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2023 (6) TMI 337 - AT - Income TaxTP adjustment of specified domestic transaction of sale of power by eligible unit to the manufacturing unit - HELD THAT:- As in the instant facts, it is a well settled principle that where an assessee, being a captive power plant provided electricity to its associated enterprises and claimed deduction u/s. 80-IA, then for the purpose of deduction, market value of power, supplied by the assessee to its associated enterprises should be computed considering rate of power charged by State Electricity Board for supply of electricity to industrial consumers. In the case of Shree Rayalaseema Hi Strength Hypo Ltd. [2023 (1) TMI 1115 - ITAT HYDERABAD] held that where assessee, a captive thermal power plant, provided electricity to its AEs and claimed deduction under section 80-IA in respect of profits arising out of such activity, for purpose of such deduction market value of power supplied by assessee to its AEs should be computed considering rate of power charged by State Electricity Board for supply of electricity to industrial consumers and thus, assessee was justified in adopting ALP of electricity supply to its AEs at rate charged by State Electricity Board and Revenue was not justified in excluding certain heads of charges out of it Accordingly we are of the considered view that the assessee has rightly computed the ALP by adopting the rate of Rs. 6.5 per unit as the arms length rate. Accordingly ground no. 2 of assessee’s appeal is allowed. Determining the arms’ length value for sale of steam at Rs. “nil” - steam generated by captive power plant of the assessee is transmitted to the plant which manufactures chemicals as well as further processed to generate power - assessee has adopted “other method” in transfer pricing documentation for benchmarking SDT on transfer of steam, wherein quotation was obtained by MOL from independent supplier and such quotation has been considered by the assessee as the benchmark rate - HELD THAT:- While we are in agreement with assessee that the ALP of steam cannot be determined at Rs. “nil”, however, at the same time, we are also in agreement with the observations made by the Hon’ble DRP that the quotation obtained by the assessee from SSPL also cannot be taken as the basis for benchmarking the ALP of steam supplied by the CPP of the assessee. DRP, has correctly pointed out certain infirmities in the quotation obtained by the assessee and has specifically observed that the quotation obtained by the assessee is not backed by any analysis of the evaluation of the price so quoted and the said quotation is not supported by any supporting evidences. Since appropriate exercise has not been conducted by the assessee to justify the arms length price of steam supplied to its associated enterprise, this issue is restored to the file of AO wherein the assessee may furnish supporting documents in order to justify arms length price of the steam supplied by its captive power plant to its Associated Enterprise. Accordingly, this issue is being restored to the file of AO with the above directions.
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