Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (9) TMI 324 - ITAT CHENNAITP adjustment - addition towards deduction claimed u/s. 80IA for power generating division - determining ALP of domestic transactions in case of captive consumption of power generated by one unit and consumed in other unit - assessee has claimed deduction u/s. 80IA of the Act, for Windmill Division and has determined profit from eligible undertaking by charging power to Textile Division at the rate at which the assessee buys power from M/s.TANGEDCO Ltd. - TPO has rejected rate adopted by the assessee and has adopted rate paid by TNERC to power generating companies for purchase of power - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decision of ITAT Chennai Benches, in the assessee’s own case for AY 2007-08 [2011 (11) TMI 368 - ITAT CHENNAI], where the Tribunal has considered an identical issue in light of deduction claimed u/s. 80IA of the Act, and observed that for the purpose of computing deduction u/s. 80IA price at which the TNERC purchased power from the power generating companies is not correct rate to be adopted, but the price at which the assessee purchased power from electricity supply companies is the rate to be compared for the purpose of determining ALP of price charged by the assessee to its other division. The ITAT Chennai Benches in the case of M/s The India Cements Limited vs. The DCIT, [2021 (12) TMI 390 - ITAT CHENNAI] has considered an identical issue in light of deduction claimed u/s. 80IA for profit derived from eligible undertaking in respect of transfer of power from Windmill Division to other division and observed that while computing deduction u/s. 80IA for power generation units for captive consumption of power, rate at which Electricity Boards supplies power to its consumers should be considered instead of the rate at which the power generating companies supply power to the Electricity Boards. Hon’ble Bombay High Court in the case of CIT-LTU v. Reliance Industries Ltd. [2019 (2) TMI 178 - BOMBAY HIGH COURT] has also considered similar issue and held that for the purpose of computing deduction u/s. 80IA of the Act, the rate at which the assessee purchased power from distribution companies is to be considered instead of rate at which the power distribution companies purchased power from generating companies. Thus determining ALP of domestic transactions in case of captive consumption of power generated by one unit and consumed in other unit, the rate at which power purchased by the assessee from distribution company is alone needs to be considered but not the rate at which distribution companies purchased power from generating companies. In the present case, the TPO and the DRP has adopted rate fixed by TNERC for purchase of power from various power generating companies by TNEB. TPO as well as the DRP are completely erred in making downward adjustment towards deduction claimed u/s. 80IA in respect of Wind Power Division, and thus, we direct the AO/TPO to delete TP adjustment made towards deduction u/s. 80IA - Decided in favour of assessee.
|