In CIT, Ajmer v. M/s. RSWM Limited, a division bench of the Rajastan High Court held that the Assessee can avail the Benefit of s. 80-IA of Income Tax Act in respect of income from generation of electricity which was captively consumed by it.
In the instant case, the department challenged the order of the ITAT wherein it was held that income from generation of power, may that be in the nature of captive generation, make the assessee entitled for deduction under Section 80-IA of the Income Tax Act, 1961 in respect of notional income from generation of electricity which was captively consumed by the assessee itself in another unit of the same company.
The bench comprising Justices Govind Mathur and Vinit Kumar Mathur noted the decision of the Delhi High Court in the case of Commissioner of Income Tax Vs. DCM Shriram Consolidated Ltd, wherein it arrived at the conclusion that generation of electricity by setting up a fully independent and identifiable industrial undertaking and use of that captive power for its own other unit is also required to be dealt with as per provisions of Section 80-IA and is entitled for the deduction in the same terms. The order was later, confirmed by the Apex Court.
Dismissing the departmental appeal, the bench observed that “On perusal of the facts and all legal aspects of the matter, we are satisfied that the issue involved in this appeal is also required to be decided in terms of the judgment referred above. In view of it, this appeals preferred by the Revenue are dismissed with conclusion that Tribunal rightly declared the assessee entitled to claim deduction as prescribed under Section 80-IA of the Income Tax Act, 1961 and even for the purpose of computing the books of account as per Section 115-JA of the Income Tax Act, 1961. The question is therefore answered in favour of assesse and against the Revenue.”
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