TMI Blog2019 (4) TMI 1574X X X X Extracts X X X X X X X X Extracts X X X X ..... ier direction as per assessment year 2002-03 order as an apparent error requiring necessary modification u/s 254(2). We therefore make it clear that the AO shall hold frame his consequential computation in tune with the provisions in new Electricity Act, 2013 so far as assessee s sec. 80IA deduction claim in Revenue s appeal is concerned. The assessee succeeds in its instant second substantive ground as well as lead MA. - M.ANo.17-18/Kol/2019 (arising out ITA No.685/Kol/2014 And 1267/Kol/2014) - - - Dated:- 23-4-2019 - Shri S.S. Godara, Judicial Member And Dr. A.L. Saini, Accountant Member For the Assessee : Shri J.P. Khaitan, Sr, Advocate For the Respondent : Shri Shankar Haldar, JCIT-SR-DR ORDER PER S.S.Godara, Judicial Member:- These two assessee s miscellaneous application(s) filed u/s. 254(2) of the Income Tax Appellate Tribunal Act, 1963, in short the Act seek to modify / rectify our order dated 27.11.2018 partly allowing its main appeal ITA No.685/Kol/2014 and dismissing Revenue s cross-appeal ITA No.1267/Kol/2014. Heard both the parties. Case file(s) perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of additional demand charges also. The AO was of the view that while computing the transfer price, additional demand charges has to be excluded. Therefore, he decided the total transfer price of ₹ 35,15,93,155/- against the price of ₹ 40,44,26,809/-. The AO also noted that the Assessee is bound to pay to the State Government Electricity Duty on the units generated by the captive plant and he calculated the cost element to be paid to the State Government at ₹ 223.86 lacs. Therefore, he was of the view that this has to be reduced while computing the profit and accordingly he recomputed the profit from power undertaking - I at ₹ 6,42,55,155/- and reduced the deduction accordingly. 4.1 In respect of power undertaking - II, the AO noted that the Assessee generated 8,97,59,276 units and set transfer price at ₹ 3.36/unit. Here also the Assessee has taken into account additional demand charges while computing the transfer price which was re-calculated by the AO. The AO further noted that the Assessee has to pay to the State Government, Electricity Duty on the units generated by the captive plant and he computed the Electricity Duty to be pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Tribunal. In fact, the Assessing Officer has recorded in the assessment order that ..... the Department has contested against the said Appellate Orders before the higher judicial forums. The CIT(A) and ITAT have also upheld the captive undertaking issue in the appellant's favour in AY 2003-04 and AY 2004- 05 and the CIT(A) has also similarly held for AY 2006-07 and AY 2007-0S. Therefore, respectfully following the above mentioned decisions 1 hold that the deduction under section 80IA is fully available to the company in respect of the captive power undertakings.' 4.4 In respect of the steam undertaking issue, the CIT(A) noted that one power undertaking VI, Bhadrachalam generates steam for captive use of other undertakings at Bhadrachalam and allowed the deduction by observing as under: 1 find that it has been repeatedly established that steam is power as per the Delhi Tribunal decision in SIAL SBEC Bioenergy Ltd. vs.. DCIT [S3 TT] 866 (2004)] and DCIT v. Maharaja Shree Umaid Mills [120 TTJ 711 (2009)]. Further, the Hon'ble Supreme Court had dismissed the Department's SLP against the judgement of the Madras High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Id. DR has relied. The main submissions of the Id. AR are that this issue is duly covered by the decision of this Tribunal in Assessee's case for A.Y 2002-03. We have perused the ITAT order for A.Y 2002-03 in ITA No. 18/Kol/2006 in the case of the Assessee. We noted that the Tribunal under para 10.13 of its order accepted the rate as has been worked out by the CIT(A) to be the fair market value by holding as under: 10.13 The Ld. AIR further submitted that in the instant case the assessee would be entitled to determine its profits of the power unit by considering the tariff rate determined at ₹ 4.45 per unit as per the policy of the APSEB. Keeping in view the ratio of the decision of the Hon'ble Supreme Court in Thiru Arooran Sugars Ltd. (supra), we are of the view that the market price in case of a captive unit should be the price that the assessee would have paid to an outsider if the same commodity/services were to be procured by the assessee i.e. the landed cost. However in the instant case the actual price is unreasonably high since the rate of APSEB contains certain fixed charges which are not directly relatable to the captive plant. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in para 10.13 of its order for A.Y. 2002-03 has accepted the rate per unit as worked out by Ld. CIT(A). Ld. CIT(A) reduced the tariff rate by surcharge and additional duty. Respectfully following the aforesaid decision of this Tribunal, we direct the AO compute the profit eligible for deduction u/s 80IA on the basis of the aforesaid finding given by the Tribunal for A.Y. 2002-03. We adopt the above detailed reasoning mutatis mutandis to decline Revenue s instant third substantive ground as well. Necessary computation shall follow at the Assessing Officer s end as per law. 5. It is sufficiently clear therefore that we had followed learned co-ordinate bench s order pertaining to assessment year 2002-03 in assessee s case itself. It transpires during the course of hearing that the legislature enacted the new Electricity Act, 2003 post facto assessment year 2002-03 governing the field in the impugned assessment year 2009-10. The very issue as to whether the tribunal s said earlier order in assessment year 2002-03 would operate or not post facto the above legislative developments was considered by yet another co-ordinate bench s decision in M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the price charged from it by the State Electricity Board. In such circumstances, we hold that, when it was permissible for the assessee to sell electricity to consumers and distribution licensees at rates higher than that paid by it to the State Electricity Board, the price charged by the State Electricity Board would be a very good indication of the market value of electricity and the assessee did not commit any error in adopting such price for working out the amount eligible for deduction u/s 80IA of the Act. 5.6.2. We find that the reliance placed by the ld AR on the decision of the Hon ble Supreme Court in the case of Thiru Arooran Sugars Ltd. v CIT, (1997) 227 ITR 432 (SC) , wherein at page 441, it was held as under:- In view of the aforesaid, it is very difficult to uphold the contention of Mr. Nariman that in order to find out the market price, there has to be an actual market where there will be a concourse of buyers and sellers . This argument was specifically rejected by Lord Pearson L. J., in the case of Building and Civil Engineering Holidays Scheme Management Ltd. v. Post Office [1966] 1 QB 247 (CA), in the following words (page 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence we are in agreement with the arguments of the ld AR. 5.6.4. We find that the method adopted by the assessee viz. to take the average rate charged by the State Electricity Board for the previous month is quite appropriate and reasonable for determining the market value for the month of supply. The annual weighted average adopted by the ld CITA would result in variations occurring during the year at different times being made applicable uniformly for the whole year. In our considered opinion, the assessee s method is more appropriate as it factors in variations as and when they take place. 6. Learned departmental representative fails to dispute all these developments and also the fact that our impugned order had not taken into consideration this latter case law already complied in paper book we treat our earlier direction as per assessment year 2002-03 order as an apparent error requiring necessary modification u/s 254(2) of the ITAT Act. We therefore make it clear that the Assessing Officer shall hold frame his consequential computation in tune with the provisions in new Electricity Act, 2013 so far as assessee s sec. 80IA deduction claim in Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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