9911796707
TMI Blog2012 (6) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of power to related parties was not higher than market price. 3. The learned Commissioner of Income Tax(Appeals) erred in sustaining partially disallowing deduction under Section 80 IA on sale of power to related parties. 4. The learned Commissioner of Income Tax(Appeals) ought to have appreciated that the prices paid by the related parties were lower than the prices charged by the Tamil Nadu Electricity Board. 5. The learned Commissioner of Income Tax(Appeals) ought to have appreciated that the prices paid by the related parties were comparable with those paid by unrelated parties such as Ennore Foundries, Schasayee Paper etc. 6. The learned Commissioner of Income Tax(Appeals) ought to have appreciated that even the average price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of Rs. 0.098(3.364-3.266) was applied to 1185056.17 units sold to the related parties and excess receipts from the related parties. Were worked out at Rs. 1,16,13,550/- and the claim of deduction under section 80 IA was not allowed on the excessive receipts from the related parties. However, since the entire profit attributable to sale of power to M/s. OPG Metals was already disallowed by the Assessing Officer, this disallowance was not made again. It is submitted by the appellant that the Hon'ble ITAT has held in ITA No.1014/Mds./10(supra) that and average sale price of Rs. 3.45 per unit was reasonable and not excessive and hence deduction under section 80 IA could not be denied and that the average sale price to group companies of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d there in could not be taken for comparison purposes, could not be brushed aide. The ITAT, therefore, held that the power purchase agreement with TNEB, which was a standby arrangement, could not be made basis for arriving at the market rate of power disregarding the energy rate at which TNEB Grid to its customers. Therefore, the reliance by the appellant on this decision of the ITAT in appellant's own case for Assessment Year 2006-07, is misplaced. Further the submissions of the appellant that the sale price to Meridian Industries may be ignored, cannot be considered as the maximum sale amongst unrelated parties are to this concern alone. Ignoring the same would give a distorted picture and if this argument of the appellant is accepted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of profits derived from the said undertaking in accordance with the provisions of that section. The Assessing Officer observed that the average price at which the assessee sold power to sister concerns works out to Rs. 3.364 per unit, when the average rate in respect of non-related parties works out to Rs. 3.266 per unit. The average sale price to sister concerns is more by 0.098 per unit. The total number of units sold to sister concerns was 11,85,05,617 units. Therefore, the Assessing Officer worked out that the assessee derived more profits of Rs. 1.16,13,550/- under Section 80-IA of the Act. 5. On appeal, the Commissioner of Income Tax(Appeals) confirmed the action of the Assessing Officer. 6. The dispute before us relates to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not empower the Revenue to do so. The basic condition, which is to be satisfied for invoking the provisions of Section 80-IA(10) is that the business transactions are so arranged so as to produce to the assessee more than the ordinary profits, which might be expected to arise in such eligible business. The Section does not provide that if the assessee earns more profit from related parties in compare to unrelated parties, then the allowance of deduction under Section 80-IA is to be restricted to the same proportion at which the profit was derived from unrelated parties, even in the circumstances where such profits derived from related parties were such that it could be expected to arise to such eligible business as ordinary profit. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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