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Showing contexts for: captive consumption in Dcit Cen Cir 40, Mumbai vs Saf Yeast Co. P. Ltd, Mumbai on 24 November, 2017Matching Fragments
27. The learned Counsel relied on the order of Delhi Bench of the ITAT in the case of SIAL SBEC Bio Energy Ltd. vs. DCIT (2004) 83 TTJ 866 on the issue of meaning the word power and that steam is a form of energy. He also relied on the case of West Coast Paper Mills Ltd 100 TTJ 833 for the proposition that deduction under Section 80-IA of the Act ITA Nos. 1634-1637&1777 -1780/ Mum/2016 Saf Yeast Company Privat e Limited (A.Y. 05-06 to 08-09) can be given for generation of steam power which is used for captive consumption. Further, the Mumbai Bench of the ITAT in the case of West Coast Paper Mills Ltd. vs. Jt. CIT (2006) 100 TTJ 833 held that the deduction provided in Section 80-IA are available to an assessee who generates power and consumes the power itself. The only condition that needs to be satisfied for the provisions of Section 80-IA of the Act to be attracted is that the undertaking must generate power. In that case the assessee generated power using two Diesel Generator Sets and it was held that the assessing authority was bound to grant a deduction to the assessee on the profits attributable to the generation of power from the two Diesel Generator Sets. Relying on judgements of the Apex Court and the Bombay High Court, as well as looking to the intention of the legislature (as construed from the memorandum explain the provisions of the Finance Bill, 1993) to encourage and incentive the generation of power, the ITAT has held that generation of power for captive consumption makes the assessee entitled to claim a deduction under Section 80-IA of the Act. The Hon'ble Madras High Court in case of Tamilnadu Petro Products Ltd. vs. ACIT (2011) 238 CTR 454 held that:
37. The AO has taken an objection that the power generation unit is a part of a larger undertaking and assessee's power generation undertakings are not independent unit with a distinct name, address or product and that in various documents filed before various Government authorities, the name and address of the factory is that of "Saf Yeast Co.Pvt. Ltd." and the product manufactured is stated to be yeast. There is no need nor is there any statutory obligation to have a different name and the address obviously has to be the same as the assessee's power generation undertakings are situated in the same premises as the yeast producing factory. The Mumbai Bench of ITAT in the case of West Coast Paper Mills, 100 TTJ 833 observed that Section 80IA of the Act does not speak of the consumption of power and there is no fetter against using the power generated for self consumption. The Bench was of the view that the assessee was eligible for deduction for power generated by the two DG sets, which was used for captive consumption. In taking this view, the Tribunal relied on the decision of the Supreme Court in Textile Machinery Corporation Ltd. vs. CIT regarding exemption under section 15C of the 1922 Act and the Bombay High Court decision in CIT vs Sahney Steel & Press Works (1989) 177 ITR 354.
44. Insofar as the findings of the AO that the Cooling Power and Steam Power undertakings are part of the yeast manufacturing activity of the assessee is incorrect. In the case of Sirpur Paper Mills Ltd.(supra), a similar objection was raised by the Revenue as in that case the steam generated was used in the paper making process. Ground No 6 of the Revenue's Appeal in the Sirpur Paper Mills case was that the steam is directly used in the paper making process and hence the steam producing facility cannot be treated as a separate or independent undertaking. It was held by the Hon'ble Hyderabad Bench of the Tribunal that, "Ultimately the determinative factor would be whether the undertaking is producing a different article or thing or not whether for sale to outsiders or for captive consumption. The steam generated by the two units may be useful in the paper manufacturing process. But even then the question to be asked is whether it is a product which is capable of being sold to outsiders. The answer to this question has to be in the affirmative. The assessee itself may not have sold it to any outsider but the same is capable of being sold to any State Electricity Board or for that matter to any electricity generating unit. In fact, we see no reason why the same cannot be sold to anyone, though the assessee itself may have sold it to an outsider. It has used the entire steam generated either in the papermaking process or has transferred it to the turbine unit to generate electricity. If electricity used for captive consumption can be eligible for ITA Nos. 1634-1637&1777 -1780/ Mum/2016 Saf Yeast Company Privat e Limited (A.Y. 05-06 to 08-09) deduction, we see no reasons as to why steam which is also a form of power cannot be eligible for such deduction. Thus there is absolutely not force in the contention of the Revenue merely on the basis of its own appreciation about the maintenance of books of account that no separate undertaking exists. The aforesaid discussion rules out objection No 5 as well as Objection No 6 raised by the Revenue."
49. The assessee relied on following decisions wherein it was held that Captive consumption power generated is eligible for deduction u/s 80-IA ;
i) CIT vs. TANFAC Industries Limited Tax Case No.1773 of 2008 wherein it was held by Hon'ble ITA Nos. 1634-1637&1777 -1780/ Mum/2016 Saf Yeast Company Privat e Limited (A.Y. 05-06 to 08-09) Madras High Court that Steam generated and consumed captively would be eligible for deduction u/s 80IA. This judgment was upheld by the Hon'ble Supreme Court as reported in (2010) 319 ITR (St) 8.