DCIT, Madurai v. M/s. Thiagarajar Mills Ltd., Madurai

ITA 1624/CHNY/2010 | 2007-2008
Pronouncement Date: 25-03-2011 | Result: Dismissed

Appeal Details

RSA Number 162421714 RSA 2010
Assessee PAN AAACT4304R
Bench Chennai
Appeal Number ITA 1624/CHNY/2010
Duration Of Justice 5 month(s) 26 day(s)
Appellant DCIT, Madurai
Respondent M/s. Thiagarajar Mills Ltd., Madurai
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 25-03-2011
Date Of Final Hearing 14-03-2011
Next Hearing Date 14-03-2011
Assessment Year 2007-2008
Appeal Filed On 29-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI (BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER) .. I.T.A. NO. 1624/MDS/2010 ASSESSMENT YEAR : 2007-08 THE DY. COMMISSIONER OF INCOME TAX COMPANY CIRCLE I MADURAI. (APPELLANT) V. M/S THIAGARAJAR MILLS LTD. KAPPALUR MADURAI 8. PAN : AAACT4304R (RESPONDENT) APPELLANT BY : SHRI TAPAS KUMAR DUTTA RESPONDENT BY : NONE O R D E R PER ABRAHAM P. GEORGE ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE ITS GRIEVANCE IS THAT THE CIT(APPEALS) DIRECTED THE A.O. TO ALLOW DEDUCTION O F RS.1 97 78 747/- CLAIMED BY THE ASSESSEE UNDER SECTION 80-IA OF INCO ME-TAX ACT 1961 (HEREINAFTER CALLED THE ACT) IN RESPECT OF I TS POWER PLANT. ACCORDING TO REVENUE THE POWER PLANT WAS FOR CAPTI VE CONSUMPTION AND THIS EFFECTIVELY ONLY REDUCED THE COST OF THE E LECTRICITY AND HENCE I.T.A. NO. 1624/MDS/10 2 COULD NOT BE CONSIDERED FOR ANY CLAIM OF DEDUCTION UNDER SECTION 80- IA OF THE ACT. 2. AS CLEAR FROM THE GROUND ITSELF THE DISALLOWANC E WAS MADE ON ACCOUNT OF A REASON THAT ASSESSEE WAS USING THE POW ER FROM THE WINDMILLS INSTALLED BY IT FOR CAPTIVE CONSUMPTION. THIS ISSUE IS NO MORE RES INTEGRA IN OUR OPINION. HON'BLE JURISDICT IONAL HIGH COURT IN THE CASE OF CIT V. THIAGARAJAR MILLS LTD. IN T.C.A. NO.68-70 OF 2010 DATED 7.6.2010 HAS HELD AS UNDER IN PARA 8 AND 9 OF ITS ORDER:- 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 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 I.T.A. NO. 1624/MDS/10 3 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 ASSESSEE4 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. 3. THUS THERE BEING A CLEAR DIRECTION IN THIS REGA RD FROM THE HON'BLE JURISDICTIONAL HIGH COURT WE ARE OF THE OP INION THAT LD. CIT(APPEALS) WAS JUSTIFIED IN DIRECTING THE A.O. TO ALLOW THE DEDUCTION UNDER SECTION 80-IA OF THE ACT IN RESPECT OF THE PO WER PLANT THE POWER OF WHICH WAS USED FOR CAPTIVE CONSUMPTION. W E THEREFORE FIND NO MERIT IN THIS APPEAL FILED BY THE REVENUE. I.T.A. NO. 1624/MDS/10 4 4. IN THE RESULT THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 25 TH MARCH 2011. SD/- SD/- (HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 25 TH MARCH 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-I MADURAI (4) CIT-I MADURAI (5) D.R. (6) GUARD FILE