Sr. no.

Issue

Justification

1.

Interest expenditure incurred for investments in subsidiary should be outside the purview of Section 14A

1. The investments in subsidiary companies are generally made not for the purpose of earning capital gains or dividend income but only out of commercial expediency.

2. These investments are made by the assessee company to promote the business of the subsidiary company.

3. The assessee company is also not in the business of making investments and earning income out of it.

4. Any dividend income / capital gain income received by the assessee is purely incidental.

5. Therefore, the investments made by the assessee in the subsidiary company are not to be reckoned for disallowance under section 14A r.w.r 8D.

6. The aforesaid view is affirmed by the Hon'ble Income Tax Appellate Tribunal - Chennai - in the case of EIH Associated Hotels Limited Vs. DCIT - 2013-TIOL-796-ITAT-MAD.

7. In recent times, the Assessing Officers are mechanically applying the provisions of section 14A without even giving due consideration to the nature of investments.

8. Therefore, this judicial pronouncement should be made as law (ideally as a clarificatory amendment with retrospective effect), to evade frivolous law suits.

2.

Benefit of Section 80-IA should be extended to co-generation of power whether used for captive consumption or sold to third party

1. Generally manufacturing entities operate captive power plants or co-generation unit for generation of power for own consumption and for sales in the open market.

2. Especially, Sugar manufacturing industries and paper industries requires steam for the purpose of heating and drying the sugar.

3. The co-generation unit operated by the sugar plants generates more steam of high order than that are actually required by the manufacturing plant.

4. Therefore, such excess steam of high pressure, high temperature and super heated form is diverted to rotate the turbines which generate power.

5. In these cases, Power is generated through steam and the undertaking complies with all other conditions as stipulated u/s 80IA

6. Therefore, it would be an eligible undertaking for claiming the deduction.

7. The word 'power' has to be given a meaning which in common parlance means energy.

8. Energy can be of any form, be it mechanical, be it electrical, be it wind or be it thermal.

9. The Assessee should be entitled to deduction u/s 80IA irrespective of whether the power is sold in the open market or used by the Assessee itself.

10. This view is affirmed by the Hon'ble Madras High Court in the cases of Tamilnadu Petro Products Ltd - 13 taxmann.com 139 - following the ratio laid down by the Apex Court in the case of CIT v. Tanfac Industries Ltd. [SLP (C) No. 18537 of 2009].

11. The deduction claim of the assessees has been consistently disputed and disallowed by the assessing officers even after obtaining favourable orders from the ITAT in the assessee's own case.

12. Therefore, this judicial pronouncement should be made as law (ideally as a clarificatory amendment with retrospective effect), to evade frivolous law suits.