2012 (12) TMI 1196 - AT - Income Tax

Summary

Issues Involved:

1. Eligibility for deduction u/s 80-IA(10) for captive consumption of power.
2. Partial denial of deduction u/s 80-IA(10) due to alleged inflated prices of power sold.

Summary:

1. Eligibility for deduction u/s 80-IA(10) for captive consumption of power:

The Revenue's grievance was that the CIT(A) held the assessee eligible for claiming deduction u/s 80-IA(10) of the Income Tax Act, 1961, for captive consumption of power. The Revenue argued that the power was sold to a group concern located in the same premises. The learned D.R. admitted that a similar issue had been decided in favor of the assessee for the assessment year 2006-07. The Tribunal noted that the Hon'ble jurisdictional High Court in Tamilnadu Petro Products Ltd. v. ACIT (338 ITR 643) had held that the benefit u/s 80-IA(10) could be given even for electricity generated on a captive basis. The Tribunal reiterated its earlier decision, stating that captive consumption of power generated by the assessee from its own power plants qualifies for deduction u/s 80-IA(10). Consequently, the Tribunal dismissed the Revenue's appeals.

2. Partial denial of deduction u/s 80-IA(10) due to alleged inflated prices of power sold:

The assessee's cross-objection concerned the CIT(A)'s partial denial of deduction u/s 80-IA(10) on the grounds that the assessee had sold power at inflated prices. The learned A.R. argued that the same issue had been decided in the assessee's favor for the assessment year 2006-07, where it was held that the rates at which the assessee sold power to its sister concerns could not be judged based on the rates agreed with Tamil Nadu Electricity Board (TNEB). The Tribunal noted that the assessment order did not provide the rate charged by TNEB for high tension categories during the relevant year or the actual rate at which the assessee sold power to its associate concerns. The Tribunal held that the agreement with TNEB, which was a standby arrangement, could not be the basis for determining market rates. The matter was remitted back to the Assessing Officer for fresh consideration to determine if the rates charged were higher than those charged by TNEB to regular high tension customers. The cross-objection was allowed for statistical purposes.

Conclusion:

The appeals of the Revenue were dismissed, and the cross-objection of the assessee was allowed for statistical purposes.

The order was pronounced in the Court on Thursday, the 20th of December, 2012, at Chennai.