The Tax Publishers2019 TaxPub(DT) 1577 (Visakhapatnam-Trib)

INCOME TAX ACT, 1961

Section 80-IA

For the purpose of section 80-IA, profit of eligible undertaking had to be determined on the basis of actual lending cost of electricity purchased by assessee from APTRANSCO and value adopted by the APTRANSCO could not be considered.

Deduction under section 80-IA - Profits derived from power generation undertaking - Per unit value of power to be adopted -

Assessee having a captive power plant claimed deduction under section 80-IA in respect of profit derived from the power plant. For this purpose, assessee adopted a price of Rs. 4.50 per unit of power consumed by Rice Mill of the assessee. AO took the view that deduction can be granted only at the price at which APTRANSCO would have paid the assessee, had the power generated been sold to APTRANSCO. Thus, the AO adopted the rate @ Rs. 3.25 per unit and accordingly disallowed excess claim of deduction under section 80-IA. Held: Assessee undoubtedly was an industrial consumer and APTRANSCO supplied power to such industrial consumers at the rate of Rs. 4.50 per unit. Had assessee not been saddled with the restrictions of supplying surplus power to APTRANSCO it would have supplied power to ultimate customers at a price not less than Rs. 4.50 per unit, being the rate charged by APTRANSCO from its industrial consumers. Thus, under the given circumstances, it would appropriate to hold that consideration recorded by assessee for transfer of power for captive consumption, which was at the rate of Rs. 4.50 per unit, corresponded to market value of such power and for the purpose of section 80-IA, profit of eligible undertaking had to be determined on the basis of actual lending cost of electricity purchased by assessee from APTRANSCO.

Followed:Jindal Steel and Power Ltd. (2007) 16 SOT 509 (Del-Trib) : 2007 TaxPub(DT) 1292 (Del-Trib), West Coast Paper Mills Ltd. v. Jt. CIT (2006) 100 TTJ (Mumbai) 833 : 2010 TaxPub(DT) 5 (Mum-Trib)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10 to 2011-12



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