TaxTMI 
TaxTMI 
2015 (9) TMI 1001
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....A.Y. 2007- 2008, it commissioned a New Wind Electricity Generating Unit in Tamilnadu. It was already having a Wind Power Generation Unit in Andhra Pradesh and had entered into Power Purchase Agreement with Transmission Corporation of Andhra Pradesh Limited. A survey under section 133A was carried out on 13.03.2007 in the business premises of the assessee. Subsequent to the survey, the return of income for the year under consideration was filed by the assessee on 31.10.2007 declaring total income of Rs. 35,97,73,410. During the course of assessment proceedings, the assessee was called upon by the A.O. to furnish the details regarding electricity power generated by hydel power unit and wind power unit. On verification of the said details as well as further details furnished by the assessee, it was noticed by the A.O. that the closing stock of power units generated at Hydel A.P. during the period from 22.03.2007 to 31.03.2007 of 22,25,874 units was valued by the assessee at Rs. 0.71 per unit as against the market price of Rs. 3.10 per unit. When the assessee was called upon by the A.O. to explain it's stand in the matter, the following explanation was offered by the assessee. "The ....
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....he A.O. under section 143(3), an appeal was preferred by the assessee before the Ld. CIT(A) disputing the addition of Rs. 53,19,838 made by the A.O. on account of the alleged difference in the valuation of banked units. During the appellate proceedings before the Ld. CIT(A), the following submissions were made on behalf of the assessee in support of its claim on this issue. "2. The appellant-company. in addition to manufacture and sale of cement, also operates power generating units. The power so generated is sold as per the power purchase agreement that the appellantcompany entered into with APCPDCL. The appellant company also utilizes power for its manufacturing activity in the, cement manufacturing unit. While billing the appellant for power consumed, APCPDCL gives credit for the power sold to it under the power purchase agreement. However, APCPDCL adjusts only a portion of the generated units against the power consumption of the appellant for each month. Out of the remaining unadjusted units, the appellant has valued unbilled units at cost. This practice has been consistently followed over the years not only by the appellant but by various power generating units to reflect t....
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..... Once the power so evacuated is utilized by the appellant for its cement plant, (subject to payment of wheeling charges and banking charges) the appellant realizes the sale value to the extent of units adjusted against the consumption by the cement plant. It is of utmost importance to note that APCPDCL itself acknowledges the quantity of banked units which indicates that banked units constitute closing stock of the assessee acknowledged as such by APCPDCL. Once this is acknowledged as a fact, the valuation of closing stock in accordance with accepted methods of accounting cannot be the subject matter of dispute. In this view of the matter, and having regard to the facts submitted above, the appellant prays that the treatment of the quantity of banked units by the appellant as closing stock, which has been consistently followed over the past several years, may be upheld and the addition of Rs. 53,19,838/- made by the Assessing Officer may be deleted. 7. It is submitted that the method of accounting for unbilled units has been consistently followed by the assessee over the years and has been accepted by the Department. In the light of the fact that there has been no change either....
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....erated the submissions made on behalf of the assessee before the Ld. CIT(A) in support of assessee's case that the addition made by the A.O. on this issue was rightly deleted by the Ld. CIT(A). 6. We have heard the rival contentions and also perused the relevant material on record. It is observed that although 22,25,874 banked energy units produced by Hydel Power Unit A.P. during the period from 22.03.2007 and 31.03.2007 and included in the closing stock were valued by the assessee at Rs. 0.71 per unit as against the market price of Rs. 3.10 per unit, the basis of such valuation was duly explained by it before the A.O. as well as before the Ld. CIT(A). As specifically pointed out by the assessee before the Ld. CIT(A), a similar basis was adopted by it even in the earlier years and this method of valuation consistently followed in the earlier years was accepted by the department. It was also brought to the notice of the Ld. CIT(A) by the assessee that as per the said method consistently followed, the banked energy units included in the closing stock were duly considered as part of the sales in the immediately succeeding year and there was thus no loss to the revenue. Reliance in ....