF THE ACT. TH E CIT(A) CANNOT TAKE UP THE DEBATABLE ISSUE U/S 154 OF THE ACT. FOR THI S PROPOSITION THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE JUDGEM ENT IN THE CASE OF SILVER IMPEX VS. ACIT (DEL.) (311 ITR 244). 6. ON THE OTHER HAND THE AUTHORISED REPRESENTATI VE FOR THE ASSESSEE SUBMITTED THAT THERE WAS A POWER PURCHASE AGREEME NT THE SAME WAS BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSME NT. THE SAID POWER PURCHASE AGREEMENT WAS ENTERED BETWEEN THE ASSESSEE AND ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD 5 5 THE ANDHRA PRADESH STATE ELECTRICITY BOARD AND THE RA TE PER UNIT OF POWER SHALL BE BASED ON THAT AGREEMENT. THIS AGREEMEN T WAS NOT AT ALL CONSIDERED BY THE ASSESSING OFFICER WHILE DETERMINING THE RATE PER UNIT. SINCE THIS DOCUMENT WAS AVAILABLE ON RECORD THE CIT(A ) HELD THAT THE ASSESSING OFFICER HAS COMMITTED FACTUAL ERROR IN NOT CONSID ERING THE SAME WHILE ADOPTING UNIT RATE. AS SUCH THERE IS A MIS TAKE APPARENT ON RECORD AND THE SAME WAS CORRECTED BY THE CIT (A) IN FAVO UR OF THE ASSESSEE. 7. REGARDING SECOND GROUND ALSO THE AUTHORISED REPRESE NTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS NOT DEBATABLE AND IT WAS RIGHTLY DECIDED BY THE CIT (A) IN FAVOUR OF THE ASSESSEE . 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WHILE COMPLETING THE ASSESSMENT U/ S 143(3) OF THE ACT THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSE SSEE RELATING TO THE POWER PER UNIT AT 2.89 AND AFTER REJECTION H E ADOPTED THE RATE AT 2.60 PER UNIT. FOR REJECTING THE RATE ADOPTED BY TH E ASSESSEE THE ASSESSING OFFICER GIVEN THE REASON AS FOLLOWS: THE RATE AT WHICH THE ASSESSEE IS BILLED BY CPDCAP L ON ITS POWER CONSUMPTION BY CEMENT UNITS IS APPLIED TO THE NUMB ER OF UNITS GENERATED AND DELIVERED BY THE ASSESSEE FOR THE PURPOSE OF ESTIMA TING THE GROSS RECEIPTS FROM HYDEL POWER GENERATION. IF THERE ARE NO CEMEN T UNITS FOR ADJUSTMENT OF HYDEL POWER GENERATION AGAINST THE CONSUMED UNITS T HEN THE ASSESSEE WOULD HAVE SOLD THE GENERATED POWER IN OPEN MARKET AT A L ESSER PRICE. THE RATE OF BILLING OF CPDCAPL CONSTITUTE THE POWER PURCHASE/GE NERATION COST ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD 6 6 TRANSMISSION LOSSES ADMINISTRATIVE COST ETC. AS P ER THE PROVISIONS OF SECTION 80IA (4) THE ASSESSEE IS ENTITLED FOR DEDUCTION ONL Y ON THE PROFITS AND GAINS DERIVED BY THE HYDEL POWER UNDERTAKING WHICH FORMS PART OF GROSS TOTAL INCOME. IN THIS CASE THE ASSESSEE ASSUMED THAT TH E SAVING IN POWER BILLS OF ITS ANOTHER UNIT AS THE PROFIT DERIVED BY THE HYDEL POWER UNIT. IT AMOUNTS TO ASSESSEES HYDEL UNIT MAKING PROFIT FROM ITS CEMENT S UNITS AS THE ASSUMED COST INCLUDES THE ADMINISTRATIVE COSTS TRANSMISSIO N LOSS ETC. OVER AND ABOVE THE FAIR MARKET VALUE. DURING THE COURSE OF ASSESS MENT PROCEEDINGS THE ASSESSEES REPRESENTATIVE EXPRESSED THAT THE POWER PURCHASE COST OF CPDCAPL SHOULD NOT BE APPLICABLE TO THE ASSESSEE FO R THE REASON THAT THEY HAD ALTERNATIVE HYDEL POWER CONSUMERS AT THE RATES AS HIGH AS THE TARIFFS OF CPDCAPL. IT IS EXPRESSED THAT ITS PROFITS FROM THE CEMENT UNIT HAVE INCREASED ONLY DUE TO ITS DECISION TO GENERATE HYDEL POWER AN D SUPPLY IT TO CPDCAPL. IT IS FURTHER EXPRESSED THAT THE PROFITS OF CEMENT UNI TS IN THE ABSENCE OF HYDEL POWER UNITS WOULD HAVE BEEN LESS TO THE EXTENT OF T HE VALUE OF ADJUSTED POWER UNITS AND FOR THESE REASONS IT IS CLAIMED THA T THE ASSESSEES COMPUTATION OF DEDUCTION ALLOWABLE IS CORRECT. CON SIDERING THE FOLLOWING FACTS ETC. THE ASSESSEES PROFIT DERIVED FROM HYDEL POWER IS ESTIMATED. THE ASSESSEE HAS NOT ADOPTED THE FAIR MARKET VALUE OF ANY REASONABLE ESTIMATE OF EARNINGS FROM HYDEL POWER UNIT. THE AS SESSEE FAILED TO EXPLAIN ANY BASIS OR RATIONAL FOR ADOPTING THE PER UNIT RATE @ RS.2.89/- THE ASSESSEE ESTIMATED THE SAVINGS IN POWER BILLS O F CEMENT AS ITS EXEMPT INCOME FROM HYDEL POWER UNIT. WHILE ADOPTING THE CPDCAPL RATES/TARIFF @ 2.89 PER UNIT ON THE HYDER POWER UNITS GENERATED THE ASSESSEE HAS NOT REDUCED ANY AMOUNT ON ACCOUNT OF INCENTIVE AS REDUCED BY CPDCAPL APPEARIN G IN THE COPIES OF POWER BILLS ISSUED BY THE SR. ACCOUNTS OFFICER OPE RATIONS DIVISION CPDCAPL NALGONDA FILED BY THE ASSESSEE. THE ASSESSEE HAS NOT FILED THE COPIES OF MONTH WIS E ADJUSTMENTS MADE IN CC BILL IN RESPECT OF THE ASSESSEES NLG 208 & N LG 415 UNITS (ISSUED BY THE SR. ACCOUNTS OFFICER OPERATIONS DIVISION CP DCAPL NALGONDA) AGAINST THE HYDEL POWER GENERATED FOR THE MONTHS OF APRIL AND MAY 2004 AS SHOWN IN ITS COMPUTATION SHEET. HYDEL POWER DELIVERED I.E. APRIL 2004 2 77 000 UNITS MAY 2004 10 38 600 UNITS TOTAL 13 15 600 UNITS THE DETAILS REALIZABLE HYDEL UNITS AND COMPUTATION OF VALUE OF THE SAME ADOPTED BY THE ASSESSEE SHOW THAT IT HAS TAKEN PER UNIT PRICE AT RS.2.89/- THE ASSESSEE VALUED THE GROSS INCOME FROM HYDEL POW ER GENERATION @ RS.2.89 FOR 1 58 28 695 UNITS WHICH AMOUNTS TO RS.4 57 77 714. ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD 7 7 9. AS SEEN FROM THE ABOVE THIS IS A CONSCIOUS DECISION OF THE ASSESSING OFFICER IN NOT ACCEPTING THE RATE ADOPTED BY THE ASSESSEE . THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THIS ORDER OF THE ASSESSING OFFICER. THE ASSESSING OFFICER MAY BE WRONG IN ADOPTING THE RATE OF POWER AT 2.6 PER UNIT. IF THE ASSESSEE HAS ANY GRIEVAN CE AGAINST THIS THE NEXT COURSE AVAILABLE TO THE ASSESSEE IS TO FILE AN AP PEAL AGAINST THE ORDER OF THE ASSESSING OFFICER PASSED U/S 143(3) OF THE IT ACT AS PROVIDED U/S 246 OF THE ACT. ONCE THE ASSESSING OFFICER RE JECTED THE CLAIM OF THE ASSESSEE WHILE PASSING THE ORDER U/S 143 (3) THEN THE ASSESSEE CAN MOVE PETITION U/S 154 TO RECTIFY THOSE MISTAKE CREPT IN HIS ORDER WHICH REQUIRES NO ARGUMENTS. IN OTHER WORDS ANY DEBATABLE ISSUE CANNOT BE TAKEN UP U/S 154 OF THE ACT. IN OUR OPI NION THE CIT(A) EXCEEDS THE JURISDICTION AND HE CANNOT DEAL THE IMPUGNE D ISSUES U/S 154 OF THE ACT. AS RIGHTLY ARGUED BY THE LEARNED DEP ARTMENTAL REPRESENTATIVE THE ASSESSING OFFICER HAS TAKEN CONSCIOUS DECISI ON W.R.T. THE RATE OF POWER PER UNIT AND ALSO ISSUES RELATING TO ALLOCATION OF EXPENDITURE AND THESE ISSUES CANNOT BE DEALT WITH U/S 15 4 OF THE ACT. ACCORDINGLY WE REVERSE THE ORDER OF THE CIT(A) AND AL LOW THE APPEAL OF THE REVENUE. SEC.154 DOES NOT COVER ANY MISTAKE WHICH MAY BE DISCOVERED BY COMPLICATED PROCESS OF INVESTIGATION OR ARGUM ENT AND A MISTAKE WHICH CAN BE DISCOVERED BY THE PROCESS OF ELUCIDATIO N ARGUMENT OR DEBATABLE. ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD ITA NO.149/HYD/2009 M/S DECCAN CEMENTS LTD. HYDERABAD 8 8 10. IN THE RESULT THE APPEAL OF THE REVENUE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT 14.5.2010 SD/- SD/- N.R.S. GANESAN CHANDRA POOJARI JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 14 TH MAY 2010 COPY FORWARDED TO: 1. THE ADDL. CIT RANGE 1 HYDERABAD 2. M/S DECCAN CEMENTS LTD. 6-3-898 RAJBHAVAN ROAD HYDERABAD. 3. CIT(A)-II HYDERABAD. 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP