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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 ..... yarn manufacturing unit. The adjustment in the bills as a barter arrangement was, therefore, only for the convenience of the Electricity Board. Section 80-IA provides that where an assessee, which is eligible for 80-IA benefits, transferred its goods or service to its business other than the eligible business, the consideration if any recorded for such transfer in the accounts of the eligible business, should correspond to the market value of such goods or services - Determining of tariff between assessee and Electricity Board cannot be considered as an exercise undertaken in a competitive environment and under market conditions – Further Had the assessee not been saddled with the restrictions of supplying surplus power to the State Elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking 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 Tamil Nadu Electricity Board to it. The windmills of the assessee were disparately situated vis- -vis its yarn manufacturing activity. The Electricity Board purchased power produced by the windmills of the assessee at the rate of Rs. 2.70 per unit and when it sold the electricity to its textile units, it had charged the assessee at the rate of Rs. 3.50 per unit, after making adjustments for the units generated by the assessee. Assessee, while computing its claim for deduction under Section 80- IA of the Act in respect of the windmills, had adopted the price of Rs. 3.50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the notional carry forward losses and depreciation. 3. In the first appeal, CIT(Appeals) allowed the claim of the assessee with regard to set-off of notional carried forward losses and depreciation following the decision of Hon'ble jurisdictional High Court in the case of Velayudhaswamy Spinning Mills v. ACIT (231 ITR 368). This left the issue regarding transfer price open, and on this ld. CIT(Appeals) refused to interfere, for, according to him, the A.O. had adopted a correct approach while considering the rate of Rs. 2.70 per unit for the purpose of calculation of ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee for the electricity generated by the windmills but, such electricity when supplied by the Electricity Board to the yarn manufacturing unit of the assessee, they had charged from the assessee Rs. 3.50 per unit. There is no dispute that the power manufactured by the assessee from its windmills though meant for the use of captive consumption in its yarn manufacturing unit, was not physically the same as was actually used by the yarn manufacturing units. The windmills were disparately situated vis- -vis the yarn manufacturing unit. Assessee was left with no go other than supply t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1948 authorizes State Electricity Board to enter into arrangements for purchase and sale of electricity under certain conditions mentioned therein. Section 43A of the said Act also lays down rules and conditions for determining tariff for the sale of electricity by a generating company to State Electricity Boards. The tariff is determined on the basis of various parameters mentioned therein. A private person requires a specific consent to set up a power generating unit and it has to comply with the restrictions for use of power generated and the tariff at which the power can be supplied to Electricity Board. Thus the determining of tariff between assessee and Electricity Board cannot be considered as an exercise undertaken in a competitive ..... X X X X Extracts X X X X X X X X Extracts X X X X
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