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TMI Blog2013 (10) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the difference between the market value claimed by the Assessee and the market value assessed by him – Held that:- CPP of the Assessee qualifies for claiming deductions under this sub-section 80-IA (4) (iv) of the Act - Sub-section (8) of section 80-IA {80-IA (8)} of the Act provides that for the purposes of deduction under this section profits and gains of eligible business are to be computed as if the transfer was done on the market value on that date - The proviso to section 80-IA (8) of the Act requires the AO to compute the profits and gains in the manner already proved. And in case the manner presents exceptional difficulties then the AO is empowered to compute profits and gains on such reasonable basis as he may deem fit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07. THE FACTS 2. The Assessee manufactures iron and steel. It has established a Captive Power Plant (the CPP) to supply electricity to its manufacturing unit (the Steel-Division). The excess power is sold to the Chhattisgarh State Electricity Board (the Board). 3. The Assessee filed its return for the AYs 2004-05 to 2006-07 showing nil, Rs. 5,10,92,400/-, Rs. 91,08,876/- income respectively. 4. A search was conducted by the Department. Thereafter, the Assessing Officer (the AO) issued a notice to the Assessee under section 153-A of the Act to file revised return. 5. The Assessee filed its revised return, again showing nil income for the AY 2004-05, but showing Rs. 5,09,91849/- and Rs. 90,66,465/- income for the AYs 2005-06 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the "market value", as specified in Section [80-IA (8)] of the Act would be the same as the "sale price" of the State Electricity Board when the assessee did not incur any transmission loss or administrative or any other charges which the State Electricity Board has to incur for the same?' 14. The remaining two appeals namely, Tax case-31 and 34 of 2012 are in respect of AYs 2004-05 and 2006-07. These appeals are not admitted, but the counsel for the Department states that in these two appeals also, he is pressing the aforesaid substantial question only. 15. Considering the statement of the Department, these appeals are formally admitted on the aforesaid substantial question and with consent of the parties, are being decided. THE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit for AYs 2005-06 and 2006-07 23. The AO computed the market value of power under section 80-IA (8) read with its proviso and the explanation. He considered the rate charged by the Chhattisgarh Electricity Company Limited, Raipur (the Chhattisgarh-Company) for supply of electricity to the Board and held the market value of the power to be Rs. 2.25/- per unit for the AY 2004-05 and 2005-06; and Rs. 2.32/- per unit for the AY 2006-07. 24. The market value computed by the AO was less than the value claimed by the Assessee, he (the AO) dis-allowed the difference and added it in the income of the Assessee. 25. In Chhattisgarh, a consumer can utilise the power produce by its own captive power generating unit or it can buy power from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard. The CPP has charged the same rate from the Steel-Division that the Steel-Division had to pay to the Board if the power was purchased from the Board. 31. The 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. 32. In our opinion, the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier: it should have been co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods or services as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods or services as on that date: Provided that where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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