Back
2024 Supreme(Jhk) 687
IN THE HIGH COURT OF JHARKHAND AT RANCHI
B.R. SARANGI, C.J., SUJIT NARAYAN PRASAD, J.
The Principal Commissioner of Income Tax (Central)-1 - Appellant
Versus
Grasim Industries Limited – Respondent
T.A. No. 18 of 2021 with T.A. No. 19 of 2021 with T.A. No. 20 of 2021 with T.A. No. 21 of 2021
Decided on : 09-07-2024
Advocate Appeared:
For the Appellant :Mr. Kumar Vaibhav, Sr. SC, [I.T. Deptt.], Mr. Anurag Vijay, Jr. SC [I.T. Deptt.], Mr. Om Prakash, Advocate
For the Respondent:Mr. Biren Poddar, Sr. Advocate, Mr. Piyush Poddar, Advocate, Mr. Mahendra Choudhary, Advocate, Mr. Manav Poddar, Advocate
The court upheld the ITAT's decision on the method of determining sale value for deductions under the Income Tax Act, affirming the precedent set by the Supreme Court.
Headnote:(A) Income Tax Act, 1961 - Sections 143(1), 142(1), 80IA - Appeals concerning assessment years 2006-07 to 2010-11 - The respondent-assesse, a company, contested the addition made to its income on account of excess sale value of captive power plant for claiming deductions - The ITAT dismissed the appellant's appeal, leading to the current proceedings. (Paras 1-10)
(B) Question of Law - The court examined whether the ITAT was justified in determining the sale value of electricity generated by the respondent from its captive power plant based on the rate charged by Jharkhand State Electricity Board, rather than the cost of production plus 20% as per the assessment order. (Paras 11-12)
Facts of the case:
The respondent-assesse filed a return declaring total income of Rs. 28,17,19,840/- for the assessment year 2010-11, which was scrutinized, leading to an assessment order determining total income at Rs. 54,86,18,780/-. (Paras 4-5)
Findings of Court:
The ITAT's decision to delete the addition of Rs. 23,48,42,750/- was upheld, confirming the law laid down in a previous Supreme Court case. (Paras 10-15)
Issues: The main issues were the method of determining the sale value of electricity for deduction under Section 80IA and the appropriateness of the rate charged by the Jharkhand State Electricity Board. (Paras 11-12)
Ratio Decidendi: The court affirmed the ITAT's approach in determining the sale value based on the rate charged by the Jharkhand State Electricity Board, aligning with the precedent set by the Supreme Court. (Paras 12-15)
Result: Appeals dismissed.
JUDGMENT :
1. Heard Mr. Kumar Vaibhav, learned Senior Standing Counsel appearing for the appellant-revenue and Mr. Biren Poddar, learned senior counsel assisted by Mr. Piyush Poddar, learned counsel for the respondent-assesse.
2. These appeals relate to different Assessment Years i.e. 2006-07 in T.A No. 20/2021; 2008-09 in T.A No. 19/2021; 2009-10 in T.A No. 21/2021 and 2010-11 in T.A No. 18/2021. However, for the sake of convenience, we are taking facts of one of the appeals i.e., T.A. No. 18 of 2021.
3. This appeal has been filed by the appellant to quash order dated 08.07.2020 passed by the learned Income Tax appellate Tribunal (ITAT), Ranchi Bench, Ranchi in Appeal being ITA No. 137/RAN/2015 for the assessment year 2010-11.
4. The factual matrix of the case is that the respondent being an assesse under Income Tax Act having PAN No. AAACB7747A is a company engaged in the business of manufacturing caustic soda, liquid chlorine, electricity etc. The respondent-assesse filed return of its income for the assessment year 2010-11 on 28.09.2010 declaring total income as Rs. 28,17,19,840/-. Subsequently the return of the respondent was processed under Section 143(1) of the Income Tax Act, 1961 and the respondent-assesse was selected for scrutiny. Thereafter, notice was issued under Section 142(1) of the I.T. Act and the assessment proceedings were undertaken by the Assessing Officer.
5. The final assessment order under Section 143(3) of the I.T. Act was passed on 30.12.2012 by the Assistant Commissioner of Income Tax, Circle-1, Ranchi determining total assessed income of the respondent-assesse at Rs. 54,86,18,780/- after making various additions.
6. In the instant case, the appellant is only concerned with the addition of Rs. 23,48,42,750/- which was made in the said assessment order on account of excess sale value of captive power plant shown by the respondent to get excess deduction under Section 80 IA of the Income Tax Act, 1961.
7. The respondent-assessee preferred an appeal against the said assessment order dated 30.12.2012 before the Commission of Income Tax (Appeals), which was registered as Appeal No. 90/Ran/Co/12-13. The learned CIT (Appeals) vide its order dated 15.06.2015 partly allowed the appeal of the respondent holding Rs. 51,28,692/- as addition to be made in the ioncome of the respondent-assessee instead of Rs. 23,48,42,750/- on account of excess sale value of captive power plant shown by the respondent in order to claim excess deduction under Section 80IA of the IT Act.
8. Against the said order dated 15.06.2015 the appellant-revenue preferred appeal before the learned Income Tax Appellate Tribunal, Ranchi Bench, Ranchi which was registered as I.T.A. No. 137/RAN/2015 for the assessment year 2010-11.
9. The respondent also filed cross-objection in the said appeal and challenged the aforesaid addition of Rs. 51,28,692/- confirmed by the order of CIT (A) on account of excess sale value of captive power plant show by the respondent.
10. The learned Income Tax Appellate Tribunal, Ranchi Bench, Ranchi vide its order dated 08.07.2020 passed in I.T.A. No. 137/RAN/2015 for the assessment year 2010-11 in the appeal filed by the appellant, dismissed the said appeal of the appellant and deleted the entire addition of income of Rs. 23,48,42,750/- including the amount of Rs. 51,28,692/- confirmed in the said order of the CIT (Appeal) made in the assessment order dated 30.12.2012 on account of excess sale value shown by the respondent for its captive power in order to show extra profit from such captive power plant and in turn get excess deduction of such profit under Section 80IA of the Income Tax Act, 1961 from the total income of the respondent, hence these appeals.
11. The question of law, which is framed for consideration, has been taken note of by this Court in order dated 29.06.2022, which reads as under:
I. Whether on the facts and in the circumstances of the case and in law, the learned ITAT was justified in determining/confirming
