TMI Blog2011 (11) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... e sold its power to the Electricity Board cannot be equated with market rate since power tariff between the assessee and the Board is not done in a competitive environment. Thus, price at which the Electricity Board supplies power to its consumers is to be considered to be the market value for transfer of power by the assessee's electricity generating undertaking for captive consumption. See Addl. CIT v. Jindal Steel & Power Ltd. (2006 - TMI - 65524 - ITAT Delhi-H) - Decided in favor of the assessee. - IT APPEAL NO. 1571 (MDS.) OF 2011 - - - Dated:- 30-11-2011 - ABRAHAM P. GEORGE, GEORGE MATHAN, JJ. K.E.B. Rangarajan for the Respondent. ORDER Abraham P. George, Accountant Member In this appeal filed by the assessee, its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 80-IA of the Act in respect of the windmills, had adopted the price of Rs. 3.50 per unit. According to assessee, this was the rate at which the Electricity Board supplied power to its textile yarn manufacturing units and the adjustment of quantum of power in the bills raised by the Electricity Board was only a barter arrangement done by the Board for convenience. However, the A.O. did not accept this contention. According to him, cost reduction achieved due to production of electricity from the windmills was enjoyed by the yarn manufacturing units. As per A.O., it would result in enhancement of profitability of spinning mills and not the windmills. A.O. also made note of the fact that power produced by the assessee was regularl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to him, the A.O. had adopted a correct approach while considering the rate of Rs. 2.70 per unit for the purpose of calculation of deduction, in respect of the windmills under Section 80-IA of the Act. 4. When the appeal came up for hearing, nobody appeared on behalf of assessee. Though an adjournment application has been filed by M/s C. Ramasamy B. Srinivasan, Chartered Accountants, there was no representation of any person on behalf of the said firm, when the case was called up. 5. Learned D.R. supporting the orders of the authorities below, submitted that admittedly assessee had sold electricity generated from windmills at Rs. 2.70 per unit to the Electricity Board though the electricity so sold was repurchased by the assessee from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee was left with no go other than supply the electricity to the Electricity Board. It is not that the same power that was produced by the assessee was supplied by the Electricity Board to its yarn manufacturing unit. The adjustment in the bills as a barter arrangement was, therefore, only for the convenience of the Electricity Board. Sub-section (8) of Section 80-IA provides that where an assessee, which is eligible for 80-IA benefits, transferred its goods or service to its business other than the eligible business, the consideration if any recorded for such transfer in the accounts of the eligible business, should correspond to the market value of such goods or services. Ostensibly, in this case, the A.O. was of the opinion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered as an exercise undertaken in a competitive environment and under market conditions. Price determined in such a scenario cannot be equated with a situation where the price is determined in the normal course of competitive environment. Thus, the price at which assessee sold its power to the Electricity Board cannot be equated with market rate as understood for the purpose of Section 80-IA(8) of the Act. Now the question that remains is whether the price recorded by the assessee at Rs. 3.50 per unit for purchasing power from the Electricity Board for its yarn manufacturing unit can be considered the market value. Assessee undoubtedly is an industrial consumer and the Board supplies power to such industrial consumers at the rate of Rs. 3.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
