Captive power valuation under section 80IA and change of opinion reopening were both rejected by the Tribunal.

For deduction under section 80IA, the profit of a captive power undertaking was computed by valuing power transferred for internal consumption at its market value, and the lower rate suggested by the Revenue was rejected. The Tribunal followed its earlier view in the assessee's own case and upheld the deduction on the basis adopted by the CIT(A). Reopening under section 148 was treated as a mere change of opinion because it rested on the same material without fresh tangible material, so the reassessment could not be sustained. The Revenue's appeals failed on both issues, and the assessee's cross-objections became infructuous.

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Issues: (i) Whether, for deduction under section 80IA, the profit of the eligible captive power undertaking was to be computed by adopting the rate at which electricity was consumed internally or by substituting a lower rate said to be available from the electricity utility; (ii) Whether the reopening under section 148 was valid when the reassessment was founded on a different view of the same material.

Issue (i): Whether, for deduction under section 80IA, the profit of the eligible captive power undertaking was to be computed by adopting the rate at which electricity was consumed internally or by substituting a lower rate said to be available from the electricity utility.

Analysis: The eligible undertaking generated power for captive use by the assessee's own industrial activity. The Tribunal followed its earlier decision in the assessee's own case and the reasoning that, for the purposes of section 80IA(8), the transfer of power to the other business must be valued at market value. On the facts, the rate adopted for internal consumption was accepted as the proper basis for computing eligible profits, and the lower rate suggested by the Revenue was not accepted as the relevant measure for the deduction.

Conclusion: The issue was decided in favour of the assessee and the deduction under section 80IA was upheld on the basis adopted by the CIT(A).

Issue (ii): Whether the reopening under section 148 was valid when the reassessment was founded on a different view of the same material.

Analysis: The reassessment was treated as a case of change of opinion. The Tribunal noted that the earlier appellate view had been followed by the CIT(A), and no material was shown to disturb that approach or to establish any fresh tangible material for reopening. In these circumstances, the reopening could not be sustained.

Conclusion: The reopening under section 148 was held to be invalid and the issue was decided in favour of the assessee.

Final Conclusion: The Revenue's appeals failed on both the deduction issue and the reassessment issue, and the assessee's cross-objections became infructuous; the common order of the CIT(A) was left undisturbed.

Ratio Decidendi: For section 80IA(8), the value of power transferred for captive consumption must reflect the market value of the transfer, and a reassessment cannot be sustained when it is based merely on a change of opinion without fresh tangible material.

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