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TMI Blog2012 (1) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 per unit as against the market value of the electricity Rs. 4.51 per unit actually paid by the eligible business and considered by the Assessing Officer for computing deduction u/s.80IA in conformity with the provisions of section 80IA(8) of the Act, since the eligible unit cannot recover more than the duty paid?" 2. Issue arises in the following factual background. Respondent assessee is engaged in the business of manufacturing of glass items. For the assessment year 2005-2006, respondent filed return of income declaring a total income of Rs. 91.23 lakhs and a book profit of Rs. 3.25 crores under Section 115JB of the Income Tax Act, 1961. Return was selected for scrutiny. The Assessing Officer in the assessment framed made additions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer carried the matter in appeal. CIT(Appeals) however, by his order dismissed the appeal making following observations : "5.3 I have gone through the contentions of the appellant as well as the arguments of the Assessing Officer. I notice that the average cost of electricity charged by GEB from the non eligible unit of appellant firm was Rs. 5 per unit which included the electricity duty of Rs. 0.83 per unit on an average. It is also a fact that appellant company had paid duty @ Rs. 0.3425 per unit to GEB in respect of the eligible unit. Further excluding the electricity duty the average market value of electricity generated works out to Rs. 4.17 per unit. 5.3.1 Section 80IA(8) reads as under : (8) Where any goods held for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of such goods and services to similarly placed eligible units and not as against charges levied by GEB. I am in agreement with the Assessing Officer that since the eligible business has only paid duty of Rs. 0.3425 per unit, it is entitled to charge the same amount from its non eligible business which is the electricity duty actually paid by the eligible unit and that eligible unit cannot recover more than the duty paid. The Assessing Officer is therefore justified in reducing the claim of 80IA by Rs. 40,14,812/. The disallowance of Rs. 40,14,812/for the purpose of deduction u/s.80IA is thus confirmed. Ground No.2 is thus dismissed." 5. Assessee carried the matter in further appeal before the Tribunal. Tribunal allowed the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attributable to the power generated and consumed by the assessee. The answer to the question is readily available in Subsection (8) of Section 80IA, which reads as below: 80IA( 8) Where any goods held for the purpose of the eligible profits are transferred to any other business carried on by the assessee, or where any goods held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods as on the date of transfer, then for the purposes of the deduction under this section, the profits and gains of such eligible business sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of Mumbai Bench of the Tribunal in the case of West Coast paper Mills Ltd. v/s. JCIT(supra), we are of the view that the cost of electricity produced by the assessee at Captive Unit may be taken at market value at Rs. 4.9 per unit for the purpose of computation of the eligible profit of that unit. No contrary decision was brought to our notice by the learned DR. We, therefore, set aside the order of the CIT(A) and direct the AO to compute deduction u/s80IA by taking market value of the electricity generated by the assessee at the rate of Rs. 4.9 per unit. Ground no.3 is allowed. 6. Revenue has thereupon filed this appeal challenging the decision of the Tribunal. Counsel for the Revenue vehemently contended that the Tribunal com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly fetch in the open market. To our mind sum of Rs. 4.51 per unit of electricity only represented cost of electricity generation to the assessee and not the market value thereof. It is not in dispute that the GEB charged Rs. 5 per unit for supplying electricity to other industries including non eligible unit of the assessee itself. Tribunal therefore, while adopting the said base figure and excluding excise duty therefrom to work out Rs. 4.90 as the market value of the electricity generated by the assessee, to our mind, committed no error. It can be easily seen that if the assessee were to supply such electricity or was allowed to do so in the open market, surely it would not fetch Rs. 4.51 per unit but Rs. 5 per unit as was being charged b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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