TaxTMI 
TaxTMI 
2011 (7) TMI 965
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.... of the Income-tax Act, 1961. 2. The assessee is a textile manufacturing company. It is having a windmill undertaking as an independent division. The windmill undertaking is entitled for the benefit available under section 80-IA of the Act. The assessee accordingly claimed deduction for the impugned assessment year. 3. The electricity generated by the windmill establishment of the assessee is collected by the Tamil Nadu Electricity Board on a special arrangement. The Tamil Nadu Electricity Board collected the electricity from the generating point of the assessee and releases it to the assessee-company whenever required. This practice is followed by the Tamil Nadu Electricity Board to promote the involvement of industries in generating....
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.... under section 80-IA adopting the market price of the power generated by it at Rs. 3.50 per unit. This is on the ground that the Tamil Nadu Electricity Board is supplying power at the rate of Rs. 3.50 per unit and in the absence of any other quoted rate in the market, the same should be considered as the sale price of the power in the market. Accordingly the assessee-company computed the eligible profit adopting the market rate of energy produced by it at the rate of Rs. 3.50 per unit. 6. But the Assessing Officer held the view that while the assessee is delivering the power to the Tamil Nadu Electricity Board, the assessee is paid only Rs. 2.70 per unit and therefore that price of Rs. 2.70 per unit should be taken as the market price of....
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....ion. The Assessing Officer took the market value of the power generated by the assessee at Rs. 2.70 per unit and not Rs. 3.50 per unit as claimed by the assessee and thereby the assessee has overstated the price of the goods sold by it so as to boost the profit of its eligible unit, which in this case is the windmill unit. 9. The rule applicable in determining the market value in a similar context has been discussed by the hon'ble jurisdictional High Court in the case of CIT v. Thiagarajar Mills Ltd., Kappalur, Madurai. While delivering the judgment in Tax Case (Appeal) Nos. 68 to 70 of 2010 dated June 7, 2010 their Lordships have held as under : "9. Therefore, there is no difficulty in holding that captive consumption of the power ge....
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....9. In that case also one of the issues raised was valuation of the power generated by the eligible unit. In that case the power generated by the assessee was used by it for own consumption as well as for sale to the State Electricity Board. The Tribunal held that the rate at which the State Electricity Board supplies power to its consumers is to be considered to be the market value for transfer of power by the assessee's electricity generating undertaking for captive consumption for the purposes of section 80-IA(8) and not the price at which the power is supplied by the assessee to the Board. 12. Further, as far as the captive consumption of power is concerned, the assessee is neither selling nor buying electricity. The quantum of power ....