TaxTMI 
TaxTMI 
2023 (1) TMI 1115
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Strength Hypo Limited ("the assessee") for the assessment years 2017-18 & 2018-19, under section 143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act, 1961 (for short "the Act"), consequent to the directions of Hon'ble Dispute Resolution Panel, Bengaluru ("DRP"), assessee filed these appeals. Since the facts involved in these two appeals, so also the grounds, are identical we deem it just and proper to dispose of these two appeals by way of a common order, with reference to the facts in the lead case for the assessment year 2017-18. 2. Brief facts of the case are that the main business of the assessee is manufacturing and sale of industrial chemical, trading in coal and generation of power. They have a captive thermal power plant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....led objections before the learned DRP and contended that its internal CUP i.e., the rate at which the non-eligible unit and other AEs procured power in an uncontrolled transaction from an unrelated entity viz. APSPDCL, was the right basis for determination of Arms Length Price (ALP). 5. Learned DRP considered the demand charges, calculating the same on the basis of slab rate as per the tariff at Rs. 7.40 per unit and holding that the other charges and duties arise due to various reasons, namely, some are collections on behalf of the Government by DISCOMS (fuel surcharge and electricity duty), some arise due to large investment made in distribution and transmission assets put by the DISCOM for multiple industrial customers (for example dema....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eliance is placed on the decisions reported in net of life sciences Ltd vs. ACIT (2022) 138 Taxmann.com 557, Star paper Mills Ltd vs. DCIT (2022) 134 taxmann.com 177, DCIT vs. Vishal fabrics Ltd (2022) 139 taxmann.com 30, West Coast paper Mills Ltd vs. additional CIT (2014) 52 taxmann.com 268 (Mumbai ITAT), CIT vs. reliance industries limited (2019) 12 Taxmann.com 372 (Bombay HC), CIT vs. Godavari power and Ispat Ltd (2014) 42 Taxmann.com 551 (Chattisgarh HC), PCIT vs. Gujarat alkylation chemicals Ltd (2017) 80 Taxmann.com 722 (Gujarat HC), and CIT vs. Kanoria chemicals and industries Ltd (2013) 35 Taxmann.com 566 (Calcutta HC). 8. Per contra, Revenue relied upon the orders of the authorities below and it is strenuously argued by the Ld. D....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der section 80-IA of the Act has been claimed by the assessee with the distribution system of 11 KV capacity. It is also not in dispute that the assessee entered into specific domestic transaction with its AEs, namely, Sh. Rama Seema High-strength Hypo Ltd, Sh. SMR Galaxy Projects Pvt. Ltd and ATV Projects and Investments Private Ltd in respect of sale of power. 10. Dispute in this appeal revolves around the deduction of Rs. 3,75,68,330/-claimed by the assessee under section 80-IA of the Act in respect of the power generation through thermal sources by adopting Rs. 8.74 per unit as ALP for supply of power to its chemical division and other AEs. It is not in dispute that the state power distribution company charged Rs. 8.98 per unit from TG....
X X X X Extracts X X X X
X X X X Extracts X X X X
....chmark the transaction. Insofar as these rates are concerned, Ld. TPO does not dispute the same. According to the Ld. TPO, assessee is not entitled to claim the inclusion of the TOD charges, demand charges, penal demand charges, electrical duty, customer charges and late payment charges which the state electricity board collects from the consumer, since the assessee does not incur any expenditure relevant to such charges being a captive power plant. 13. It is relevant to note here that the assessee does not claim late payment charges. According to the assessee while adopting CUP method, the price at which the state Electricity Board adopted while supplying power to the assessee has to be considered instead of excluding so many charges leve....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the power to the APSPDCL during the financial year 2015-16 at Rs. 5.45 cannot be an uncontrolled transaction, the Ld. TPO cannot ignore the transaction as submitted by the assessee between TGV Projects, Gauri Gopal Hospital and SRHHL with the APSPDCL at Rs. 8.98, Rs. 8.82 and Rs. 10.71 per unit cannot be ignored. At the same time the consistent view taken by the higher judicial fora and also the Tribunal in the cases referred to by the assessee is to the effect that when the assessee had set up a captive power generating unit and provided electricity to its AEs and claimed deduction under section 80-IA of the Act in respect of profits arising out of such activity, for the purpose of such deduction the market value of power supplied by the ....