IN THE ITAT BANGALORE BENCH ‘A’
Bangalore Electric Supply Co. Ltd.
versus
Deputy Commissioner of Income-tax, Circle 11(2), Bangalore
IT Appeal No. 359 (Bang.) of 2009
[Assessment year 2005-06]
Date of Pronouncement – July 4, 2012
ORDER
N.V. Vasudevan, Judicial Member
This appeal by the assessee is against the order dated 10.02.2009 of the CIT(Appeals)-I, Bangalore relating to assessment year 2005-06.
2. The only issue that arises for consideration in this appeal is as to whether the assessee is entitled to claim deduction u/s. 80-IA(4)(iv)(c) of the Income-tax Act, 1961 (“the Act”).
3. The assessee is a wholly owned Government of Karnataka Undertaking. It is an electricity distribution company. The assessee claimed deduction 80-IA(4)(iv)(c) of the Act in respect of the profits derived from the distribution of power at 100% of the gross total income. Section 80-IA provides that where the gross total income of the assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4), there shall, in accordance with and subject to the provisions of section 80-IA, be allowed, in computing the total income of the assessee, a deduction of an amount equal to 100% of the profits and gains derived from such business for ten consecutive assessment years. The Assessee claimed deduction under section 80- IA(4)(iv)(c) of the Act. Those provisions read as follows:-
“(4) This section applies to ………….
(iv) an undertaking which, ………….
“(c) undertakes substantial renovation and modernization of the existing network of transmission or distribution lines at any time during the period beginning on the 1st day of April 2004, and ending on 31st day of March, 2010.
Explanation: for the purposes of this sub-clause, “substantial renovation and modernisation” means an increase in the plant and machinery in the network of transmission or distribution lines by at least fifty per cent of the book value of such plant and machinery as on the 1st day of April, 2004″.
4. The Assessee claimed that it had during the previous year relevant to AY 05-06 undertaken substantial renovation and modernization and therefore was entitled to claim deduction u/s.80-IA(4)(iv)( c) of the Act. There is no dispute that the Book Value of Lines, cable Networks as on 1.4.2004 was as under:
