DCIT Vs Viral Alkalis Ltd (ITAT Mumbai)
ITAT Mumbai held that effluent water treatment shall be considered as water treatment plant and accordingly, the same is eligible for deduction under section 80IA of the Income Tax Act.
Facts- The assessee company is engaged in the business of treatment of effluent water sold waste and has received approval consent from Maharashtra Pollution Control Board vide letter dated 23/03/2007 for manufacture of 30 MT per month potassium carbonate by using waste water from Vinati Organics as raw material. The revised return of income filed on 19/02/2018. In the revised return the assessee has claimed deduction u/s.80IA(4) alongwith it, it has filed audit report in Form 10CCB electronically wherein the Auditors have quantified the deduction u/s. 80IA(4) at Rs.5,67,13,974/-.
AO has denied the claim of deduction u/s.80IA(4) holding that assessee is not doing activities as defined in Section 80IA(4) which includes carrying out infrastructure project of water treatment project or effluent treatment plant. CIT(A) allowed the claim of deduction.
Conclusion- It has been brought to our notice that CBDT vide Circular No.1/2006 dated 12/01/2006 have also clarified that effluent treatment plant shall be considered as part of water treatment plant and shall be eligible for tax u/s.80IA. Thus, it has clarified that the effluent water treatment shall be considered as water treatment plant eligible u/s. 80IA.
Held that assessee’s effluent water treatment plan categorically falls within the ambit and scope of Section 80IA(4) as misinterpreted by the ld. AO so as to deny the claim of deduction u/s.80IA(4).
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The aforesaid appeal has been filed by the Revenue against the order dated 12/04/2022 passed by the ld. CIT(A)-48,Mumbai for the quantum of assessment passed u/s.143(3) for the A.Y.2016-17.
2. The grounds raised by the Revenue reads as under:-
“1. Whether the Ld. CIT(A) has erred both in law and on facts in deleting the addition Rs. 5,67,13,974/- made by the assessing officer representing deduction claimed u/s 801A (4) of the IT Act.
2 Whether the Ld CIT (A) has erred both in law and on facts in deleting the addition Rs. 56,50,000/- made by the assessing officer representing disallowance out of business expenses from ‘other expenses’.
3 Whether, the Ld CIT (A) has erred both in law and on facts in failing to appreciate the findings of the assessing officer and overlooking the finding made during the assessment proceedings
4 Whether the Ld. CIT (A) has failed to appreciate the details/justification given by the AO and therefore addition made and that the AO had established that transactions were not genuine and thus the addition made was correct by giving detailed clarification after through verification of the submission made by the assessee.
3. Apart from that Revenue has also raised additional grounds:-
“1.Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring that the assessee has got its accounts audited only on 19.02.2018 and the audit report in form no 10CCB has been filed by assessee along with its revised return only on 19.02.2018, hence deduction w/s 80IA(4) of the Act is inadmissible to assessee as per the provisions of section 801A(7) of the IT Act,
2 Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in ignoring that as per section 80AC of the IT Act no such deduction shall be allowed to assessee unless assessee furnishes a return of his income for such assessment year on or before the due date specified under sub section (1) of section 139 of IT Act.”
4. The brief facts are that assessee company is engaged in the business of treatment of effluent water sold waste and has received approval consent from Maharashtra Pollution Control Board vide letter dated 23/03/2007 for manufacture of 30 MT per month potassium carbonate by using waste water from Vinati Organics as raw material. The revised return of income filed on 19/02/2018. In the revised return the assessee has claimed deduction u/s.80IA(4) alongwith it, it has filed audit report in Form 10CCB electronically wherein the Auditors have quantified the deduction u/s. 80IA(4) at Rs.5,67,13,974/-. Ld. AO has denied the claim of deduction u/s.80IA(4) holding that assessee is not doing activities as defined in Section 80IA(4) which includes carrying out infrastructure project of water treatment project or effluent treatment plant. The relevant observation of the ld. AO reads as under:-
23.3. The assessee is not doing above activities and therefore it is not falling with in definition of Infrastructure facilities.
1) The assessee is not doing activity of removing harmful substances from water before it is discharged to the environment. Thus assessee cannot be said to be enterprise doing effluent treatment.
2) The assessee was asked to produce drawing and flow chart to explain how it received waste water from M/s Vinati Organics Ltd. How it processes it and how it discharges it to environment. No evidences could be produced by it to prove that there is any infrastructure through which it received waste water released by M/s Vinati Organics Ltd. Thus the most important thing that waste water is received by assessee could not be proved by assessee.
3) The assessee is not doing activity of removing harmful substances in order to turn it into a type of water that can be safely discharged into environment. The assessee is, neither removing harmful substances nor it is discharging water into environment
4) The assessee is into a business of manufacture of potassium carbonate and caustic potush and not into business of providing infrastructure facility which is prerequisite for claiming deduction u/s 801A(4) of the IT Act
5) P&L account of assessee shows revenue of assessee from sale of products and not from running effluent treatment plant. The relevant part of schedule 15 revenue from operation is reproduced below:-
Note 14(a)
