TaxTMI 
TaxTMI 
2015 (3) TMI 356
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....e State Electricity Board has to incur necessarily. 2. Any other ground that may be raised during the hearing of appeal. Assessee had filed following grounds of appeal for the next AY: 2008-09 1.The CIT(A)erred in confirming the order of assessment restricting the deduction under section 801A of the Act to Rs. 26,10,28,391 instead of the Rs. 68,48,02,132, as claimed. 2.The CIT(A] erred in holding that the findings of the Hon'ble ITAT for assessment years 2003-04, 2004-05 and 2005-06 were not binding on him. 3.The CIT(A) erred not following his predecessors order for assessment year 2007-08 wherein it has been held that the findings of the Hon'ble ITAT for assessment years 2003- 04, 2004-05 and 2005-06 conclude the issue in favour of the Appellant. 4.The CIT(A) erred in confirming the disallowance of Rs. 1,00,000 paid to arrive at a settlement of dispute under the provisions of Factories Act, 1948 without appreciating that the same was compensatory in nature and allowable under section 37(1) of the Act. 5.The CIT(A) erred in levying interest under section 234B and 234C of the Act. ITA/71/NGP/2011-AY.2007-08: 2. Assessee-company, engaged in the busi....
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....DR) submitted that assessee had sold electricity to its own division with an ulterior motive of reducing profit,that there was no justification for charging Rs. 3.80 per unit from the Ferro and Alloy division. Authorised Representative (AR) submitted that the issue was squarely covered by the decisions of the Tribunal delivered in the case of assessee itself. He relied upon the following decisions: i). ITA/248/Nag/2008 dtd.28.10.2009, ITA/249/ Nag/2008 dtd.28.10.2009 and ITA/297/Nag/2008 dated 28.10.2009, delivered by the E Bench of ITAT, Mumbai in assessee's own cases for the AY.2003-04, 2004-05 and 2005-06. ii). Jindal Steel and Power Ltd.(16 SOT 509), iii). Godavari Power and Ispat Ltd.(ITA/60-62/ BLPR/2010 dtd.04.11.2011-AY.2004-05 to 2006- 07), iv). Godavari Power and Ispat Ltd. Raipur(Hon'ble Chhattisgarh High Court-IT case no 31-33 of 2012), v). Smt. Godavari Devi Saraf(113 ITR 589), vi). Excel Cotspin (India)(P)Ltd.(ITA/1570/Mds/2011-AY.2007-08), vii). Arun Textile(P) Ltd (ITA No.569/Mds/ 2011 AY.2007-08), viii). Shah Alloys Limited (ITA 844/Ahd/2006-AY.2002-03). He further submitted that CIT,Raipur had initiated revisionary proceedings in....
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.... value i.e. the rate at which power was supplied to the State Electricity Board. In that matter the assessee had sold power @ Rs. 3.72 and Rs. 2.32 per unit to his own captive division and the State Electricity Board respectively. Deciding the appeal in favour of the assessee, Tribunal held as under: ""We have carefully considered the submissions of both the parties on this aspect. The crux of the dispute before us relates to the manner of computing profits of the undertakings of the assessee engaged in generation of power for the purposes of relief under sect/on 801A of the Act.The difference between the assessee and the Revenue with regard to the determination of the market value of Power so as to record the income accrued to the assessee on supplies made to its own manufacturing units. As noted earlier, in this case, the assessee has utilized the power generated for its captive consumption by way of supplies to its other manufacturing units and a/so for the State Electricity Board. The dispute essentially relates to the mechanism of section 80IA(8) of the Act. Section 80- IA (5) provides that where an assessee, which is eligible for section 80IA benefits, transfers its goods ....
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....n the case of Orchard v Simpson (1857) 2 CBNS 299, the phrase "market value" in contract for the sale of goods has been understood to mean the price in the market to an ordinary consumer, irrespective of the particular contract. Similarly, in Law Lexicon by P Ramanatha Aiyar, with reference to U.S. vs Certain: Property in Borough of Manhattan, City County and State of New York, ACANY, 403 F.d800, 802, it has been explained that the market value of an article or piece of property is the price which it might be expected to bring if offered for sale in a fair market; not the price which might be obtained on a sale at public auction or a sale forced by the necessities of the owner but such a price as would be fixed by negotiation and mutual agreement, after ample time to find a purchaser, as between a vendor who is will (but not compelled) to sell and a purchaser who desires to buy but is not compelled to take the particular article or piece property. 15.Therefore, from the aforesaid, it can deduced that market value is an expression which denotes a price arrived at between the buyers and the seller in the open market wherein the transactions take place in the normal course of tr....
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....titive environment and nor in the ordinary course of trade and business, It is an environment where one of the players has the compulsive legislative mandate not only in the realm of enforcing buying but also to set the buying tariff in terms of preset statutory guidelines. Therefore, the price determined in such a scenario cannot be equated with a situation where the price is determined in the normal course of trade and competition. Therefore, the price determined as per the Power Purchase Agreement cannot be equated with market value as understood in common parlance. We see no reason for not holding so for the purposes of section 80IA(8) also. 17. In this background, we may make a gainful reference to the decision of the Hon'ble Calcutta High Court in the case of CIT vs Manmatha nath Mukherjee [1958] 34 ITR 567, which has been relied on by the assessee before us. The issue before the Hon'ble Calcutta High Court was in the context of the Bengal Agricultural Income-tax Act, 1944. Shorn of other details, the question considered by the Hon'ble High Court, relevant for the present, was the procurement rate of paddy offered by the State could be considered to be the mark....
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....l. Had the assessee not been saddled with restrictions of supplying surplus power to the State Electricity Board,it would have supplied power to the State Electricity Board, it would have supplied power to the ultimate consumers at rates similar to those of the Board or such other competitive rates, meaning thereby that price received by the assessee would be in the vicinity of Ps 3.72 per unit i.e. charged by the Board from its industrial consumers/users. Thus, under the given circumstances, it would be in the fitness of things to hold that the consideration recorded by the assessee's undertaking generating eclectic power for captive consumption at the rate of Ps 3.72 per unit corresponds to the market value of power. Therefore, on this aspect, we uphold the stand of the assessee and power.Therefore, on this aspect,we uphold the stand of the assessee and power. Therefore, on this aspect, we uphold the stand of the assessee and set aside order of the CIT (A) and direct the Assessing Officer to allow relief to the assessee under section 801A as claimed.Assessee succeeds on this ground." 2.3.b.Here we would also like to mention that the revisionary proceedings initiated by the....
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.... (103 ITD 19 @ 37), the co-ordinate bench has observed that the CIT(A) had come to a reasonable conclusion that the transfer price (of electricity) should be taken on the basis of average price paid by the assessee during the whole year to KSEB minus certain extraneous charges like electricity, duty etc which was not connected with the business of the assessee, that the Bench was unable to understand how that proposition was distinguishable on facts. In para 9 (pg.7) of the order Tribunal has held as under : 9. Learned DR has addressed length on correctness of approach adopted by learned CIT, on merits. He submits that the learned CIT may not share perception of the co-ordinate benches but the exercise SO conducted by him constitutes logical thinking and is fully justifiable on merits. That aspect of the matter, however, is not relevant at this stage. Once we come to the conclusion that the stand of the assessee, which is sought to be disturbed by the impugned revision order, is a possible view of the matter and it is not sustainable in law, we have to conclude that learned Commissioner indeed erred in assuming jurisdiction u/s 263 on the facts of this case. That apart, even ....
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...., he upheld the order of the AO. About the orders passed by the Tribunal, he stated that the question before the ITAT was legality of proceedings carried out u/s. 263 of the Act, that the Tribunal had not decided the issue of sale price of price of power. 4.2.Before us, AR made the same submissions as were made for the earlier year.DR supported the order of the FAA. We have heard the rival submissions and perused the material on record. We find that, while deciding the appeals filed against the order of the CIT passed u/s.263 of the Act, Tribunal has discussed the merits of the case at paragraph 8 of the order. It has specifically mentioned the cases of Jindal Steel and Power Ltd. (supra) and West Coast Paper Mills Ltd.(103 ITD19) and 'various other decisions of co-ordinate benches'. While deciding the issue against the AO for the last AY. at paragraphs no. 2.3., 2.3.a and 2.3.b., we have relied upon the decisions of the Tribunal and the Hon'ble Chhatisgarh High Court. Respectfully,following the said decisions we reverse the order of the FAA and decide Ground Nos.1 to 3 in favour of the assessee. 5. Next Ground of appeal is about disallowance of Rs. 1,00,000....