Facts of the Case

  1. The assessee, M/s DCM Shriram Consolidated Ltd., was engaged in generation of electricity.
  2. The electricity generated by the assessee was entirely utilized for captive consumption.
  3. While computing book profits under Section 115JA of the Income Tax Act, the assessee claimed profits derived from the business of power generation.
  4. The Income Tax Appellate Tribunal accepted the assessee's claim.
  5. The Tribunal relied upon its earlier decision in the assessee's own case relating to Assessment Year 1997-98.
  6. Aggrieved by the Tribunal's order, the Revenue preferred an appeal before the Delhi High Court under Section 260A of the Act.

Issues Involved

Whether the Income Tax Appellate Tribunal was correct in law in allowing the assessee's claim of profits derived from the business of generation of power while computing book profits under Section 115JA of the Income Tax Act, 1961, particularly when the electricity generated was entirely meant for captive consumption?

Petitioner's Arguments (Revenue)

  • The Revenue challenged the Tribunal's decision allowing the assessee to consider profits from power generation while computing book profits under Section 115JA.
  • It was contended that the electricity generated was not sold in the market but was entirely consumed captively by the assessee.
  • Therefore, according to the Revenue, such profits ought not to have been treated as eligible profits for the purpose of computation under Section 115JA.

Respondent's Arguments (Assessee)

  • The assessee supported the Tribunal's order.
  • It relied upon the earlier decision of the Tribunal rendered in its own case for Assessment Year 1997-98.
  • The assessee contended that the issue already stood concluded in its favour and that profits derived from power generation remained eligible notwithstanding captive consumption of the electricity generated.

Court Findings

The Delhi High Court observed that an identical issue had already arisen in the assessee's own case for Assessment Year 1997-98.

The Tribunal had earlier dismissed the Revenue's appeal through its order dated 02.05.2005 in ITA No. 1400/Del/2001. Against that order, the Revenue had filed ITA No. 1187/2005 before the Delhi High Court.

The High Court noted that the appeal filed by the Revenue in ITA No. 1187/2005 had already been dismissed on the same day. Since the Tribunal's impugned order for Assessment Year 1998-99 was based on the earlier Tribunal decision which had already been affirmed, the present appeal was governed by the same reasoning.

Accordingly, the Court held that the Revenue's appeal could not succeed.

Court Order

The Delhi High Court dismissed the Revenue's appeal and upheld the order of the Income Tax Appellate Tribunal allowing the assessee's claim relating to profits derived from the business of generation of power while computing book profits under Section 115JA of the Income Tax Act.

Important Clarification

The judgment reiterates the principle that where an identical issue in the assessee's own case has already been decided and affirmed by the High Court, subsequent appeals involving the same issue and materially similar facts are liable to be decided consistently.

The Court relied upon the principle of judicial consistency and followed its earlier decision in the assessee's own case.

Sections Involved

  • Section 115JA of the Income Tax Act, 1961
  • Section 260A of the Income Tax Act, 1961

Link to Download the Order- https://delhihighcourt.nic.in/app/case_number_pdf/2008:DHC:3092-DB/RAS21112008ITA5712006.pdf

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