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TMI Blog2017 (9) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it is the sale of price at which the Electricity Board supplies electricity to its consumer which will be taken as market price, subject however, to the exclusion of surcharge, duty etc. thereon. The issue is thus accordingly restored back to the file of the AO for determination of eligible profit for the purposes of deduction under s.80IA(4) - Appeal of the assessee is allowed for statistical purposes. - I.T.A. No.1668/Ahd/2015 - - - Dated:- 12-9-2017 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER For The Appellant : Shri Sanjay R.Shah, AR For The Respondent : Ms. Richa Rastogi, Sr.DR ORDER PER PRADIP KUMAR KEDIA - AM: The captioned appeal by the Assessee is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of section 80IA(8) r.w.s.80IA(10) of the Act. The rate per Unit on which power generating company i.e. GUVNL purchased power from other sources was taken as a benchmark for determination of market value of captive power generated by the assessee in place of sale price of GUVNL to its consumers. The AO accordingly substituted the claim of deduction under s.80IA (4) to ₹ 22,60,425/-. Consequently, relief under s.80IA(4) was denied to the extent of ₹ 18,87,051/-. 4. Aggrieved, the assessee preferred appeal before the CIT(A). The CIT(A) also declined to entertain the appeal of the assessee in respect of the aforesaid issue. 5. Further aggrieved, the assessee is in appeal before the Tribunal. 6. The Ld.AR for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination of market value of the electricity generated by its Power Plant for captive consumption which is in tune with the provisions of section 80IA(8) of the Act. The Ld.AR relied upon the decision of the Hon ble Gujarat High Court in Pr.CIT vs. Gujarat Alkalies and Chemicals Ltd. (2007) 395 ITR 247 (Guj.) for the aforesaid proposition. Pertinent to note here, in the course of the arguments canvassed by the Ld.AR, it was pointed out by the Bench that a view has been taken on the impugned issue recently in Rainbow Papers Ltd. vs. ACIT which is likely to be followed. It was observed by the bench that duly, surcharge, cess etc. charged by the Electricity Boards to its consumers would not form part of the market price . 7. The Ld.DR, on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the determination of eligible profit reads as under:- 15. We shall now turn to the second and major controversy raised by the assessee towards the market value of captive transfer of power generated by power unit to its paper unit for captive use. As narrated earlier, the assessee has adopted the rate charged by the GEB (UGVCL) including surcharge and duty for the purpose of working out the deemed selling price of power being supplied by the captive power generating unit to paper unit. The deemed sale value towards captive supply thus included recovery towards surcharge and duty similar to what is made by the Electricity Board on the basic sale price to its consumers. The AO declined to admit the claim of the assessee to inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hearing as well as from the submissions before the CIT(A), we find that the assessee while fiercely asserting its claim for inclusion of surcharge is not seriously contesting the exclusion of duty charged by the GEB (UGVCL). Thus, two points of difference remains in determination of deemed selling price, one towards average selling price as per Discoms and second towards inclusion of surcharge. 15.2. The assessee asserts the rate charged by the GEB (UGVCL) as benchmark rate for the purposes of deemed selling price along with surcharge collected by the Electricity Board. 15.3. In the context, it will be relevant to refer section 80IA(8) of the Act which provides for the manner of computation of transfer price where ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he deeming selling price should also not include the component of surcharge which is not chargeable at the first place in the facts of the case. 16.2. The decision in the case of Pragati Glass (supra) also provides exclusion of excise duty for the purposes of determination of market value of electricity generated. The duty being excluded, surcharge meant for specific purposes cannot form part of profits of the eligible business. We also take note of similar observations have been made by the Coordinate Bench of the Tribunal in West Coast Paper Mills Ltd. vs. ACIT 103 ITD 19 (Mum.) referred to and relied upon by the revenue to support our view. 16.3. In parity, we hold that both surcharge and duty shall not form part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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