CIT Vs. DLF POWER LTD

JUDGEMENT

(1.) WITH the consent of the parties the matter is taken up for hearing and for final disposal on the following substantial question of law :- 1/2Whether the Income Tax Appellate Tribunal (tribunal, for short) was correct in law in quashing the order passed by the Commissioner of Income Tax under Section 263 of the Act dated 31.12.2009? 1/2

(2.) FOR the assessment year 2005-06, the respondent-assessee filed a return declaring loss of Rs.47,83,774.00 on 29.10.2005. Vide assessment order dated 26.12.2007, the Assessing Officer calculated the book profits under Section 115JB of the Act and assessed the gross total income at Rs.17,82,47,622.00. From the aforesaid amount, deduction of Rs.17,82,47,622.00 was allowed under Section 80IA of the Act. Some more amounts were added and the book profits were ultimately computed at Rs.19,25,37,634.00.

(3.) IN response to the notice the assessee filed a reply stating that the assessee has two units; power generation unit and energy systems unit. The first unit was entitled to deduction under Section 80IA, whereas the second unit was not entitled to the said deduction. It was submitted that interest income of Rs.157.51 lakhs includes Rs.149.37 lakhs which relates to power generation unit and balance of Rs.8.15 lakhs relates to energy system unit on which no 80IA was claimed. Further Rs.4.95 lakhs relates to income earned on fixed deposits kept as margin money for importing store and spares and for purchasing gas etc. Balance of Rs.144.41 was interest on late payment by customers. It was stated that these two amounts of Rs.4.95.00 lakhs and Rs.144.41.00 lakhs were included and should be taken into consideration for computing deduction under Section 80IA. With regard to the second aspect, it was stated that only Rs.10.95 lakhs relates to power generation unit and the balance amount relates to energy system unit.