Atul Limited,, Ahmedabad vs Assessee

The present miscellaneous application is directed at the instance of assessee pointing out apparent error in the order of Tribunal dated 31st July, 2013 passed for Assessment Year 2007-08 in ITA No. 3084/Ahd/2011.

MA No. 43/Ahd/20124(In I.T.A No.3084/Ahd/2011) A.Y. 2007-08 Page No 2 Atul Ltd vs. ACIT

2. The brief facts of the case are that assessee-company is in the business of manufacture and sale of pharmaceutical, chemicals, dyes, and fertilizers. It had claimed deduction of Rs. 27,43,09,337/- u/s. 80(IA) of the Act. The deduction has been categorized as under:-

(a) Newer power plant: Rs. 15,16,77,543/-

(b) Captive power plant: Rs. 09,02,59,841/-

(c) Co-generation power plant: 03,23,71,953/-

3. In respect of newer power plant, since Assessment Year 2001-02, it has been consistently held that assessee was not eligible for deduction u/s. 80(IA). This view was upheld up to the Tribunal. The ITAT in the Assessment Year 2007-08 also has denied the deduction with regard to newer power plant following the past history.

4. In respect of captive power plant, the Assessing Officer has allowed the claim of the assessee to the extent of Rs. 5,75,73,273/-. The action of the Assessing Officer was upheld by the Commissioner of Income Tax (Appeals)

5. In respect of co-generation plant, the Assessing Officer had allowed the deduction at Rs. 1,04,35,123/-. The assessee has challenged the disallowances of Rs. 3,26,86,568/- and Rs. 2,19,36,828/- representing captive power plant and co-generation plant.

6. In ground no. 7, the disallowance in respect to newer plant was challenged whereas in ground no. 8, the disallowance out of captive power plant and co-generation plant were challenged.

MA No. 43/Ahd/20124(In I.T.A No.3084/Ahd/2011) A.Y. 2007-08 Page No 3 Atul Ltd vs. ACIT

7. In the present miscellaneous application, it is pleaded by the assesee that Tribunal failed to record specific finding in respect to new power plant and has committed an apparent error by following the earlier years' orders. With regard to captive power plant and co-generation plant, it is pleaded that Tribunal has set-aside this issue to the file of Assessing Officer but added certain directions which is beyond the powers of Tribunal and thus committed an apparent error.

8. Learned counsel for the assessee submitted that judgment of Hon'ble Gujarat High Court in the case CIT vs. Shah Alloys Ltd was brought to the notice of the Tribunal which was considered by the Tribunal but Tribunal failed to appreciate this judgment in true perspective. The dispute according to the learned counsel for the assessee is that, what rate of the sale of electricity is to be taken for the purpose of computing the eligible profit. It is admittedly that electricity was consumed by assessee itself or by its sister concern, therefore, for computing the eligible profit, the rate of electricity ought to be adopted at which assessee is independently procuring the electricity from Gujarat Electricity Board. According to the learned counsel for the assessee, this method has almost been accepted in all the cases of captive power project. The assesee has not only cited judgment of Hon'ble Gujarat High court but also the judgment of Bombay Tribunal, Delhi Tribunal which are directly on the point. The Tribunal has committed an apparent mistake by observing that Assessing Officer would also compare the profitability of these units with those independent units.

9. Ld. DR on the other hand submitted that there is no apparent error in the order of the Tribunal.

MA No. 43/Ahd/20124(In I.T.A No.3084/Ahd/2011) A.Y. 2007-08 Page No 4 Atul Ltd vs. ACIT

10. We have duly considered rival contentions and gone through the record carefully. The power of rectification u/s. 254(2) of the income tax act can be exercised only when the mistake which is sought to be rectified is an obvious and patent which is apparent from the record and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions. As far as new power plant is concerned, the Tribunal has upheld the disallowance by following the earlier years' orders. Therefore, we do not find any apparent error in the order of the Tribunal.

11. As far as captive power plant and co-generation plant are concerned, the issue is that assessee has produced electricity which was consumed by itself. For computing eligible profit for grant of deduction u/s. 80(IA), rate of sale of the electricity at arms' length is to be adopted. The case of the assessee is that it has been purchasing electricity from GEB which is a govt. undertaking and an independent entity selling electricity to many concerns. The rate at which GEB sold electricity to assessee be adopted for self-generated electricity also. We find that the Tribunal has followed its order passed on 29-10-2012 in Assessment Year 2006-07. While setting aside the issue for reconsideration to the Assessing Officer, the Tribunal has noticed the judgment of Hon'ble Gujarat High Court as well as orders of ITAT Bombay and Delhi which were brought to its notice. We find that Tribunal has simply followed the order of ITAT in Assessment Year 2006-07 and not construed the rate laid down in the judgment of Hon'ble Gujarat High Court and other two orders of ITAT. The Tribunal at its own has given certain directions vide which Assessing Officer is required to re-compute eligible profit for the purpose of claim of deduction MA No. 43/Ahd/20124(In I.T.A No.3084/Ahd/2011) A.Y. 2007-08 Page No 5 Atul Ltd vs. ACIT

u/s. 80(IA) in the light of Hon'ble High court's decision and also to compare the profit of these units with those independent units in the line of this business. In our opinion, this observation was not based on the facts from the record. The Tribunal has committed an apparent error by giving these directions without support of evidence on the record. Therefore, we expunge the observations of the tribunal made while disposing ground no.

8. This issue will be remain as set aside to the file of Assessing Officer for re-adjudication. In other words, this ground is disposed with a finding that ld. Assessing Officer shall re-adjudicate this issue in accordance with law. The observation made by us in the order dated 31st July, 2013 will not impair or injure the case of Assessing Officer and will not cause any prejudice to the defense/explanation of the assessee. The ld. Assessing Officer will be at liberty to decide this issue in accordance with law after considering all the materials and the judgment of Hon'ble jurisdictional High Court.

12. In the result, the MA partly is allowed.

Order pronounced in the open court on 19-06-2015

Sd/- Sd/-

(ANIL CHATURVEDI) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 19/06/2015 ak आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. MA No. 43/Ahd/20124(In I.T.A No.3084/Ahd/2011) A.Y. 2007-08 Page No 6 Atul Ltd vs. ACIT

By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद