TMI Blog2011 (11) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... at the rate of ₹ 3.50 per unit, corresponds to the market value of such power. Though the ld. CIT(Appeals) had upheld order of the A.O. relying on the decision of Delhi Bench of this Tribunal in the case of Addl. CIT v. Jindal Steel And Power Ltd. (2007 (6) TMI 308 - ITAT DELHI ), we are of the opinion that this decision better supports the case of the assessee. We are, therefore, of the opinion that assessee has to succeed in its appeal and profits of eligible undertaking has to be determined on the basis of annual landing cost of electricity purchased by the assessee from TNEB. - Appeal filed by the assessee stands allowed. - I.T.A. No. 1570/Mds/2011 - - - Dated:- 30-11-2011 - SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER And S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts textile units, it had charged the assessee at the rate of ₹ 3.50 per unit, after making adjustments for the units generated by the assessee. Assessee, while computing its claim for deduction under Section 80- IA of the Act in respect of the windmills, had adopted the price of ₹ 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 ya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Velayudhaswamy Spinning Mills v. ACIT (231 ITR 368). This left the issue regarding transfer price open, and on this ld. CIT(Appeals) refused to interfere, for, according to him, the A.O. had adopted a correct approach while considering the rate of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive consumption in its yarn manufacturing unit, was not physically the same as was actually used by the yarn manufacturing units. The windmills were disparately situated vis- -vis the yarn manufacturing unit. 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 consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to comply with the restrictions for use of power generated and the tariff at which the power can be supplied to Electricity Board. Thus the determining of tariff between assessee and Electricity Board cannot be considered 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 ₹ 3.50 per unit for purchasing power f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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