TMI Blog2011 (7) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... ther consumer. The Tamil Nadu Electricity Board is the supplier and the assessee is the consumer and there is no question of commodity banking or barter exchange. The Tamil Nadu Electricity Board sells power to the assessee in the usual course of its business and the assessee buys the power like any other consumer in the market. It is in that context price collected by the Tamil Nadu Electricity Board i.e. Rs. 3.50 per unit is obvious the market price of the power generated by the assessee. The expression used in section 80-IA(8) is "market value" means the value determined by market forces. In the captive consumption of power generated by the assessee-company no market force is operating. Market forces come into the picture only when the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s followed by the Tamil Nadu Electricity Board to promote the involvement of industries in generating power necessary for their units. The Tamil Nadu Electricity Board is collecting the electricity from the generation point of a particular industrial unit and supplies to the same unit at the time of requirement. The assessee also had entered into such an agreement with the Tamil Nadu Electricity Board. 4. When Tamil Nadu Electricity Board takes over the electricity generated by the assessee unit, it pays for the power at the rate of Rs. 2.70 per unit. The Tamil Nadu Electricity Board charges at the rate of Rs. 3.50 per unit when power is supplied to industrial units. One point to be remembered at this juncture is, as far as captive cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Rs. 2.70 per unit and therefore that price of Rs. 2.70 per unit should be taken as the market price of the power generated by the assessee. The Assessing Officer computed the eligible profit of the assessee-company on the basis of the price of the power at Rs. 2.70 per unit. The Assessing Officer reduced the sale price of the power at 80 paise per unit. To that extent the quantum of the eligible profit of the assessee has come down. This grievance of the assessee was taken in the first appeal but not successful. The assessee is aggrieved and, therefore, in the appeal before us. 7. We heard Shri T. Banusekar, the learned chartered accountant appearing for the assessee and Shri Anirudh Rai, the learned Commissioner of Income-tax, appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve held as under : "9. Therefore, there is no difficulty in holding that captive consumption of the power generated by the assessee from its own power plant would enable the respondent/assessee to derive profit and gains by working out the cost of such consumption of power inasmuch as the assessee is able to save to that extent which would certainly be covered by section 80-IA(1). When such will be the outcome out of own consumption of the power generated and gained by the assessee by setting up its own power plant, we do not find any lack of merit in the claim of the respondent/assessee when it claimed by relying upon section 80-IA(1) of the Income-tax Act by way of deduction of the value of such units of power consumed by its own plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive consumption of power is concerned, the assessee is neither selling nor buying electricity. The quantum of power contributed by the assessee to the Tamil Nadu Electricity Board can be availed of by the assessee for which no additional payment is to be made. If the assessee has received Rs. 2.70 per unit, the assessee has to pay only Rs. 2.70 per unit. It is a kind of commodity banking, or in economic term, barter exchange of same good. Therefore, de facto speaking, there is no sale and purchase. In such circumstances there is no market price at all. 13. Market price comes into play only when the assessee is buying power from the Tamil Nadu Electricity Board just like any other consumer. The Tamil Nadu Electricity Board is the suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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