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TMI Blog2023 (4) TMI 1294X X X X Extracts X X X X X X X X Extracts X X X X ..... THAT:- We find that on an earlier occasion the Tribunal in the case of Mahendra Sponge and Power Ltd [ 2022 (8) TMI 1445 - ITAT RAIPUR] , had observed, that the issue presently under consideration before us was squarely covered by its earlier decision passed in the case of ACIT vs. Godavari Power and Ispat Ltd. [ 2011 (11) TMI 107 - ITAT, BILASPUR] . As further observed by the Tribunal that the Hon ble High Court of Chhattisgarh in the case of CIT vs. Godavari Power and Ispat Ltd [ 2016 (2) TMI 1375 - CHHATTISGARH HIGH COURT] had observed, that the lower appellate authorities had rightly computed the market value of the power after comparing the same with the rate at which power was available in the open market, namely the price charged by the Chhattisgarh State Electricity Board. Decided against revenue. - SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER For the Assessee : Shri Amit Jain, Advocate For the Revenue : Smt. Ila.M.Parmar, CIT-DR ORDER PER RAVISH SOOD, JM: The present appeal filed by the revenue is directed against the order passed by the CIT(Appeals)-II, Raipur, dated 30.07.2020, which in turn arises from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. It was observed by the TPO that the price paid by the assessee to its AE for purchase of power was higher than the rate paid by the State Electricity Board for purchase of power from Captive Power plants. The TPO called upon the assessee to show cause as to why the rate at which its AE, viz M/s. Mahendra Sponge and Power Limited had sold electricity to a non-AE, i.e Chhattisgarh State Power Distribution Company Limited may not be adopted as a comparable to benchmark the transaction under consideration. In reply, it was stated by assessee that the price at which it had purchased electricity from the State Electricity Board was rightly adopted as a comparable for benchmarking the transaction under consideration. However, the TPO did not find favour with the aforesaid claim of the assessee. It was observed by the TPO that there was a basic difference between purchase of power by the assessee directly from its AE as against that made from a non-AE. On the basis of his aforesaid deliberations the TPO adopted the average rate of Rs.3.07 per unit at which Chhattisgarh State Power Distribution Company Ltd, i.e a non-AE had purchased power from Captive Power plant as a compar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at which assessee purchases power. Moreover, the internal CUP is preferable to the external CUP. However, the TPO has not applied internal CUP which the rate at which power has been purchased by the assessee from CSEB. Instead the TPO has applied external CUP. As per the order of TPO, the assessee should have purchased power from the AE @ Rs. 3.07 which is the rate at which CSPDCL purchases power from CPP. However on going through the facts of the case I find that this rate of Rs. 3.07 cannot be applied due to change of various factors, i.e. in other words the two transactions are not comparable transactions. In the matter of power purchase CSPDCL has monopoly and the rate of purchase is dictated by that company. In other words the rate at which CSPDCL purchases power from CPP is not uncontrolled transaction. Therefore, the rate adopted by the assessee is justified. CUP should be arrived on the basis of price of transaction between own related parties and the price should be own controlled price. In the case of sale of power by captive power traders the price is not uncontrolled price. As per the Electricity Act 2003 the traders are bound to sell power to Electricity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing to that extent and for the remaining the assessee is entitled for transfer price by treating sale price of power transferred for captive use. The assessee filed appeal before the CIT (A) wherein the CIT (A) allowed the appeal of the assessee. Against the said order the Revenue 'filed appeal before the Tribunal wherein the Tribunal upheld the finding of CIT (A). The Ld. AR pointed out that as per the new Finance Act,2013 from A.Y. 2013- 14, the domestic transaction took place u/s 92C whereas the Assessing Officer adopted a figure that CSEB purchasing power @ 1.89 p.u.on the basis of the information gathered from the CSEB U/s 133(6). The TPO as not taken into consideration that there are criteria for purchase from State generating station when excess production are there. In such situation, the generating station are under obligation to sale the extra power at the lowest price this lowest price cannot be considered as equivalent to the market rate as defined u/s 80IA(8) of the Income Tax Act, 1961. The matter further referred to the DR where the DRP adopted different approach i.e. the averaging of IEX rate but, the DRP has not given any reason for adopting the said rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is regularly claiming deduction u/3 80IA of the Act in respect of profits derived from the captive power plant/ undertaking. The assessee transfers the power for captive use as per the market rate/below on which CSEB selling the power which is @4.64 p.u. In the previous years the Revenue disputed CSEB rates consists @Rs.0.38 p.u. on account of electricity tax, cess and for which the transfer price or power price was adjusted to that extent by disallowing to that extent and for the remaining the assessee is entitled for transfer price by treating sale price of power transferred for captive use. The assessee filed appeal before the C1T (A)wherein the CIT (A) allowed the appeal of the assessee. Against the said order the Revenue filed appeal before the Tribunal wherein the Tribunal upheld the finding of CIT (A). The Ld. AR pointed out that as per the new Finance Act,2013 from A.Y. 2013- 14, the domestic transaction took place u/s 92C-whereasthe Assessing Officer adopted a figure that CSEB purchasing power @ 1.89 p.u.on the basis of the information gathered from the CSEB U/s 133(6). The TPO has not taken into consideration that there are criteria for purchase from State gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited: (supra) while deciding an identical issue has observed as under 3.6.1 Ground no. 6 of appeal is directed against rejections of the prevailing purchase price and adjustments made to the market pr.ice for the electricity thereby adding back the sum of Rs. 3,86,93,638/- as excess deduction u/s 80-1 A (8) claimed in its power plant. In the present case, the power generated by the captive plants was consumed by the manufacturing units of the appellant at Raigarh. The appellant accounted for the revenue/profit on transfer of such power to its captive units at the rate of Rs. 3.92 per unit, which is the price charged by CSEB for supplying power 'to industrial consumers. This rate ofRs.3.92 charged b: the CSEB represents the market price. 3.6.4 It is also noteworthy that had the manufacturing units of the appellant purchased power from CSEB, then, the units would have paid Rs. 3.92 per unit. Therefore, for the manufacturing units, Rs.3.92 per units is the..purchase price, i.e. the price at which power is available in the open market. The composition of such market price, is not relevant for the purchaser of the power Insofar as the purchaser is concerned, what is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Boar, and the Board supplies such power at the rale of Rs. 3.72 per unit to its consumers. This is the price at which the consumers are able to procure the power. We may consider hypothetical situation as well. Had the assessee not been saddled with restrictions of supplying surplus power to the State Electricity Board, it would have supplied power of the ultimate consumers at rates similar to those of the Board or such other competitive rates, meaning thereby that price received by the assessee would be in the vicinity of Rs. 3. 72 per unit i.e. charged by the Board from its industrial consumers/users. Thus, under the given circumstances, it would be in the fitness of things to hold that the consideration recorded by the assessee's undertaking generating electric power for transfer of power for captive consumption at the rate of Rs.3. 72 per unit corresponds to the market value of power. Therefore, on this aspect, we uphold the stand of the assessee and set aside order of the Commissioner (Appeals) and direct the assessing officer to allow relief to the assessee under Section 80IA as claimed. Assessee succeeds on this ground. On similar facts ITAT Raipur is also of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drive home his contentions. 12. As stated by the ld.AR and, rightly so, we find that on an earlier occasion the Tribunal had vide its order passed in the case of ACIT-1(2), Raipur vs. Mahendra Sponge and Power Ltd, ITA No.159/Blpr/2011, dated 19.06.2015 for AY 2008-09, had observed, that the issue presently under consideration before us was squarely covered by its earlier decision passed in the case of ACIT vs. Godavari Power and Ispat Ltd. (2011) 133 ITD 502 (Bilaspur). It was further observed by the Tribunal that the Hon ble High Court of Chhattisgarh in the case of CIT vs. Godavari Power and Ispat Ltd, Tax case No. 31,32 and 34 of 2012 dated 02.08.2013, had observed, that the lower appellate authorities had rightly computed the market value of the power after comparing the same with the rate at which power was available in the open market, namely the price charged by the Chhattisgarh State Electricity Board. For the sake of clarity the observations of the Tribunal in the case of Mahendra Sponge and Power Ltd., ITA No.159/BLPR/2011, dated 19.06.2015 are culled out as under: 6. At the outset, it is informed that the issue is squarely covered by the decision of Bilaspur Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered while computing the market value of the power. 34. The CIT-A and the Tribunal had rightly computed the market value of the power after considering it with the rate of power available in the open market namely the price charged by the Board. There is no illegality in their orders. 35. In view of above, the question is decided against the Department and in favour of the Assessee. The tax appeals have no merit. They are dismissed. 7. Since, this issue has already been decided by Hon ble Jurisdictional High Court as discussed hereinabove, therefore, we find no force in this ground of Revenue. Before we conclude this judgment it is also worth to mentioned that the ld. CIT(A) has taken into consideration market price and thereafter granted part relief by sustaining the disallowance of Rs.11,76,763/-. The relevant paragraph of ld.CIT(A) has already been reproduced above. The ld. AR has stated at BAR that the assessee has not challenged the said partial relief and no appeal was preferred. Thus, under the totality of the facts an circumstance of the case, as also law pronounced by the Hon ble Jurisdictional High Court, we hereby reject this ground of reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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