TMI Blog2023 (1) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... of profits arising out of such activity, for the purpose of such deduction the market value of power supplied by the assessee to its AEs should be computed considering the rate of power charged by the State Electricity Board for supply of electricity to industrial consumers. We, therefore, respectfully following the decisions of Reliance Industries Limited [ 2019 (2) TMI 178 - BOMBAY HIGH COURT ], Godavari Power and Ispat Ltd [ 2013 (10) TMI 5 - CHHATTISGARH HIGH COURT ], Gujrat Alkalis and Chemicals Ltd [ 2016 (10) TMI 1111 - GUJARAT HIGH COURT ] and Kanoria Chemicals and Industries Ltd [ 2013 (5) TMI 357 - CALCUTTA HIGH COURT ] are of the considered opinion that the assessee is justified in adopting the ALP of the electricity supply bites captive power generation plant to its AEs at Rs. 8.74 and the Revenue is not justified in excluding certain heads of charges from out of it. With this view of the matter, we allow the grounds of appeal on this aspect. - ITA-TP Nos. 123 & 351/Hyd/2022 - - - Dated:- 26-10-2022 - SHRI RAMA KANTA PANDA, ACCOUNTANT MEMBER AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER For the Assessee : Shri T. Rajendra Prasad, AR. For the Revenue : Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctricity duty and such charges have to be excluded from consideration. He accordingly proposed the average energy charges at Rs. 7.39 per unit as Comparable Uncontrolled Price (CUP). 4. Assessee filed objections before the learned DRP and contended that its internal CUP i.e., the rate at which the non-eligible unit and other AEs procured power in an uncontrolled transaction from an unrelated entity viz. APSPDCL, was the right basis for determination of Arms Length Price (ALP). 5. Learned DRP considered the demand charges, calculating the same on the basis of slab rate as per the tariff at Rs. 7.40 per unit and holding that the other charges and duties arise due to various reasons, namely, some are collections on behalf of the Government by DISCOMS (fuel surcharge and electricity duty), some arise due to large investment made in distribution and transmission assets put by the DISCOM for multiple industrial customers (for example demand charges arising out of providing firm commitment of sanctioned power to industrial power units by the distributing company) etc. Inasmuch as the captive power plant of the assessee does not incur these expenditure and commitments, Rs. 7.39 per u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransmission assets incurred by this comes for multiple industrial customers to meet the demand charges arising out of providing firm commitment of sanctioned power to the industrial power units by the distributing company etc., which the assessee is not likely to incur, and, therefore, the authorities below are justified in excluding such charges which are incurred by the State Electricity Board but not by the assessee. It is the further argument of the Ld. DR that the assessee supplied power to APSPDCL at Rs. 5.45 per unit for a period of two months during the relevant financial year and therefore, Ld. TPO benchmarking the price per unit at Rs. 7.39 is quite justified. 9. We have gone through the record in the light of the submissions made on either side. It is an admitted fact that the assessee has been dealing in manufacturing and sale of industrial chemicals, trading in: generation and distribution of power and chemicals to the domestic as well as international markets. The assessee also has a captive thermal power plant of 10 MW capacity at Kurnool, in respect of which the deduction under section 80-IA of the Act has been claimed by the assessee with the distribution system ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rical duty, customer charges and late payment charges which the state electricity board collects from the consumer, since the assessee does not incur any expenditure relevant to such charges being a captive power plant. 13. It is relevant to note here that the assessee does not claim late payment charges. According to the assessee while adopting CUP method, the price at which the state Electricity Board adopted while supplying power to the assessee has to be considered instead of excluding so many charges levelled by the State Electricity Board to its consumers, more particularly to the assessee. Even in respect of the chemical division of the assessee in question, it procured power from the thermal division at Rs. 8.74 while the same chemical division procured power from the APSPDCL at Rs. 10.71 per unit. Insofar as this fact is concerned, neither the Ld. TPO nor the Ld. DRP dispute the same. 14. Coming to the case law relied on by the assessee, in the cases of Star paper mills Ltd (supra), Vishal fabrics Ltd (supra), Reliance Industries Limited (supra), Godavari Power and Ispat Ltd (supra), Gujrat Alkalis and Chemicals Ltd (supra) and Kanoria Chemicals and Industries Ltd (s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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