INCOME TAX ACT, 1961

Section 80-IA

Deduction under section 80-IA - Determination of Market value of Power supplied by asseesseis captive power plant - Quantum of -

Assessee-manufacturer of iron and steel, had established a captive power plant in State of Chhattisgarh to supply electricity to its steel division. It had sold power to steel division at same rate, which was charged by State Electricity Board [Board] for supply of electricity to industrial consumers. It claimed deduction under section 80-IA. AO computed market value of power supplied by assessee to steel division by taking into account rate charged by Chhattisgarh Electricity Company Limited, Raipur for supply of electricity to State Electricity Board. Held:The market value of the power supplied to the steel division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier, 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. 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.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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