TMI Blog2024 (2) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... at Limited [ 2013 (10) TMI 5 - CHHATTISGARH HIGH COURT] We find that the Tribunal vide its order passed in the case of DCIT-2(1), Vs. M/s. Mahendra Sponge and Power Limited, [ 2022 (8) TMI 1445 - ITAT RAIPUR] had after exhaustive deliberations vacated the disallowance of the assessee s claim for deduction u/s. 80IA(4)(iv)(a) as found favor with the claim of the assessee and observed, that the market value of the power supplied by the assessee to its steel division was rightly computed by considering the rate at which power was available in the open market, namely, the price that was charged by the electricity board. Decided in favour of assessee. - Shri Ravish Sood, Judicial Member And Shri Arun Khodpia, Accountant Member For the Assessee : Shri Bikram Jain, CA For the Revenue : Shri Satya Prakash Sharma, Sr. DR ORDER PER RAVISH SOOD, JM: The present appeal filed by the revenue is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 31.07.2023, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short the Act ) dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng an income of Rs. 76,16,340/-. The case of the assessee company was selected for scrutiny assessment u/s. 143(2) of the Act. 3. During the course of assessment proceedings, the A.O observed that the assessee company had broadly two divisions, viz. (i) steel division (ii) power division. It was observed by him that the assessee had claimed deduction u/s. 80IA(4)(iv)(a) of the Act of Rs. 2,69,83,026/-. The A.O observed that the assessee had sold power to its steel division and associate enterprises @4.30/- per unit, which was much higher as in comparison to the price, at which, it had sold surplus power to Chhattisgarh State Electricity Board (CSEB), i.e. at contracted price of Rs. 2.60/- to Rs. 2.97/- per unit (against which CSEB had paid an amount of Rs. 1.58/- per unit after various deductions). Also, the A.O observed that the assessee company had purchased power from CSEB @5.02/- per unit. 4. On a perusal of the Form 3CEB, it was observed by the A.O that the assessee company had entered into certain Specified Domestic Transactions (SDT) during the year. Accordingly, the A.O after getting the approval of the PCIT- 1, Raipur made a reference to the Transfer Pricing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer for the computation of arm's length price in relation to the specified domestic transaction. The TPO in its order u/s. 92CA of the Act made a downward adjustment to Rs. 8,26,60,258 to the deduction claimed by the assessee under section 80 IA of the Act thereby the reducing the deduction u/s 80IA to Rs. 2,69,83,026. Subsequently the assessment was made by the AO taking into account the order of the TPO and determined the total income at Rs. 3,53,49,370 after making following disallowances of deduction claimed under section 80IA Rs. 2,69,83,026 and disallowance on account of CSR Rs. 4,50,000. 6.1 The AO in the assessment order noted that the Form 3CEB report of the assessee showed large specified domestic transaction on which it had claimed the deduction u/s. 80IA of the Act. The AO asked the assessee to justify the said deduction u/s. 80IA of the Act. The AO further in the assessment order noted that a reference was made to the TPO who in his order u/s 92CA has recommended a downward adjustment of Rs. 82660258/- which was carried out and consequentially a downward adjustment of claim u/s 80IA of the Act of Rs. 26983026/- had been made, and further a disallowance of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant submitted that the Hon'ble ITAT in case of ACIT Vs. Animesh Ispat (p) Ltd., in ITA No. ITA No. 14/RPR/2021, held that the issue is squarely covered by the order passed in the case of the assessee's sister concern viz Mahendra Sponge and Power Ltd. (supra) for AY 2014-15 in ITA No.196/Rpr/2019. 6.3 The submission of the appellant is examined the case laws and the orders are perused. The case of the appellant is squarely covered in its own case by the order of the Hon'ble ITAT. Therefore, respectfully following the order of the Hon'ble ITAT, the addition made by the AO on account of 80IA is deleted. The ground of appeal is allowed. 7. In the result the appeal is allowed. 7. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 8. We have heard the ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 9. Shri Bikram Jain, Ld. Authorized Representative (for short AR ) for the assessee com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the case in vacating the disallowance of the assessee s claim for deduction u/s. 80IA(4)(iv)(a) of the Act amounting to Rs. 3,86,20,902/-. 7. Controversy involved qua the issue in hand lies in a narrow compass, i.e., sustainability of the triggering of Section 80IA(8) of the Act by the A.O for declining the assessee s claim of deduction u/s. 80IA(4)(iv)(a) of Rs. 3,86,20,902/-. 8. Shorn of unnecessary details, the assessee company which is engaged in the business of manufacturing and trading of sponge iron, steel ingots and generation of power has two divisions, viz. (i) steel division; and (ii) power division. The profit of the power division is eligible for deduction u/s. 80IA(4)(iv)(a) of the Act. This is the seventh year of claim of deduction by the assessee u/s. 80IA(4)(iv)(a) of the Act. 9. During the course of the assessment proceedings, it was observed by the A.O that the assessee company had transferred electricity produced in its captive power plant to its steel division and associate concerns, while for the remaining electricity was sold to the State electricity board, viz. Chattisgarh State Electricity Board (For short CSEB ). It was observed by the A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been restored by the Tribunal. 11. The Ld. Departmental Representative (for short DR ) fairly conceded to the submissions put forth by the Ld. AR. 12. Ostensibly, as stated by the Ld. AR, and rightly so, the aforesaid issue in hand is squarely covered by the order that was passed by the Tribunal while disposing off the appeal of the assessee for the immediately preceding year i.e, assessment year 2013-14, wherein the Tribunal after relying on its earlier order had observed as under: 10. Controversy involved qua the issue in hand lies in a narrow compass, i.e.,as to whether or not the A.O had rightly triggered the provisions of Section 80IA(8) of the Act by adopting the domestic purchase price of electricity by CSEB as the market rate and justifiably scaled down the assessee s claim for deduction u/s. 80IA(4)(iv)(a) by an amount of Rs. 4,38,75,880/-?. In our considered view, as claimed by the Ld. AR, and rightly so, the aforesaid issue as on date is squarely covered by the order of the Tribunal in the assessee s own case for the assessment year 2008-09, i.e.ACIT-1(2) Vs. Mahindra Sponge and Power Limited in ITA No.159/BLPR/2011, dated 19.06.2015. In its aforesaid or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as this is not the rate for which a consumer or the Steel- Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market. 32. In our opinion, the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier: it should have been compared with the market value of power supplied to a consumer. 33. It is admitted by the Department that in Chhattisgarh the power was supplied to the industrial consumers at the rate of Rs. 3.20/- per unit for the AY 2004-05 and Rs. 3.75/- per unit for the AYs 2005-06 and 2006-07. It was this rate that was to be considered while computing the market value of the power. 34. The CIT-A and the Tribunal had rightly computed the market value of the power after considering it with the rate of power available in the open market namely the price charged by the Board. There is no illegality in their orders. 35. In view of above, the question is decided against the Department and in favour of the Assessee. The tax appeals have no merit. They are dismissed 7. Since, this issue has already been decided by Hon ble Jurisdicti ..... 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