Revenue's appeal dismissed as assessee allowed section 80IA deduction using State Electricity Board rates for captive power supply

ITAT Mumbai dismissed Revenue's appeal regarding deduction under section 80IA for electricity supply to captive units. The assessee adopted State Electricity Board rates as market price for power supplied to its own units. CIT(A) allowed the deduction following previous Tribunal decisions in assessee's favor for AY 2006-07 to 2009-10. Revenue failed to demonstrate any change in facts or law from earlier years. Tribunal upheld CIT(A)'s decision allowing market rate adoption based on SEB selling rates rather than Power Distribution Agency rates.

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Issues:
- Interpretation of market price of power supplied for captive consumption for deduction u/s 80IA.
- Relevance of government duties and taxes in determining market price.
- Assessment of deduction u/s 80IA based on market value of power generated.

Analysis:
1. The appeal by the Revenue challenged the CIT(A)'s decision regarding the market price of power supplied to the current unit for captive consumption for deduction u/s 80IA. The Revenue argued that the CIT(A) erred in adopting the rate at which the State Electricity Board supplies electricity without considering the sale price shown in the assessee's books. The Tribunal referred to a previous case where a similar issue was adjudicated, and it was held that the market value of electricity sold/supplied can be adopted based on the rate at which the assessee purchases electricity from the State Electricity Board. The Tribunal found no other method to determine market value and upheld the assessee's claim under u/s 80IA, setting aside the CIT(A)'s decision in favor of the assessee.

2. The second issue involved the exclusion of government duties and taxes in determining the market price of power supplied for deduction u/s 80IA. The Revenue contended that the CIT(A) erred in not excluding these duties and taxes. The Tribunal, following the decision in a previous case, upheld the assessee's method of calculating the market value of electricity supplied to captive units based on the rate at which electricity was purchased from State Electricity Boards. The Tribunal found this method rational and reasonable, rejecting the Revenue's argument. The Tribunal concluded that the assessment order was not erroneous and prejudicial to the interest of revenue, quashing the CIT(A)'s order and restoring the assessment order in favor of the assessee.

3. The final issue revolved around the assessment of deduction u/s 80IA based on the market value of power generated by the captive power plants. The CIT(A) had disallowed a certain amount claimed by the assessee, but the Tribunal, following the precedent set in earlier cases, allowed the deduction. The Tribunal emphasized that the adoption of the selling rate of electricity to State Electricity Boards as the market rate was justified, rejecting the department's argument. The Tribunal upheld the CIT(A)'s decision to delete the disallowed amount, as there were no changes in facts or laws compared to previous years' decisions in the assessee's favor. Consequently, the appeal of the Revenue was dismissed by the Tribunal.

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