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TMI Blog2017 (8) TMI 1588X X X X Extracts X X X X X X X X Extracts X X X X ..... actor; 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 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 . - Decided in favour of the assessee. Sale proceeds received by the company from the sale of Certified Emission Reduction (CER) pertaining to Carbon Credit - revenue or capital receipts - HELD THAT:- In view of the decision rendered by the Supreme Court in Vodafone International [ 2012 (1) TMI 52 - SUPREME COURT] it has to be taken as capital account and it cannot be taxed under the Income Tax Act since it was taxable under direct tax X X X X Extracts X X X X X X X X Extracts X X X X ..... sion Reduction (CER) pertaining to Carbon credit shown as capital receipt was neither chargeable to tax under the head "capital gain" nor under the head "business income" u/S.28(iv) and to be excluded for the purpose of section 115JB specifically when the benefit arose to the company from the business activity? D.B. Income Tax appeal No227/2016 (i) Whether the Tribunal was legally justified in reversing the findings of the CIT(A) and allowing the claim of the assessee for the value of the goods or services for the purpose of section 80IA(8) against the All India rate and the rate at which power was sold to third parties thereby deviating from the principle of determining the market value of goods or services referred to Section 80IA(8)?" (ii) Whether the Tribunal was legally justified in holding that the sale proceeds received by the company from the sale of Certified Emission Reduction (CER) pertaining to Carbon credit shown as Capital receipt was neither chargeable to tax under the head "capital gain" nor under the head "business income" u/s 28(iv) and to be excluded for the purpose of section 115JB specifically when the benefit arose to the company from the business ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c 80IA(8), which states that - "Where any goods or services held for the purposes of the eligible business are transferred to any other business carried 13 on by the assessee, or where any goods or services held for the purposes 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 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" Explanation - For the purposes of this subsection, "market value", in relation to any goods or services, means the price that such goods or services would ordinarily fetch in the open market." 12. On perusal of the above, it could be clearlyseen that the Statute provides that the assessee must adopt 'Market Value' as the transfer price. In the open market, where a basket of 'Market Values'[say like, independent third part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould only be adopted. We are not agreeable to the above contention of the department. No doubt the grid rate is market value but there is no concept of 'best' market value in law. If by using the said adjective, Revenue seeks to infer that grid rate is the only market value in the present context, such inference is also clearly not tenable. Further, in case there are options, the option favorable to the Assessee is to be adopted. This is a well settled principle of law laid down by courts time and again including Supreme Court in the case of CIT Vs. Vegetable Products Ltd. [1973] 88 ITR 192 [SC] and other High Courts as pointed out by the AR. 13. In the light of the aforesaid, we hold that - (a) the value adopted by the Assesse be it valueas per independent third party trading transactions or as per Power Exchange (IEX etc.) or any other independent transaction (for the relevant period and which has taken place in the relevant area where the eligible unit is located) constitute 'market value' in terms of explanation to Section 80IA(8); (b) the value at which State Grid has sold powerto the Cement Unit of the Assessee (average annual landed cost) also constitute 'market valu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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