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TMI Blog2012 (8) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeal is that of disallowance of deduction claimed by the Assessee under sec.80IA of the Act to the extent of Rs.69.70 lakhs which has been restricted by the Assessing Officer to Rs.53,87,918/- and further confirmed by the CIT(Appeals). 3. The brief facts of the case may be noticed. 4. The Assessee is a firm producing wind mill energy from wind mills No.1 & 2. It filed its return on 30.11.2007 declaring income of Rs.41,58,380/-. It had also claimed a deduction of Rs.69.90 lakhs under sec.80IA of the Act in respect of income derived from the generation and sale of Electricity produced from wind mills and sold to the Tamilnadu Electricity Board (TNEB) by way of a 'Captive power agreement'.. 5. The Assessing Officer considered the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before us, the A.R., has reiterated various pleas made in the grounds of appeal and cited case law of Chennai ITAT 'D' Bench Order in ITA No.850/Mds/2011 decided in the case of M/s. Sri Velayudhaswamy Spinning Mills (P) Ltd., v. DCIT and prayed for acceptance of the appeal. 8. The D.R., on the other hand, has relied on the order of the CIT(Appeals) and prayed for rejection of the Assessee's appeal. 9. We have given our thoughtful consideration to the various arguments of both the parties and also perused the findings referred to as well as case law relied upon by the Assessee. The only issue which arises for our adjudication is as to whether for the purpose of deduction claimed by the Assessee under sec.80IA of the Act regarding electrici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for the transfer recorded in the books of accounts if not corresponds to the market value of such goods, the assessing authority shall compute the eligible profit on the basis of the market value of such goods. It means that sub-section(8) of section 80IA does not allow an assessee to inflate the profit of its eligible unit by over invoicing the goods transferred or underinvoicing of goods bought in. It is a safeguard against misuse of the existing provision. The Assessing Officer took the market value of the power generated by the assessee at Rs..2.70 per unit and not Rs.. 3.50 per unit as claimed by the assessee and thereby the assessee has overstated the price of the goods sold by it so as to boost the profit of its eligible unit, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the power generated and consumed by the assessee will be that value that should have been paid by the assessee if the power was bought from open market. When the above case is applied to the present case, the case of the assessee has to be accepted that the market value should be treated as Rs..3.50 per unit of electricity. 11. Exactly this issue was considered by the Delhi Bench-I of the Tribunal in the case of Additional Commissioner of Income-tax vs. Jindal Steel & Power Ltd., 16 SOT 509. In that case also one of the issues raised was valuation of the power generated by the eligible unit. In that case the power generated by the assessee was used by it for own consumption as well as for sale to the State Electricity Board. The Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tamil Nadu Electricity Board? The price is Rs..3.50 per unit. Therefore it is obvious that the market price of the power generated by the assessee is Rs..3.50 per unit. The expression used in section 80IA(8) is "market value". 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 picture only when the assessee buys power from Tamil Nadu Electricity Board like any other consumer. The value paid for such consumption is the market value. In the present case that is Rs. 3.50 per unit. 14. Therefore we accept the contention of the assessee and set aside the orders of the lower authorities on this issue. The assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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