This deduction is available to all the Assessees.
The business should be collecting and processing of bio-degradable waste for generating power or producing bio-fertilizers or bio-pesticides or for producing bio-gas.
100% of the profit and gains from such business for a period of five consecutive A.Y. beginning with the A.Y. relevant to P.Y. in which such business commences.
Related Case:
HC OF BOMBAY—Commissioner of Income-tax Vs. Smt. Padma S. Bora—Deduction available on Income from manufacturing fuel briquettes from bagasse—This appeal u/s 260A of the Income Tax Act, 1961 (“the Act”) challenges a common order dated 9/2/2010 passed by the Income Tax Appellate Tribunal (“the Tribunal”) relating to assessment years 2003-04 and 2004-05.
The brief facts leading to this appeal are as under:
(a) The respondent-assessee, is an individual inter alia engaged in the business of manufacturing fuel briquettes from bagasse. For the A.Y. 2003-04 and 2004-05 the respondent filed her returns of income declaring total income of Rs. 2.65 lakh and Rs. 2.34 lakh respectively. The aforesaid income for the A.Y. 2003-04 and 2004-05 was arrived at inter alia after claiming deduction of Rs. 27.62 lakh and Rs. 28.18 lakh respectively u/s 80JJA of the Act.
(b) By an order dated 28/2/2006 for A.Y. 2003-04 the Assessing officer disallowed a claim for deduction of Rs. 27.62 lakh u/s 88JJA of the Act. Similarly by an order dated 29/9/2006 for A.Y. 2004-05 the deduction of Rs. 28.18 lakh u/s 80JJA of the Act was disallowed.
This deduction u/s 80JJA of the Act was disallowed by the Assessing Officer on the following grounds:
(1) bagasse is not a waste;
(2) it is not generated in municipal/urban limits i.e. by local authorities;
(3) it is not collected but it is purchased; and
(4) the process does not involve any treatment or
recycling of a biodegradable waste.
(c) In appeal, the Commissioner of Income Tax (appeals) by an order dated 2/5/2007 for A.Y. 2003-04 and order dated 7/6/2007 allowed the respondent’s appeal in respect of its claim for deduction u/s 80JJA of the Act. The Commissioner of Income Tax(Appeals) in both the above orders held that bagasse was purchased from sugar factories and processed by it for making briquettes to be used as fuel. It was further held that the respondent assessee was engaged in the business of collecting and processing/treating biodegradable waste. Further it was held that all the conditions laid down in Section 80JJA of the Act were satisfied and the respondent-assessee was entitled to claim a deduction thereunder.
(d) Being aggrieved by the order of Commissioner of Income Tax (appeals) dated 2/5/2007 and 7/6/2007 for the A.Y. 2003-04 and 2004-05 respectively, the appellant preferred two appeals to the Tribunal. By a common order dated 9/2/2010 the Tribunal dismissed both the revenue’s appeals filed by the revenue. The Tribunal held that bagasse generated in the sugar industry is a waste and merely because it is purchased for a price it does not cease to be a waste. The Tribunal held that the respondent assessee satisfied the conditions for availing of the benefit of S. 80JJA of the Act namely collecting and processing bio-degradable waste in respect of profits and gains derived there from.
Mr. Vimal Gupta, Senior Counsel for the revenue in support of the appeal submits as under:
(a) Bagasse which is purchased by the respondent is not a waste but a by product of sugar industry. Therefore, S. 80JJA of the Act could have no application in this case;
(b) Reliance is placed upon a circular No.772 dated 27/12/1998 issued by the Central Board of Director Taxes explaining the intention to insert S. 80JJA of the Act to support his contention. According to him S. 80JJA of the Act was introduced so as to encourage local bodies to manage waste arising in Urban areas. Thus the benefit of S. 80JJA of the Act is not available to persons other than local bodies;
(c) Bagasse is not collected by the respondent-assessee but is purchased from the sugar factories. Therefore, the pre-requisite for claiming deduction u/s 80JJA of the Act is not satisfied.
In view of the above, it is urged by him that substantial questions of law do arise and the appeal be admitted.
As against the above, Mr. S.N. Inamdar, Senior Counsel appearing for the respondent submits as under:
(a) Bagasse is a waste which arises in the manufacture of sugar. It is not a by product of a sugar industry. In support of his contention that bagasse is a waste reliance was placed upon a letter dated 4/2/2006 of the Sugar Commissioner, Maharashtra State certifying that bagasse is a residual waste generated in sugar industry. Similarly reliance was also placed upon Chapter 23 Heading No.23.01 of the Central Excise Tariff Act, 1985 and Chapter 23 of ITC (HS) classification wherein bagasse has been classified as waste of sugar manufacture;
(b) The Circular No.772 dated 23/12/1998 being relied upon by the appellant does not in fact restrict operation of S. 80JJA of the Act only to local bodies and excludes individuals from its benefit; and
(c) S. 80JJA of the Act merely requires that bio degradable waste should be collected and processed for making briquettes fuel. The mere fact that the bagasse is collected from the sugar factory by making a payment would not by itself result in bagasse not being a waste or the same not being collected.
In view of the above, he submits that the appeal of the revenue be dismissed.
Conclusion: In view of the above, no substantial question of law arises for consideration by this court. Therefore the appeal is dismissed, with no order as to costs.
Reference:
As Per Section 80JJA, of the Income Tax Act, 1961-
Deduction in respect of profits and gains from business of collecting and processing of bio-degradable waste.
80JJA. Where the gross total income of an assessee includes any profits and gains derived from the business of collecting and processing or treating of bio-degradable waste for generating power [or producing bio-fertilizers, bio-pesticides or other biological agents or for producing bio-gas or making pellets or briquettes for fuel or organic manure, there shall be allowed, in computing the total income of the assessee, [a deduction of an amount equal to the whole of such profits and gains for a period of five consecutive assessment years beginning with the assessment year relevant to the previous year in which such business commences].