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TMI Blog2013 (2) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... for consumption from Tamil Nadu Electricity Board. The issue relates to claim for deduction under Section 80-IA of Income-tax Act, 1961 (in short "the Act") in respect of electricity generated by the assessee from its windmills and captively used by it for its yarn manufacturing business. 2. Short facts apropos are that assessee, which is in the business of manufacturing of yarn, had also installed three windmills for which it had adopted impugned assessment year as the initial assessment year for the purpose of claim of deduction under Section 80-IA of the Act. While making the claim for deduction under Section 80-IA of the Act in respect of the power produced by the windmills, assessee adopted the rate at which the power was sold by M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Relying on the decision of Hon'ble Apex Court in the case of Liberty India v. CIT (317 ITR 218), A.O. was of the opinion that assessee could not be permitted to inflate the profit from its windmills unit and he, therefore, adopted the price of Rs. 2.70 fixed by the Tamil Nadu Electricity Board for purchase of power from windmills, to be the correct pricing for computing the profits of the windmills. Because of this difference in fixation of transfer price of the electricity, the claim of the assessee for deduction under Section 80-IA came to be substantially reduced. It is also necessary to mention here that Assessing Officer had in fact disallowed the whole of the claim, since there was no profit left according to him, after setting off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... city to Tamil Nadu Electricity Board. According to him, market rate applicability as contemplated under Section 80-IA(8) would not be appropriate when the power was regulated by Electricity Board. The most appropriate rate would be the rate at which the electricity was purchased by Tamil Nadu Electricity Board from the assessee. Therefore, according to him, the orders of the authorities below needed to be confirmed. 6. We have perused the orders and heard the contention of learned D.R. The short question arising here is whether the per unit rate of electricity, for the purpose of computing the profits of the windmills of the assessee, has to be taken at Rs. 2.70 or at Rs. 3.50. Rs. 2.70 was the price given by Electricity Board to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.70 as the market value, being the price at which assessee sold power to Electricity Board and not Rs. 3.50 per unit at which assessee, in turn, purchased the power from the Electricity Board for its yarn manufacturing unit. In terms of Electricity (Supply) Act, 1948, legislature has put restrictions on establishment of power generating units and their functioning. Power generating concerns are allowed to use power for captive consumption of their other units, and the surplus, if any, has to be supplied or transferred to State Electricity Boards. Section 43 of Electricity (Supply) Act, 1948 authorizes State Electricity Board to enter into arrangements for purchase and sale of electricity under certain conditions mentioned therein. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han Rs. 3.50 per unit, being the rate charged by the Board from its industrial consumers. Thus, under the given circumstances, it would be appropriate to hold that the consideration recorded by the assessee for transfer of power for captive consumption, which is at the rate of Rs. 3.50 per unit, corresponds to the market value of such power. Though the ld. CIT(Appeals) had upheld order of the A.O. relying on the decision of Delhi Bench of this Tribunal in the case of Addl. CIT v. Jindal Steel And Power Ltd. (2007) (16 SOT 509), we are of the opinion that this decision better supports the case of the assessee. In taking this, we are also roboranted by the decision of Bombay Bench of this Tribunal in the case of West Coast Paper Mills Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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