TaxTMI 
TaxTMI 
2022 (8) TMI 440
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...., in context of computation of deduction u/s.80IA(8) of the I.T.Act,1961, the Ld. CIT(A) was justified in holding that the market value of the power is the rate of power available in the open market namely the price charged by the Electricity Board?" c. Whether on points of law and on facts & circumstances of the case, in context of computation of deduction u/s.80IA(8) of the I.T. Act, 1961, the Ld. CIT(A) was justified in holding that the goods of one unit of a company can be transferred to another unit at a notional figure of what it might cost if purchased from outside rather than at cost of production?" d. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the disallowance of Rs.5,73,515/- made u/s 14A of the Income Tax Act r.w.r 8D of the IT Rules made by the AO?" e. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified is not considering the extent provisions of section 14A(3) of the IT Act while deleting the addition of Rs.5,73,515/- made by the AO?" f. "Whether on points of laws and on facts & circumstances of the case, the Ld. CIT(A) has erred in deleting the additi....
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....as carried the matter in appeal before us. 6. We shall first deal with the grievance of the department that the CIT(Appeals) had gravely erred in law and facts of the case in vacating the disallowance of the assessee's claim for deduction u/s.80IA(4)(iv)(a) of the Act amounting to Rs.4,38,73,880/-. Controversy involved qua the present issue lies in a narrow compass, i.e., triggering of Section 80IA(8) of the Act by the A.O for declining the assessee's claim for deduction u/s. 80IA(4)(iv)(a) of Rs.4,38,73,880/-. Shorn of unnecessary details, the assessee company which is engaged in the business of manufacturing and trading of sponge iron, steel ingots and generation of power has two divisions, viz. (i) steel division; and (ii) power division. The profit of the power division is eligible for deduction u/s.80IA(4)(iv)(a) of the Act. This is the sixth year of claim of deduction by the assessee u/s.80IA(4)(iv)(a) of the Act. 7. During the course of the assessment proceedings, it was observed by the A.O that the assessee company had transferred electricity produced in the power plant to its steel division and associate concerns, while for the remaining electricity was sold to the State....
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....ity units produced by its power division to its steel plant and associate concerns at a rate lower than that at which same was being sold by CSEB to similarly placed units, therefore, no adverse inferences qua the alleged transfer/sale of the power units generated by the assessee company to its steel division and associate concerns were liable to be drawn. However, the A.O was not persuaded to subscribe to the aforesaid explanation of the assessee. Observing that the assessee was never under any obligation to sell electricity to CSEB, the A.O held a conviction that the assessee company had artificially inflated the rates at which it had sold the power units to its steel division and thus, by so doing reduced its overall tax liabilities. In order to support his aforesaid conviction the A.O had observed that a consortium of companies led by M/s. Sunflag Iron & Steel Company limited and India Bulls Power Generation Limited had offered to supply electricity to CSEB at the rate of Rs. 0.81 per unit. Also, it was observed by him that some other suppliers had supplied electricity to CSEB at the rate Rs. 2.25 per unit, Rs.2.32 per unit for different periods which being liable for correctio....
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....ng support from the judgment of the Hon'ble High Court of Chhattisgarh in the case of CIT Vs. Godawari Power & Ispat Ltd. (supra), found favor with the claim of the assessee and observed, that the "market value" of the power supplied by the assessee to its steel division was rightly computed by considering the rate at which power was available in the open market, namely, the price that was charged by the electricity board. For the sake of clarity the relevant observations of the Tribunal in the assessee's own case for A.Y. 2008-09 are culled out as under: "6. At the outset, it is informed that the issue is squarely covered by the decision of Bilaspur Bench of the Tribunal in the case of ACIT V/s Godavari Power &Ispat Ltd. [2011] 133 ITD 502 (Bilaspur). In the compilation of the assessee at page 12, the respondent-assessee has also placed reliance on the order of Hon'ble High Court of Chhattisgarh at Bilaspur in the Tax case No.31, 34,32 of 2012 dated 2nd August, 2013 pronounced in the case of CIT V/s Godavari Power &Ispat Ltd., wherein on this very fact that the said assessee was a manufacturer of Iron steel and captive power plant has supplied electricity to its manufacturer uni....
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....therefore, we find no force in this ground of Revenue. Before we conclude this judgment it is also worth to mentioned that the ld. CIT(A) has taken into consideration "market price" and thereafter granted part relief by sustaining the disallowance of Rs.11,76,763/-. The relevant paragraph of ld. CIT(A) has already been reproduced above. The ld. AR has stated at BAR that the assessee has not challenged the said partial relief and no appeal was preferred. Thus, under the totality of the facts an circumstance of the case, as also law pronounced by the Hon'ble Jurisdictional High Court, we hereby reject this ground of revenue." 11. As the facts and issue involved in the present appeal of the assessee remains the same as were there before the Tribunal in its own case for AY 2008-09, therefore, we are unable to comprehend as to on what basis the A.O had declined to follow the same. At this stage, we may herein observe that it is neither a fact nor the case of the department that the aforesaid order of the Tribunal had either been set-aside or stayed by the Hon'ble High Court which would have otherwise justified the declining on its part to follow the same. Apart from that, we find absol....