Deduction under Section 80IA(4) requires market value for power transfers within businesses, not actual purchase price

The HC held that for deduction under Section 80IA(4), when power generated for captive consumption is transferred within the assessee's businesses, the transfer consideration must reflect market value, not the actual purchase price from GEB. Following precedent, electricity is treated as goods or services under Section 80IA(8), requiring substitution of market value for allowable deduction. The Tribunal's adoption of Rs. 5.40 per unit as market value was upheld. The decision was against the revenue.

---

---

Issues:
1. Whether deduction u/s 80IA(4) is allowable for power generation for captive consumptionRs.
2. Whether the Tribunal was justified in allowing the deduction u/s 80IA(4) based on the purchase price of power from GEB instead of the rate adopted by the Assessing OfficerRs.

Analysis:
Issue 1: The appeal involved questions regarding the allowance of deduction under section 80IA of the Income Tax Act for power generation for captive consumption. The Tribunal upheld the decision of CIT(A) in allowing the deduction to the assessee. The Court referred to previous judgments where similar issues were discussed. The Tribunal considered the market value of electricity supplied by the CPP Unit to be the same as charged by GEB from consumers. The Court agreed with this reasoning, stating that the market value should be based on the actual price paid by consumers, regardless of any components like electricity duty. The Court emphasized that the market value should be determined based on the price paid by consumers, and upheld the Tribunal's decision to allow the deduction under section 80IA.

Issue 2: Another tax appeal raised similar questions regarding the deduction u/s 80IA(4) for the same assessee in a separate assessment year. The Tribunal allowed the deduction based on the purchase price of power from GEB, contrary to the rate adopted by the Assessing Officer. The Court referred to previous judgments where similar issues were discussed. The Court noted that the Assessing Officer had calculated the deduction amount based on a different rate, resulting in a loss instead of a profit shown by the assessee. However, the Tribunal's decision to consider the market value of electricity supplied by the assessee at the rate charged by GEB was upheld by the Court. The Court reiterated that the market value should be determined based on the actual price paid by consumers. The Court dismissed the tax appeals, holding that the questions were considered on multiple occasions and consistently decided against the Revenue.

---