Captive power valuation under section 80-IA uses industrial consumer tariff; factual corporate guarantee fee benchmark raised no legal issue.

For section 80-IA valuation of electricity supplied from captive power plants, the proper benchmark is the State Electricity Board tariff charged to industrial consumers, because market value must reflect the consumer-side rate rather than a supplier-side sale rate. On that basis, the Tribunal's internal CUP approach was treated as correct and the Revenue's challenge failed. On corporate guarantee fee, the 0.5% benchmark was treated as a factual determination based on the material before the Tribunal, and the Revenue's own reliance on that rate meant no substantial question of law arose for appellate interference.

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Issues: (i) Whether the transfer price of electricity supplied by captive power plants to the assessee's industrial units was correctly benchmarked by adopting the internal CUP method and the rate charged by the State Electricity Board for supply to industrial consumers for the purpose of section 80-IA deduction; (ii) Whether any substantial question of law arose on the corporate guarantee fee benchmarked at 0.5%.

Issue (i): Whether the transfer price of electricity supplied by captive power plants to the assessee's industrial units was correctly benchmarked by adopting the internal CUP method and the rate charged by the State Electricity Board for supply to industrial consumers for the purpose of section 80-IA deduction.

Analysis: The controlling legal position was taken from the earlier binding view that electricity generated by captive power plants established for own use is to be valued with reference to the rate at which industrial consumers purchase power from the State Electricity Board, not with reference to a rate applicable to sale of power to the Board or to a supplier. The court also relied on the Supreme Court's exposition that the market value of electricity for section 80-IA must reflect the consumer-side open market rate and that the rate payable to a supplier cannot be treated as the market rate for a consumer. On that basis, the Tribunal's approach in comparing the captive power transfer with the State Electricity Board's industrial consumer tariff was treated as correct.

Conclusion: The issue was answered against the Revenue and in favour of the assessee.

Issue (ii): Whether any substantial question of law arose on the corporate guarantee fee benchmarked at 0.5%.

Analysis: The Tribunal had fixed the corporate guarantee fee at 0.5% on the facts and material before it, and the court treated that exercise as one of factual adjudication rather than a pure question of law. The revenue's own reliance before the Tribunal on the 0.5% benchmark also showed that the grievance did not disclose a substantial question of law for appellate interference under section 260A.

Conclusion: No substantial question of law arose on this issue, and the Revenue's challenge failed.

Final Conclusion: The appeal did not succeed, and the Tribunal's order was left undisturbed in full.

Ratio Decidendi: For valuation of captive power transfers under section 80-IA, the proper market value is the tariff charged by the State Electricity Board to industrial consumers, and where the Tribunal's determination on corporate guarantee fee is factual and accepted by the appellant itself, no substantial question of law arises under section 260A.

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