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TMI Blog2017 (8) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... at which State Grid or third party has purchased power from the Power Unit of the Assessee, which represents its power which is sold when not required by the Cement Unit, does not constitute ‘market value’ in terms of 16 explanation to Section 80IA(8). It is the ‘principle’ and not the ‘quantum’ which is deciding factor; (c) where a basket of ‘market values’ are available for the relevant period and relevant geographical area where the eligible unit is situated, the assessee has discretion to adopt any one of them as market value; and (d) If the value adopted by the assessee is ‘market value’ as explained above, it is not permissible for Revenue to recompute the profits & gains of the eligible unit by substituting the said value (as adopted by the Assesse) by any other ‘market value’. Accordingly, we delete the disallowance on account of deduction u/s 80IA - Decided in favor of the assessee Sale proceeds received by the company from the sale of Certified Emission Reduction (CER) pertaining to Carbon Credit - revenue or capital receipt - Held that:- Receipt on account of Carbon Credit is capital in nature & neither chargeable to tax under the head Business Income nor liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8(iv) and to be excluded for the purpose of section 115JB specifically when the benefit arose to the company from the business activity? 3. The issue No.1 is squarely covered by the decision taken today in D.B. I.T.A. No.204/2010. 4. With regard to issue no.2, counsel for the appellant contended that the benefits which are claimed by the assessee under Section 80IA of the Income Tax Act has been considered by the AO and more particularly, the AO while considering the facts and the law has rejected the same in view of the observations made in para 1.7.6 and 1.7.7 which reads as under:- 1.7.6. The principles has been affirmed for the purposes of computing deduction u/s 80-IA also, in the case of West Coast Paper Mills Ltd.-Vs- JCIT(2006) 100 TTJ 833 (Mum.), wherein the Hon ble Tribunal held (at para 28, Pg.844) that- the exemption provided in Sec.80-IA is available to an assessee, among others, who has set up a plant for generation of power. It does not speak anything about consumption of the power generated by the assessee. There is no fetter against deduction u/s.80- IA where the assessee is using the power for self consumption. The only condition to be satisfied is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reversed. 7. The third issue is with regard to the sale proceeds received by the company from the sale of Certified Emission Reduction (CER) pertaining to Carbon credit shown as capital receipt, she has taken us to the Section 28(iv), 28(va) Provision (ii) of the Incomes Tax Act which read as under: 28. Profits and gains of business or profession:- The following income shall be chargeable to income- tax under the head Profits and gains of business or profession ,- . . . .. (iv) 6 the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession;] 28(va) any sum, whether received or receivable, in cash or kind, under an agreement for- (a) not carrying out any activity in relation to any business or profession (b) not sharing any know-how, patent, copyright, trade-mark, licence, franchise or any other business or commercial right of similar nature or information or technique likely to assist in the manufacture or processing of goods or provision for service: Proviso (ii) any sum received as compensation, from the multilateral fund of the Montreal Protocol on Substances that Deplete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. Explanation.- For the purposes of sub- clauses (v) and (vi), immovable property shall have the same meaning as in clause (d) of section 269UA;] Explanation 2- For the removal of doubts, it is hereby clarified that transfer includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India. 10. Counsel for the appellant has relied on the decision of Andhra Pradesh High Court in the case of Commissioner of Income Tax Vs. My Home Power Ltd. :: (2015) 276 CTR (AP)92 wherein it has been held that it is a capital receipt which has to be taxed and it cannot be totally exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars will have to be answered in the affirmative and in favour of the assessee. 14. Section 80IA(8) provides that the transfer price, for the purpose of computing the profits of the eligible undertaking should be taken at the market value, which has been described as the price which such goods would normally fetch in the open market as on the date of transfer. The market value is, therefore, nothing but an open market price at the relevant time. Four conditions therefore have to be fulfilled for a particular price to qualify to be considered as market value viz:- (a) It must be an open market which means a free and uncontrolled price. (b) It should be between independent and non-related parties (c) The price should be an arm s length price which is not influenced by any other considerations. (d) The sale must take place at the relevant time 15. If the assessee produces a market price which fulfils the abovementioned four conditions, then the section does not confer any power on the Assessing Officer to reject the market price or to substitute some other market price in its place, on the ground that this market price is more appropriate or apposite, or on any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted. 22. We have heard counsel for the parties. 23. As stated above, issue No.1, same is already decided in Tax Appeal No.204/2010. In that view of the matter, the first issue is required to be answered in favour of the assessee. 24. The issue No.2 is with regard to the claim of the assessee for the value of the goods or services for the purpose of Section 80IA(8). 25. In view of the submissions made by Mr. S. Ganesh, price which has been given to the sister concern is to be determined on the basis of principle laid down by the Supreme Court in case all the four conditions are fulfilled as stated in his submissions and more so the Tribunal has given the finding which reads as under:- 10. We have heard the rival submissions and perused the evidence on record. We have also gone through the facts of the case, assessment order, order of CIT(Appeals), the principles and the judicial decisions relied upon and documents produced by both the parties. At the outset, we find that the revised return filed by the Assessee has been accepted by the AO 12 by clear finding in the Assessment Order. Once revised return is validly filed accepted, the original return is non-est, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st at which grid has sold power to the assessee), Power Exchange Price for the relevant period etc.] are available, the law does not put any restriction on the assessee as to which Market Value it has to adopt, it is purely assessee s discretion. So long as the assessee has adopted a Market Value as the transfer price, that is sufficient compliance of law. AO can adopt a different value only where the value adopted by assessee does not correspond to the market value . Even if assessee s Cement Unit has purchased power, also from the Grid or that assessee s Power Unit has also partly sold its power to grid or third parties that by itself, does not 14 compel the assessee or permit the Revenue, to adopt ONLY the grid price or the price at which the Eligible Unit has partly sold its power to grid or third parties, as the market value for captive consumption of power to compute the profits of the eligible unit. Any such attempt is clearly beyond the explicit provisions of Section 80IA(8) of the Act. Underlying principles forming the basis of our findings given here in before in this order are also supported by the decision of Special Bench of Hon ble Bangalore Tribunal in Aztec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the value at which State Grid or third party has purchased power from the Power Unit of the Assessee, which represents its power which is sold when not required by the Cement Unit, does not constitute market value in terms of 16 explanation to Section 80IA(8). It is the principle and not the quantum which is deciding factor; (c) where a basket of market values are available for the relevant period and relevant geographical area where the eligible unit is situated, the assessee has discretion to adopt any one of them as market value; and (d) If the value adopted by the assessee is market value as explained above, it is not permissible for Revenue to recompute the profits gains of the eligible unit by substituting the said value (as adopted by the Assesse) by any other market value . 14. Accordingly, we delete the disallowance as made by the AO in order u/s 143(3) on account of deduction u/s 80IA of the Act and hence the grounds 1 2 are accordingly decided in favor of the assessee. 27. The said issue is also answered in favour of the assessee. 28. The issue No.3 is with regard to sale proceeds received by the company from the sale of Certified Emissio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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