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Income-tax Officer (TDS)-2(2), Room No. 707, Smt. K.G. Mittal, Ayurvedic Hospital, Charni Road, Mumbai Vs M/s Haldyn Glass Gujarat Ltd., Oriental House, 4th Floor, 7, J. Tata Road, Churchgate, Mumbai - 400 020
August, 12th 2014
                "" Û  

       IN THE INCOME TAX APPELLATE TRIBUNAL
             MUMBAI BENCH "J", MUMBAI
[^  Û]     ãá,    ,  [, Û                     ¢
  BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER,
      AND SHRI VIVEK VARMA, JUDICIAL MEMBER
               ITA No. : 1902/Mum/2011
                (Assessment year: 2007-08)
Income-tax Officer (TDS)-2(2),        Vs    M/s Haldyn Glass Gujarat Ltd.,
Room No. 707, Smt. K.G. Mittal,             Oriental House, 4th Floor,
Ayurvedic Hospital,                         7, J. Tata Road, Churchgate,
Charni Road,                                Mumbai - 400 020
Mumbai                                        .:PAN: AAACH 1434 J
(Appellant)                                 ×(Respondent)
                       Appellant by    :    Shri Maurya Pratap
                     Respondent by     :    Shri Piyush Chaturvedi


  /Date of Hearing                         : 30-07-2014
 /Date of Pronouncement                    : 08-08-2014
                                     
                                  ORDER
       Û. .
 ^  [, Û.
 PER VIVEK VARMA, J.M.:

       Instant appeal is filed by the department against the order of
 CIT(A)-20, Mumbai, dated 28.12.2010, wherein, the following grounds
 have been raised:
              "1.    On the facts and in the circumstances of the case and in law,
                     the Ld. CIT(A) erred in holding that the assessee is entitled to
                     deduction u/s 80IA of the I.T. Act, 1961, overlooking the finding
                     of the Assessing Officer that assessee has not fulfilled the
                     conditions of Section 80IA(4)(iv).
              2.     On the facts and in the circumstances of the case and in law,
                     the Ld. CIT(A) erred in holding that the Captive Power Plant is
                     an independent industrial undertaking eligible for deduction u/s
                     80IA of the I.T. Act, 1961, despite the principle laid down,
                     mutatis mutandis, in the case of M/s Universal Electric Ltd.
                     (1992) (63 taxman 213 (cal.) ) to the effect that a captive power
                     plant as in the instant case is not a separate undertaking.
              3.     The appellant prays that the order of the CIT(A) on the grounds
                     be set aside and that of the Assessing Officer be restored.
              4.     The appellant craves leave to amend or alter any grounds or
                     add a new ground which may be necessary".
                                  2                    M/s. Haldyn Glass Gujarat Ltd.
                                                            ITA No. 1902/Mum/2011




2.    The facts are that the assessee is in the business of
manufacture of glass bottles and containers. The manufacturing
facility of the assessee runs on power. For constant and uninterrupted
power supply, the assessee installed DG sets for its self consumption.

3.    It was in the preceding year that the assessee set up DG sets,
run on gas, for smooth generation of power. Consequently, the
assessee claimed deduction u/s 80IA(4)(iv), as the power being
generated was being used by it.
4. The AO in the order admits that the instant year is the second year when the claim had been made for deduction, but being first year for regular assessment, the issue is taken up in the instant year. The AO, on the basis of his judgment, denied the claim of deduction u/s 80IA(4)(iv). Aggrieved, the assessee approached the CIT(A), who after considering the entire issue, observed, "6.3 In the instant case, the new unit established by the appellant is engaged in entirely new activity even though the services out of the new activity are utilized by the existing unit. Till the appellant set up the CPP, it was using the power f rom outside source like State Electricity Board. In order to augment the power supply, it has commissioned the CPP run by gas fired generators. Even sub-section (8) of section 80-IA envisages such a situation of captive use of products or services of an eligible business there under. The sub-section prescribes that where any goods or services held for the purposes of the eligible business are transferred to any other business carried on by the assessee and the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods or services as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer had been made at the market value of such goods or services as on that date. The new unit of the appellant can survive on own by selling the power in the open market. Simply because no outsiders are consuming or allowed at present to consume the power generated by it does not cease to make the CPP as the new undertaking independent in operation which can survive by itself by selling the power to outsiders. Thus in the commercial sense the CPP is an undertaking with a separate business capable of surviving independent of the appellant's other businesses and providing identifiable services and making itself a revenue generating centre. This is what has 3 M/s. Haldyn Glass Gujarat Ltd. ITA No. 1902/Mum/2011 been held in the decision of the ITAT in the case of West Coast Paper Mills Ltd (supra) relied upon by the appellant. The AO has, therefore, erred in holding that the CPP is not an independent unit eligible for deduction u/s 80-IA(4)(iv)(a). In sum, the appellant is entitled to deduction of the profits derived from the undertaking running the CPP under section 80- IA of the Act". 5. The CIT(A), therefore, reversed the finding of the AO and allowed the claim of deduction u/s 80IA(4)(iv). 6. Against this order, the department is in appeal before the ITAT. 7. Before us, the DR placed reliance on the order of the AO, whereas the AR placed reliance on the order of the CIT(A). 8. Having heard the rival contentions, two issues emerge, (a) whether setting up of DG sets to augment power a captive power plant (CPP) and (b) whether to become eligible for clam of deduction u/s 80IA(4)(iv) in the instant case, it could be accepted that power so generated is used by another unit. 9. We find that both the questions have been answered by the CIT(A) in his observations in para 6.3 (as reproduced here above). 10. We also find that the similar issue has been dealt with by various fora. In the case of CIT vs Tanfac Industries Ltd. in SLP No. 18537 of 2009, the Hon'ble Supreme court dismissed the SLP filed against the order of Hon'ble Madras High court, wherein the High court had sustained the decision of the co-ordinate Bench in Chennai. The identical issue came up before coordinate Bench at Mumbai in the case of West Coast Paper Mills Ltd. vs. ACIT, reported in 103 ITD 19 (Mum), wherein, it was held, "In view of various decisions of the Supreme Court and the High C our ts on the issue of al l o wance of deduc tio n un der sectio n 80-IA, the claim of the assessee could not be denied only on the ground that the DG sets manufactured power only for the captive consumption of the assessee. The Tribunal in the assessment years 1997-98 and 1998-99, had already granted 4 M/s. Haldyn Glass Gujarat Ltd. ITA No. 1902/Mum/2011 relief to the assessee under section 80-IA in respect of DG sets, which were established for the purpose of captive consumption. Moreover, the provision of section 80IA(8) itself says that where any goods or service of the eligible business are transferred to any other business carried on by the assessee and the consideration, if any, for such transfer recorded in the accounts of the eligible business does not correspond to the market value of such goods or services as on the date of transfer, then for the purpose of deduction u n d e r t h a t s e c ti o n , t h e p r of i t an d g ai n f o r s u c h tr a n sf er r e d business shall be computed as if the transfer has been made at market value as on that date. In other words, the provisions of section 80IA themselves provide an answer and give a solution where there is a captive consumption of the finished goods of the eligible units. Therefore, the order of the Commissioner (Appeals), granting relief under section 80-IA in respect of DG Units, was justified". 11. In the case of Add. CIT vs Ultra Tech Cement Ltd., ITA No. 1831/Mum/2012 (where one of us was a party), the issue was held to be in favour of the assessee, in which case also, the assessee had set up DG sets for CPP. 12. In these circumstances, we find that different fora has delved on the issue, which is identical to the issue, that of the assessee. In the instant appeal, therefore, in our opinion, the issue raised by the department in the instant appeal, deserves to be rejected. 13. We, therefore, sustain the order of the CIT(A) and reject the appeal as filed by the department. Even otherwise, the appeal deserves to be rejected on the consistency of approach. The AO had clearly observed that this was the second year of claim of deduction, though first year of scrutiny. If the AO found merit in disturbing the issue which is coming from preceding year, then in that case, the correct approach would have been to reopen the preceding year(s). The law does not appreciate the disturbance of accepted proposition and breaking the consistency without any reasonable cause, as held by Hon'ble Karnataka High court in CIT vs Sridev Enterprises, reported in 5 M/s. Haldyn Glass Gujarat Ltd. ITA No. 1902/Mum/2011 192 ITR 165 (Kar), wherein the Hon'ble Karnataka High Court observed, consistency and definiteness of approach is necessary. 14. In the result, the appeal filed by the department is dismissed. Order pronounced in the open Court on 8th August, 2014. Sd/- Sd/- ( Û] ãá) ( [) Û (N.K. BILLAIYA) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Date: 8th August, 2014 /Copy to:- 1) /The Appellant. 2) ×/The Respondent. 3) The CIT (A)-20, Mumbai. 4) ­9, Mumbai/The CIT-9, Mumbai. 5) "" , The D.R. "J" Bench, Mumbai. 6) [ Copy to Guard File. /By Order / / True Copy / / [ / , Dy./Asstt. Registrar I.T.A.T., Mumbai *å.. *Chavan, Sr. PS
 
 
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