By TIOL News Service

CHENNAI, MAY 31, 2018: THE ISSUE BEFORE THE COURT IS - Whether when the assesee is not the owner of the power generating plant and it merely takes care of the maintenance work on behalf of the owner for certain consideration, it is not eligible for Sec 80IA benefits. AND THE ANSWER IS YES.

Facts of the case:

The assesee company, engaged in the business of power plant installation, had claimed deduction u/s 80IA. During the assessment proceedings AO noticed that assessee's undertaking had not been set up for generation and distribution of power as the assessee was a mere contractor and was paid for the services rendered. The AO disallowed the same. On appeal, the CIT concurred with the finding of the AO. Aggrieved by the same the assessee filed appeal before the Tribunal which upheld the finding of the CIT.

High Court held that,

++ the term 'generating company' can only refer to the SPCL and not the assessee, since the AO, the FAA and the Tribunal, after considering the scope of the agreement entered into between the assessee and the SPCL, clearly held that the assessee is not the owner of the power plant and that it does only maintenance work, for which, it is given a fee. Even assuming that the assessee contributed technical knowhow for the purpose of generating electricity, it does so on behalf of the owner of the plant namely the SPCL. We find that the interpretation of agreement between the assessee and the SPCL, as given by the AO, the FAA and the Tribunal, is perfectly legal and valid and that there is no perversity in the finding rendered by all the three Authorities. In such circumstances, the factual position to arrive at a different conclusion cannot be re-appreciated.

(See 2018-TIOL-1036-HC-MAD-IT)