TaxTMI 
TaxTMI 
2017 (9) TMI 832
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....ated 11/03/2013 relevant to Assessment Year (AY) 2010-11. 2. The assessee has challenged the order of the CIT(A) in sustaining the order of AO whereby the claim of assessee towards deduction under s.80IA(4) was reduced from Rs. 41,47,476/- to Rs. 22,60,425/-. 3. Briefly stated, the assessee is mainly engaged in the business of manufacturing and sales of various specialty chemicals which find application in diverse industries such as pharmaceuticals, agro chemicals, dyes and pigments etc. The assessee is also simultaneously engaged in the generation of wind-power and has installed wind-electric generators (windmills) in the states of Gujarat and Maharashtra for this purpose. The assessee in its return of income inter alia claimed deduc....
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.... has substituted the aforesaid market price of Rs. 4.60 per unit to Rs. 2.87 which represents the average purchase price of other electricity undertaking namely GUVNL. It was submitted that the CIT(A) has also wrongly endorsed the aforesaid action of the AO. The claim of eligible deduction under s.80IA(4) was thus reduced by Rs. 18,87,051/-. The Ld.AR submitted that for the purposes of determination of 'eligible profit' under s.80IA(4) of the Act from generation of power for captive consumption, the AO ought to have accepted the rate adopted by the assessee which represents the selling price at which GEB supplied power to its consumers. The Ld.AR submitted that the Revenue authorities fell in error in not adopting the "market value" as per ....
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....r s.80IA(4) r.w.s.80IA(8) in respect of assessee's Captive Wind Power Plant. For the purposes of claiming tax holiday, the assessee considered the average rate at which power was sold by an independent power supplier, i.e. MGVCL to its customers to enable it to determine the "market value" of electricity is generated by its Captive Wind Power Plant. The AO, on the other hand, has placed reliance upon the average price at which GUVNL has purchased power for supply to customers. Consequently, the eligible profit under s.80IA(4) was reduced by Rs. 18,87,051/-. 9. We observe that the identical issue has been squarely dealt with in the case of Rainbow Papers Ltd. vs. ACIT in IT(SS)A Nos.101 to 103/Ahd/2013 for AYs2008-09 to 2010-11 order date....
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....rmining the deemed sale price of power supplied by the captive power generating unit to paper unit excluded the cost towards surcharge and duty levied by GEB (UGVCL) for the purposes of determination of arm's length price. The eligible profits under s.80IA(4) r.w.s.80IA(8) of the Act was accordingly brought down by the AO to the extent of duty and surcharge. The CIT(A) also declined to admit the claim of the assessee towards 'surcharge' and 'duty' for the purposes of calculation of selling rate per unit. This apart, the CIT(A) further took note of the average price charged by various distribution companies commonly known as 'Discoms' and eventually calculated the selling price at Rs. 2.99 per unit as per working reproduced in preceding para....
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....he GEB (UGVCL). The aforesaid price is most reliable for the purpose of determination of arm's length price. Thus, we do not see any logic for deviation from the same and apply average price of other companies without any solid basis. 16. We now seek to dwell on other aspect of controversy i.e. includibility for otherwise of 'surcharge' in the deemed selling price. The controversy concerns as to whether 'surcharge' and 'duty' levied by the power generation and distribution companies to its consumer will form part of selling price or not for the determination of market value under s.80IA(8) for calculation of eligible profits under s.80IA(4) of the Act. 16.1. In this regard, we refer to the Electricity Act, 2003 and note th....