ITAT Allows Income Tax Deduction On Effluent Water Treatment

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has allowed the income tax deduction on effluent water treatment.

The bench of Amit Shukla (Judicial Member) and Gagan Goyal (Accountant Member) has observed that effluent water treatment can be considered a water treatment plant eligible under Section 80IA of the Income Tax Act.

The appellant/assessee is in the business of treating effluent water sold as waste and has received approval and consent from the Maharashtra Pollution Control Board for the manufacture of 30 MT per month of potassium carbonate by using wastewater from Vinati Organics as raw material. The revised return of income was filed on February 19, 2018. In the revised return, the assessee has claimed a deduction u/s. 80IA(4), and along with it, it has filed an audit report in Form 10CCB electronically in which the auditors have quantified the deduction u/s. 80IA(4).

The AO has denied the claim of deduction under Section 80IA(4), holding that the assessee is not doing activities as defined in Section 80IA(4), which include carrying out infrastructure projects such as water treatment projects or effluent treatment plants.

The CIT (A) allowed the claim of deduction after referring to the certificate of the Maharashtra Pollution Board that the assessee is engaged in the business of operating and maintaining effluent treatment plants, which is an eligible business for the purposes of Section 80IA(4).

The ITAT has held that the assessee's effluent water treatment plan categorically falls within the ambit and scope of Section 80IA(4), as misinterpreted by the AO, so as to deny the claim of deduction under Section 80IA(4).

Case Title: Dy. Commissioner of Income Tax Vs. M/s. Viral Alkalis Ltd

Case No.: ITA No.1752/Mum/2022

Date: 15/05/2023

Counsel For Appellant: Siddharth Kothari

Counsel For Respondent: Vranda U Matkari

Click Here To Read The Order