DCIT Vs Bannari Amman–Sugars Ltd. (ITAT Chennai)
ITAT Chennai held that disallowance of deduction u/s 80IA of the Income Tax Act unsustainable as cost of power imported is charged before computing income eligible for deduction u/s 80IA.
Facts- The assessee is a limited company engaged in the business of manufacturing of sugar, alcohol, granite and cogeneration of power. Case of the assessee was selected for scrutiny. The assessment has been completed after making various disallowance and additions amounting to Rs.3,14,60,641/-.
Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) and succeeded. Now the Revenue is in appeal before this Tribunal, challenging the findings of the Ld.CIT(A).
It is alleged that the assessee has claimed deduction u/s.80IA of the Act, at Rs.102,70,48,360/- against income from generation of power from 5 independent power generation undertaking units. Ld.AO noticed that the assessee has purchased power units from the grids of TNEB & KPTCL totaling to Rs.1,85,19,868/-. Ld.AO was of the opinion that since for the said amount assessee has not generated power and has purchased it from other power units. This amount does not represent the value of own power generation and therefore, the same should be reduced from the claim made u/s.80IA of the Act.
Conclusion- We find that the Ld.CIT(A) on examining the facts as well as going through the financial statement found merit in the submissions of the assessee and has rightly held that the assessee has charged the cost of imported power from TNEB & KPTCL to the P & L A/c before arriving at the figure of eligible profit of the industrial undertaking for the purpose of deduction u/s.80IA of the Act. In this issue, Ld.AO ought to have computed the sale price of units purchased by the assessee in question before us and should have denied the benefit of Sec.80IA of the Act on the profit element. But for lack of any such working, we find no reasons to interfere in the findings of the Ld.CIT(A) deleting the said disallowance of Rs.1,85,19,868/- on a valid ground that the assessee has claimed it an expenditure before computing income eligible for deduction u/s.80IA of the Act.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-1, Coimbatore, dated 25.02.2019 and pertains to assessment year 2013-14.
2. The Revenue has raised the following grounds of appeal:
