2024 (12) TMI 981 - AT - Income Tax

TP Adjustment - Downward adjustment in respect of transfer value of power by the Captive Power Plant to manufacturing unit of the assessee - HELD THAT - As respectfully following the decision of Jindal Steel Power Limited 2023 (12) TMI 417 - SUPREME COURT we set aside the order of AO and direct AO to apply the rate at which the electricity was supplied by the State Electricity Board to the consumers. Accordingly, Grounds No. 1 to 5 are allowed. Restricting the deduction claimed u/s 80IA to the extent of business income as against the gross total income which was confirmed by DRP - We note that even this issue is squarely covered by the decision of Reliance Energy Ltd. 2021 (4) TMI 1237 - SUPREME COURT as held that deduction u/s 80IA has to be allowed with reference to gross total income and not business income alone while deciding an issue raised whether the quantum of deduction u/s 80IA has to be restricted by treating the eligible business as the only source of income or whether it can be allowed against any source even other than the business income. Accordingly, we direct the AO to allow deduction u/s 80IA of the Act with reference to gross total income as assessed finally. Accordingly the ground raised by the assessee is allowed. Addition u/s 40(a)(ia) - non-deduction of TDS, despite the TDS being paid within the due date of filing the return - HELD THAT - Though the assessee has furnished the necessary documents substantiating the claim of the assessee we are of the opinion that let it be examined at AO s level. In the present case the assessee itself disallowed the amount suo motto in the return of income but that is not a bar for making claim before the appellate body for allowing/deleting the said disallowance as it was wrongly disallowed. The case of the assessee finds support from the decision of the jurisdiction High /Court in the case of CIT Vs Britannia Industries Ltd. 2017 (7) TMI 502 - CALCUTTA HIGH COURT AND Pruthvi Brokers 2012 (7) TMI 158 - BOMBAY HIGH COURT - Thus we restore the issue to the file of ld. Assessing Officer with a direction to allow the claim if TDS is found to be deposited before the due date of filing of the return. This ground no. 7 of appeal is allowed for statistical purposes. Book profit taken u/s 115JB in the ITNS computation sheet as different from correct figure - As in the ITNS computation sheet, the figure was wrongly taken at Rs. 74,64,00,256/-. There appears to be an apparent mistake by the ld. Assessing Officer as the amount was wrongly taken in the ITNS computation sheet. Accordingly, we restore the issue to the file of ld. Assessing Officer to examine the issue afresh and correct the mistake. This ground no. 8 is allowed for statistical purposes. Mistake in ITNS computation sheet annexed to the order, wherein the income under the head other sources was stated at Rs. 3,34,56,807/- instead of correct figure of Rs. 40,50,884/- - . After examining the facts before us, we feel that there is an error at the end of the ld. Assessing Officer in taking the figure under the head other income in the ITNS computation sheet. Accordingly, we restore the issue to the file of AO to examine afresh and correct the mistake. This ground is also allowed for statistical purposes.

Issues Involved:

1. Downward adjustment in respect of the transfer value of power by the Captive Power Plant (CPP).
2. Restriction of deduction claimed under Section 80IA of the Income Tax Act.
3. Disallowance of Rs. 45,000 due to non-deduction of TDS.
4. Incorrect computation of book profit under Section 115JB.
5. Incorrect computation of income under the head "other sources."

Detailed Analysis:

1. Downward Adjustment in Transfer Value of Power by CPP:
The first issue pertains to the downward adjustment of Rs. 37,36,51,214 in the transfer value of power by the Captive Power Plant (CPP) to the manufacturing unit of the assessee. The Assessing Officer, following the Transfer Pricing Officer's (TPO) recommendation, benchmarked the energy charge for power transferred by the CPP at a lower rate than claimed by the assessee. The TPO used the rate fixed by the MPERC for power generation stations, which was Rs. 3.404 per unit, leading to the adjustment. However, the tribunal noted that the issue was settled by the Supreme Court in CIT vs. Jindal Steel & Power Limited, which held that the market value for computing deductions under Section 80IA should be the rate at which power is supplied by the State Electricity Board to industrial consumers. Consequently, the tribunal set aside the Assessing Officer's order and directed the application of the rate used by the State Electricity Board.

2. Restriction of Deduction Claimed Under Section 80IA:
The second issue involved the restriction of the deduction claimed under Section 80IA to the extent of business income instead of gross total income. The tribunal referred to the Supreme Court's decision in CIT vs. Reliance Energy Ltd., which held that the deduction under Section 80IA should be allowed with reference to gross total income and not merely business income. Therefore, the tribunal directed the Assessing Officer to allow the deduction with reference to the gross total income.

3. Disallowance of Rs. 45,000 Due to Non-Deduction of TDS:
The third issue was the disallowance of Rs. 45,000 on the grounds of non-deduction of TDS, despite the TDS being paid within the due date of filing the return. The tribunal found that the issue required fresh adjudication to verify whether the TDS was indeed paid before the due date. The tribunal restored the issue to the Assessing Officer, directing the allowance of the claim if the TDS was found to be deposited timely, supporting the assessee's right to make fresh claims before the appellate body.

4. Incorrect Computation of Book Profit Under Section 115JB:
The fourth issue concerned the incorrect computation of book profit under Section 115JB, where the figure was erroneously taken as Rs. 74,64,00,256 instead of the correct figure of Rs. 15,43,27,305. The tribunal identified an apparent mistake and restored the issue to the Assessing Officer for correction, allowing this ground for statistical purposes.

5. Incorrect Computation of Income Under the Head "Other Sources":
The fifth issue dealt with the incorrect computation of income under "other sources," where the figure was incorrectly stated as Rs. 3,34,56,807 instead of Rs. 40,50,884. The tribunal recognized the error and restored the issue to the Assessing Officer for re-examination and correction, allowing this ground for statistical purposes.

Conclusion:
The tribunal allowed the appeal partly for statistical purposes, directing the Assessing Officer to correct the errors and apply the appropriate rates and deductions as per the legal precedents set by higher courts. The tribunal's decisions were guided by established legal principles and previous judgments, ensuring compliance with the law.

← Previous Next →