Tax Appeal: Deduction u/s.80IA on Interest Upheld, Market Value Crucial

The Court upheld the Tribunal's decision allowing the deduction u/s.80IA on interest received on margin money, emphasizing the market value consideration for goods or services transferred between businesses. The Court admitted the Tax Appeal for consideration of specific questions related to this deduction, while not entertaining the Revenue's questions on the netting of interest and the adjustment of electricity price. The Tribunal's decision on these issues was not further discussed in the judgment.

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Issues Involved:
The judgment involves the consideration of three questions raised by the Revenue regarding the deduction u/s.80IA on interest received on margin money, the netting of interest, and the addition made in respect of the adjustment of electricity price charged by the CPP Unit from the general unit.

Deduction u/s.80IA on Interest Amounting to Rs. 86,66,390 on Margin Money:
The Revenue appealed against the Tribunal's decision allowing the claim of deduction u/s.80IA on the interest received on margin money. The Court noted that similar questions [A] and [B] were admitted in other appeals, while in this case, the question [C] regarding the adjustment of electricity price was not entertained. The Court referred to sub-Section(8) of Section 80IA of the Act, emphasizing the market value consideration for goods or services transferred between businesses. The Tribunal's decision to adopt the market value of electricity at Rs. 5.40 ps. per unit was upheld, considering it as the market value despite the component of electricity duty. The Court admitted the Tax Appeal for consideration of Questions [A] and [B] only.

Netting of Interest Issue:
The Court did not entertain the question raised by the Revenue regarding the netting of interest, as it was not considered necessary in the context of the case. The Tribunal's decision on this issue was not further discussed in the judgment.

Deletion of Addition in Respect of Adjustment of Electricity Price:
The Court did not entertain the Revenue's question regarding the addition made in respect of the adjustment of electricity price charged by the CPP Unit from the general unit. The Court referred to the Tribunal's reasoning on adopting the market value of electricity supplied by the CPP Unit to the general unit at Rs. 5.40 ps. per unit, which was found to be correct. The Court emphasized that the market value consideration was valid, regardless of the component of electricity duty. The question related to this issue was not required to be considered further, and the Tax Appeal was admitted for consideration of other specific questions.

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