| The Tax Publishers2019 TaxPub(DT) 8263 (Ahd-Trib) INCOME TAX ACT, 1951
Section 80-IA
For the purpose of calculating profit eligible for deduction under section 80-IA(4), value of sale had to be calculated as per market value of such goods and services as on date of transfer as provided in section 80-IA(8). In case of captive consumption of power, market value of power utilized with captiveable was the rate at which assessee-company would have purchased power from GEB. Accordingly, rate at which GEB purchased electricity from power generating undertaking such as GSECL and NTPC, could not be considered for the purpose.
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Deduction under section 80-IA(4) - Generation of electricity for in house captive consumption - Applicable rate for computation of amount deductible -
Assessee, a government company engaged in manufacturing and selling of fertiliger and chemicals in State of Gujarat, was also having an independent plant generating electricity for in house captive consumption. In respect of such power plant assessee worked deduction under section 80-IA(4) after applying rate charge by GEB to the customers.However, AO disagreed with rate used by assessee on the ground that same was not applicable in case of in-house generation electricity for captive consumption because GEB rate charged from customer included tariff. Such power purchases cost from electricity generation units such GSECL NTPC and transmission charges paid to GETC as well transmission cost of Power Grid Corporation of India for distribution network, etc. However, in case of captive power plant assessee had not incurred such expenses. Therefore, rate should be the rate of power generating unit such as GSECL and NTPC to calculate deemed sale. Accordingly, AO calculated average rate at which GEB purchased electricity from power generating undertaking.Held: For the purpose of calculating the profit eligible for deduction under section 80-IA(4), value of sale had to be calculated as per market value of such goods and services as on the date of transfer as provided in section 80-IA(8). In case of captive consumption of power, market value of power utilized with captiveable was the rate at which assessee-company would have purchased power from GEB. Accordingly, rate at which GEB purchased electricity from power generating undertaking such as GSECL and NTPC, could not be considered for the purpose.
Relied:CIT v. Godavari Power & Ispat Ltd. (2014) 223 Taxman 234(Chatt) : 2019 TaxPub(DT) 2352 (Chhattisgarh-HC), Shree Cement Ltd. v. Asstt. CIT (2014) 31 ITR (T) 513 (Jp-ITAT) : 2014 TaxPub(DT) 1594 (Jp-Trib), Pr. CIT v. Gujarat Alkalies& Chemicals Ltd. [Tax appeal 544 of 2016, dt. 3-10-2016] (Guj) : 2018 TaxPub(DT) 5550 (Guj-HC), Asstt. CIT v. Jindal Steel and Power Ltd. (2007) 16 (SOT) 509 (Del-Trib) : 2007 TaxPub(DT) 1292 (Del-Trib) and Sri Velayudhaswamy Spinning Mills (P.) Ltd. v. Dy. CIT (2012) 2012 ITR(T) 353 (Chen-Trib) : 2012 TaxPub(DT) 290 (Chen-Trib).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2006-07
INCOME TAX ACT, 1961
Section 115JB
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