Is cogeneration power plant an independent undertaking eligible for deduction u/s.80IA of the Income Tax Act, 1961?

This Income Tax Appellate Tribunal case concerns whether a cogeneration power plant, integrated with a sugar factory, qualifies as an independent undertaking eligible for deduction under Section 80IA of the Income Tax Act, 1961. The Revenue appealed the CIT(A)'s decision, questioning the eligibility due to integrated operations and the valuation of by-products like LP steam. The assessee did not appear, and the case proceeded ex parte.

IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD ‘ A ‘ BENCH, HYDERABAD.

BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND
SHRI L. P. SAHU, ACCOUNTANT MEMBER
(Through Virtual Hearing)

ITA No.268/Hyd/2019
(Assessment Year : 2014-15)

Dy. Commissioner of Income Tax,
Circle 2(1), Hyderabad. …..Appellant.

Vs.

M/s. Kakatiya Cement Sugar & Industries,
Hyderabad. …..Respondent.
PAN AABCK 1868J

Appellant By : Smt. N. Esther (D.R.)
Respondent By : None.

Date of Hearing : 31.05.2021.
Date of Pronouncement : 23.07.2021.

O R D E R

Per Shri S.S. Godara, J.M. :

This Revenue’s appeal for Asst. Year 2014-15 arises from the Commissioner of Income Tax (Appeals)-2, Hyderabad’s order dt.18.12.2018 passed in case No.10292/2017-18/CIT(A)-2 in proceedings under Section 143(3) of Income Tax Act, 1961 (‘the Act’).  Case called twice. None appeared on behalf of the assessee. It is accordingly proceeded exparte.

2. The Revenue has proposed the following substantive grounds in this appeal :

“1. In the facts and circumstances of the case, whether the CIT(A) is correct in law in holding that cogeneration power plant is an independent undertaking eligible for deductionu/s.80IA of the Income Tax Act,1961 when theoperations are integrated with the existing sugar plant ?

2. In the facts and circumstances of the case, whether the CIT(A) is correct in law in holdingthat generation of LP steam which is a waste product with no value is equal to generation of power which is eligible for deduction u/s. 80IA of the Income Tax Act ?

3. In the facts and circumstances of the case, whether the CIT(A) is correct in law in holding that LP steam has definite value where as suchLP steam has no market value and I fact a marketable commodity ?”

3. We notice with the able assistance of learned department representative that the CIT(A) detailed discussion holding the assessee as eligible for 80IA deduction reads as under :

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