TaxTMI 
TaxTMI 
2019 (4) TMI 1574
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....mount of Rs.2,61,73,34,836/-. The Revenue is very very fair in not disputing the latter correct figure. We therefore direct necessary modification in our order in assessee's appeal ITA No.685/Kol/2014 to this effect. The assessee's "ESOP" claim shall now be read as of Rs.2,61,73,34,836/-. Its first grievance raised in the instant miscellaneous application is treated as accepted. 4. Next comes the assessee's latter substantive ground seeking to modify our order in Revenue's third substantive ground in cross appeal ITA No.1267/Kol/2014 seeking to revive Assessing Officer's action disallowing its sec. 80IA deduction claim amounting to Rs.63,02,26,000/- for the eligible captive undertaking. Our order in issue had followed another co-ordinate bench's decision in assessee's case itself in assessment year 2002-03 as under: "16. The Revenue's third substantive ground seeks to revive the Assessing Officer's action disallowing assessee's section 80IA deduction claim amounting to Rs. 63,02,26,000/- for its eligible captive undertakings. We find the instant issue also to be no more res integra as above co-ordinate bench decision in the immediate preceding assessment year upheld the CIT(A) s....
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....ince the Assessee has artificially bifurcated the two units, therefore, he was of the opinion that no deduction u/s 80IA can be allowed in respect of the steam unit as the Assessee has already claimed deduction for generation of electricity in respect of captive power undertakings. 4.3 In respect of power undertaking - I, Kovai, the AO noted that the Assessee generated 5,43,96,500 units which was transferred at the rate of Rs. 4.10 per unit and while calculating the transfer price, the Assessee has not considered the Electricity Duty paid to the State Government even though the Assessee has paid a sum of Rs. 9.90 lakhs in connection with the aforesaid undertaking. The AO, therefore, re-determined the cost and computed the profit at Rs. 11,24,50,000/-. The AO also reduced the brought forward loss amounting to Rs. 1,03,03,000/- while computing the profit from the Kovai unit as per the provisions of Sec. 80IA(5). Thus, total deduction u/s 80IA was restricted to Rs. 32,33,07,128/- in place of Rs. 69,57,61,000/- claimed by the Assessee. The Assessee went in appeal before CIT(A). CIT(A) took the view in respect of the captive power undertakings that the issue is exactly identical to th....
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....tatutory inspection/clearances, statement of costs, fixed assets, profit & loss a/c and balances sheet and the process flow chart. I also find that in respect of the said facts, the Assessing Officer has accepted the position and had not made any issue. Further, the market value of steam had been properly determined based on a market value report by Price Waterhouse & Co. This market value was separately taken as cost as per section 80IA(8) for the computation of deduction for the electricity undertakings. Therefore, there was no case of double deduction. Therefore, in view of the above discussion and finding, I hold that the deduction is fully available to the appellant company in respect of the said Power undertaking VI for generation of steam for captive consumption." 4.5 On the issue of brought forward losses incurred prior to the initial year, CIT(A) took the view that the deduction u/s 80IA has to be computed from the initial year and all losses of earlier years prior to the initial year have to be ignored. 4.6 On the issue of inclusion of additional demand charges for determining the market value, CIT(A) decided the issue in favour of the Assessee in view of the decision....
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.... Hence this ground of the Revenue is also dismissed." From the said finding of the Tribunal it is apparent that the Assessee has computed the profit for claiming deduction by taking tariff rate @ Rs. 4.45/unit as per the policy of APSEB. This rate of APSEB contains fixed charges which are not directly relatable to the captive plant. CIT(A) reduced this rate by deleting the surcharge and additional duty and worked out the unit rate @ Rs. 4.368. The Tribunal, therefore, confirmed the market rate/unit on the basis of the policy of APSEB as reduced by the surcharge, additional duty. Thus in view of the decision of this Tribunal for A.Y 2002-03, the Assessee, in our opinion, is entitled for deduction u/s 80lA in respect of the captive power undertaking but for the purpose of ascertaining the profit, market value should be taken in respect of the two power undertakings generating electricity. We noted that during the impugned assessment year the Assessee has claimed deduction u/s 80IA after determining the profit on the basis of the power tariff rate as per APERC i.e. Rs. 3.3643/unit. This includes demand charges, additional demand charges and variable charges. The AO reduced the addit....
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....pplicable to the facts of the instant case , as admittedly, the Asst Year before Hon'ble Calcutta High Court in ITC Ltd was Asst Year 2002-03. The said decision in ITC Ltd for Asst Year 2002-03 was rendered by taking into account the relevant provisions of Indian Electricity Act, 1910 and Electricity (Supply) Act, 1948. These Acts were repealed and a new Electricity Act 2003 was introduced with effect from 10.6.2003. Hence for the Asst Years 2008- 09 and 2009-10 (i.e the years under appeal before us) , the assessee would be governed by the provisions of Electricity Act, 2003. 5.6.1. We have already seen that the ITC's case in Hon'ble Calcutta High Court, proceeded on the basis that the open market for the captive power plant was only a distribution company or a company engaged both in generation and distribution and that the rate at which electricity could be sold by the captive power plant was the one fixed by the tariff regulatory commission. However, such position has undergone sea change inasmuch as during the relevant previous years it was open to the assessee to sell even to a consumer and the price for sale to a distribution company or to a consumer that could be mutually ....
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....niversally applied to find out the price at which the goods are ordinarily sold in the open market. For determination of market value, there is no pre-requisite that an open market where buyers and sellers congregate to buy and sell goods must exist. In the instant case, the assessee-company actually bought sugarcane from a large number of growers year after year in the ordinary course of business. The price at which it buys sugarcane must be taken to be the market price. If the price is controlled by the Sugarcane Control Order, the controlled price will be taken as the market price, because it is at this price that a willing buyer and a willing seller are expected to transact business. As Lord Denning pointed out, it does not make any difference to this position that the assessee was the only buyer in the region where its factory was located." (emphasis added) 5.6.3. The ld AR submitted that as held in the aforesaid judgement of the Hon'ble Supreme Court, the price paid by an assessee for purchase of raw material represents the market price of such raw material produced by the assessee. The said judgment was held not to apply in ITC's case because the Hon'ble Court was of the....