2016 (2) TMI 1375 - HC - Income Tax

Disallowance of deduction u/s 80IA r.w.s. 80IA(4)(iv) - power generated by the Respondent partly consumed and partly sold and the rate with regard to the latter - Appeal against MAHENDRA SPONGE AND POWER LTD. 2015 (6) TMI 1243 - ITAT RAIPUR wherein held on this very fact that the said assessee was a manufacturer of Iron steel and captive power plant has supplied electricity to its manufacturer unit which was at higher rate than the power supplied to Chhattisgarh State Electricity Board and computation of the market value of the power is correct after considering it with the rate of power available in the open market namely the price charged by the Board. HELD THAT - We find that the issue has been decided in the case of M/S GODAWARI POWER ISPAT LTD. 2013 (10) TMI 5 - CHHATTISGARH HIGH COURT as held market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel- Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market - AO committed an illegality in computing the market value by taking into account the rate charged to a supplier Sitting in coordinate jurisdiction, there is no occasion for us to re-examine the matter and arrive at any other determination. The fact that a Special Leave Petition may have been preferred against the same and in which there is no interim order, does not persuade us to entertain this appeal.

Summary

The High Court of Chhattisgarh upheld the order of the Income Tax Appellate Tribunal regarding the disallowance of deduction under Section 80IA of the Income Tax Act, 1956 for power generated by the Respondent. The decision was based on a previous ruling in a similar case and the appeal was dismissed.