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TMI Blog2024 (12) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing unit of the assessee. 3. The facts in brief are that the assessee is engaged in the business of manufacture and sale of paper, electronic consumer durables, chemicals, industrial blowers and air pollution control equipment etc. The assessee had set up a 55 MW Captive Power Plant (CPP) at Amlai, District Shahdol, Madhya Pradesh during the Financial Year 2012-13 to meet the power requirements of its paper and chemicals manufacturing unit at the same location. The electricity generated by Captive Power Plant was transferred to and wholly consumed by the assessee's Manufacturing Unit located at Amlai, Madhya Pradesh. The profits of the said CPP qualified for deduction under section 80IA (4)(iv) of the Act and assessee accordingly prepared the standalone accounts for the eligible unit in terms of section 80IA(5)/(7) of the Act the copy whereof is available at page no. 87 to 92 of the paper book. The transfer to power by the CPP to the manufacturing was reported as specified domestic transactions in terms of section 80IA(8) r.w.s. 92 BA of the Act and was duly reported by the Tax Auditor in form no. 3CEB. The specified domestic transactions were bench marked following comparabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to the quantum of profits and gains of the eligible business of the assessee and the resultant deduction under Section 80 IA of the Act. The higher the profits and gains, the higher would be the quantum of deduction. Conversely, if the profits and gains of the eligible business of the assessee is determined at a lower figure, the deduction under Section 80-IA would be on the lower side. Assessee had computed the profits and gains by taking Rs. 3.72 as the price of electricity per unit supplied by its captive power plants to its industrial units. The basis for taking this figure was that it was the rate at which the State Electricity Board was supplying electricity to its industrial consumers. Assessing officer repudiated such claim. According to him, the rate at which the assessee had supplied the surplus electricity to the State Electricity Board i.e., Rs. 2.32 per unit, should be the market value of electricity. Assessee cannot claim two rates for the same good i.e., electricity. When it supplies electricity to the State Electricity Board at the rate of Rs. 2.32 per unit, it cannot claim Rs. 3.72 per unit for supplying the same electricity to its sister concern i.e., the indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or regulation; rather, it is determined by the economics of demand and supply. 26. Under the electricity regime in force, an industrial consumer could purchase electricity from the State Electricity Board or avail electricity produced by its own captive power generating unit. No other entity could supply electricity to any consumer. A private person could set up a power generating unit having restrictions on the use of power generated and at the same time, the tariff at which the said power plant could supply surplus power to the State Electricity Board was also liable to be determined in accordance with the statutory requirements. In the present case, as the electricity from the State Electricity Board was inadequate to meet power requirements of the industrial units of the assessee, it set up captive power plants to supply electricity to its industrial units. However, the captive power plants of the assessee could sell or supply the surplus electricity (after supplying electricity to its industrial units) to the State Electricity Board only and not to any other authority or person. Therefore, the surplus electricity had to be compulsorily supplied by the assessee to the State E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al consumers has to be taken as the market value for computing deduction under Section 80 IA of the Act. 29. Section 43A of the 1948 Act lays down the terms and conditions for determining the tariff for supply of electricity. The said provision makes it clear that tariff is determined on the basis of various parameters. That apart, it is only upon granting of specific consent that a private entity could set up a power generating unit. However, such a unit would have restrictions not only on the use of the power generated but also regarding determination of tariff at which the power generating unit could supply surplus power to the concerned State Electricity Board. Thus, determination of tariff of the surplus electricity between a power generating company and the State Electricity Board cannot be said to be an exercise between a buyer and a seller under a competitive environment or a transaction carried out in the ordinary course of trade and commerce. It is determined in an environment where one of the players has the compulsive legislative mandate not only in the realm of enforcing buying but also to set the buying tariff in terms of the extant statutory guidelines. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Ltd. (161 taxmann.com 423) wherein it has been held that insertion of section 80IA(6) of the Act had not made any change in law and the decision of the Hon'ble Apex Court in the case of CIT -vs.- Jindal Steel & Power Limited(supra) continued to hold good. So far as the DRP observations on the point that Hon'ble Apex Court did not have the occasion to examine this issue in the light of the concept of arm's length value brought in by way of transfer pricing provisions in section 92BA of the Act, we note that this aspect has been considered by the Coordinate bench in the case of DCIT Vs Rungta Mines Ltd. ITA No. 286/Kol/2023 and rejected the revenue's arguments. 6. Therefore considering the above facts and circumstances and respectfully following the decision of the Hon'ble Apex Court in the case of Jindal Steel & Power Limited (supra), we set aside the order of ld. Assessing Officer and direct the ld. Assessing Officer to apply the rate at which the electricity was supplied by the State Electricity Board to the consumers. Accordingly, Grounds No. 1 to 5 are allowed. 7. The second issue raised by the assessee in ground no. 6 is against the restricting the deduction claimed u/s 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited before the due date of filing of the return. This ground no. 7 of appeal is allowed for statistical purposes. 8. The issue raised in Ground No. 8 is qua-non book profit taken under section 115JB in the ITNS computation sheet at Rs. 74,64,00,256/- as against the correct figure of Rs. 15,43,27,305/-. 9. The ld. Authorized Representative for the assessee while referring to page no. 179 of the paper book, which is an intimation under section 143(1) passed by the Centralized Processing Centre in assessment year 2020-21, submitted the deemed total income under section 115JB was taken at Rs. 15,43,27,305/- as per the assessee as well as per the Department. However, in the ITNS computation sheet, the figure was wrongly taken at Rs. 74,64,00,256/-. There appears to be an apparent mistake by the ld. Assessing Officer as the amount was wrongly taken in the ITNS computation sheet. Accordingly, we restore the issue to the file of ld. Assessing Officer to examine the issue afresh and correct the mistake. This ground no. 8 is allowed for statistical purposes. 10. Similarly in Ground No. 9, the assessee has challenged the mistake in ITNS computation sheet annexed to the order, wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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