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2015 (9) TMI 1001 - AT - Income TaxAddition on difference in the valuation of banked energy - change in method of valuation - CIT(A) deleted the addition - Held that - Keeping in view the ratio of the said decision of Hon ble Supreme Court in the case of CIT vs. Bilhari Investment (P) Limited (2008 (2) TMI 23 - SUPREME COURT), which is squarely applicable to the facts involved in the assessee s case, the Ld. CIT(A) accepted the method followed by the assessee for valuation of banked power units and deleted the addition made by the A.O. by changing the method of valuation consistently followed by the assessee in the earlier years. In our opinion, the relief allowed by the Ld. CIT(A) to the assessee on this issue is well founded and since the learned D.R. has also not been able to dispute or controvert this position, we find no justifiable reason to interfere with the impugned order of the Ld. CIT(A) giving relief to the assessee on this issue. - Decided against revenue.
Issues Involved:
1. Deletion of addition on account of the difference in the valuation of banked energy units. 2. Deletion of addition on account of the difference in value of power generation between the assessee and APCPDCL. 3. Deletion of addition made under section 14A. 4. Applicability of CBDT Instruction No.5 of 2014 regarding the monetary limit for filing appeals. Issue-wise Detailed Analysis: 1. Deletion of addition on account of the difference in the valuation of banked energy units: The primary issue in the appeal for A.Y. 2007-2008 was the deletion by the CIT(A) of an addition of Rs. 53,19,838 made by the Assessing Officer (A.O.) due to a difference in the valuation of banked energy units. The assessee, a cement manufacturing company, also operated wind power units and valued the banked energy units at Rs. 0.71 per unit, while the A.O. argued it should be valued at the market price of Rs. 3.10 per unit. The CIT(A) accepted the assessee's consistent method of valuation, which aligned with accounting standards and had been accepted in previous years. The Tribunal upheld the CIT(A)'s decision, noting that the method did not distort profits and was consistent with the Supreme Court ruling in CIT vs. Bilhari Investment (P) Limited (299 ITR 1 SC). 2. Deletion of addition on account of the difference in value of power generation between the assessee and APCPDCL: In the appeal for A.Y. 2008-2009, one of the issues was the deletion of an addition of Rs. 3,16,480 made by the A.O. due to a discrepancy in the value of power generation between the assessee and APCPDCL. The CIT(A) had deleted this addition, but the Tribunal did not delve into the merits of this issue due to the low tax effect involved. 3. Deletion of addition made under section 14A: Another issue in the appeal for A.Y. 2008-2009 was the deletion of an addition made under section 14A. The CIT(A) had deleted this addition, but similar to the previous issue, the Tribunal did not address the merits due to the low tax effect. 4. Applicability of CBDT Instruction No.5 of 2014 regarding the monetary limit for filing appeals: The Tribunal noted that the tax effect involved in the appeal for A.Y. 2008-2009 was less than Rs. 4 lakhs, the monetary limit prescribed by CBDT Instruction No.5 of 2014 for filing appeals before the Tribunal. Although the instruction applied to appeals filed on or after 10.07.2014, the Tribunal, referencing the Gujarat High Court's decision in Suresh Chandra Durga Prasad Khatod (HUF) 253 CTR 492 (Guj.), held that the instruction aimed to reduce pending litigation with low tax effects and should apply to pending appeals as well. Consequently, the appeal for A.Y. 2008-2009 was dismissed as not maintainable due to the low tax effect. Conclusion: The Tribunal dismissed both the appeals filed by the Revenue for A.Y. 2007-2008 and A.Y. 2008-2009. The appeal for A.Y. 2007-2008 was dismissed on the merits, upholding the CIT(A)'s decision to delete the addition related to the valuation of banked energy units. The appeal for A.Y. 2008-2009 was dismissed based on the applicability of CBDT Instruction No.5 of 2014, as the tax effect involved was below the prescribed monetary limit.
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