TaxTMI 
TaxTMI 
2023 (4) TMI 1051
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....4,94,76,749 without appreciating the fact that the Company has incurred gross total losses in the instant AY 2017-18 and has not claimed any deduction under section 80-IA of the Act. 3. On the facts and in the circumstances of the case and in law, the Hon'ble DRP/ learned AO erred in determining the price for transfer of power between eligible units and non-eligible units as assessee has not claimed any deduction under section 80IA of the Act and thus, provisions of specified domestic transfer pricing as laid down in section 92BA of the Act do not apply. 4. On the facts and in the circumstances of the case and in law, the Hon'ble DRP/ learned AO has grossly erred in ignoring tariff order passed by CSERC for supplying power by Chattisgarh State Power Distribution Co. Ltd. ('CSPDCL') in the state of Chattisgarh for the purpose of determining arm's length price in respect of transfer of power from eligible units to non-eligible units. 5. On the facts and in the circumstances of the case and in law, the Hon'ble DRP/ learned AO has grossly erred in considering the rate at which CSPDCL purchases short term power from captive power units to benchmark its tra....
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....ssee with the Associated Enterprises. The TPO has passed an order u/s 92CA(3) vide Order No. ITBA/TPO/F/92CA3/2020-21/1030221113(1) on 30/01/2021, wherein it has been determined that an adjustment of Rs. 49,52,68,006/- should be made to the value of international transactions entered into by the assessee company. Therefore, as per TPO order under section 92CA(3) dated 30/01/2021, a sum of Rs. 49,52,68,006/- was proposed to be added to the income of the assessee in the draft assessment order. In response to the same, the assessee filed objections before Ld DRP against the draft assessment order framed by the AO u/s 144C of the Income-tax Act. The Ld DRP-2 vide order dated 28/12/2021 in which directed the TPO to give effect in terms of provisions of section 144C(3) of the Act. The TPO vide letter dated 13/01/2022 received by AO's office on 16/01/2022 forwarded the revised computation as per the directions given by Ld DRP in order dated 28/12/2021. The TPO in its letter stated that - "the assessee has transferred power from Unit-2 at Rs.61,72,090,010/-. Accordingly total downward adjustment amounting to Rs. 24,94,76,749/-(61,72,09,010 - 36,77,32,261) is thus made to the income of elig....
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....nsfer of captive power from eligible units to non-eligible units. It was also the arguments of the ld. AR that ld. DRP/ ld. AO has erred on the facts and in circumstances of the case and in law in proposing to initiate penalty proceedings against the Assessee under section 270A of the Act, without appreciating the fact that the Assessee has not claimed any deduction under section 80IA of the Act and hence, there is no adjustment to the returned income declared by the assessee is warranted and therefore, the addition made deserves to be vacated. 5. Ld. CIT-DR vehemently supported the orders of the ld. CIT(DRP)-2, Mumbai and the order of the ld. AO. 6. We have considered the rival submissions, perused the material available on record and judicial pronouncements pressed into our service. The sole issue of the appeal is related to determination of price of transfer of power between the eligible units and non-eligible units. Admittedly, the assessee has adopted the rate at which the Chhattisgarh State Electricity Board is charging for supply of electricity to the industrial consumers. This issue was deliberated in detail by the Hon'ble Jurisdictional High Court of Chhattisgarh in ....
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....ng purchase of power by non-eligible unit from SEB, was found to fulfil internal CUP parameters and, thus, landed cost paid by paper manufacturing unit to SEB was held to represent internal comparable arm's length rate - whether, on facts, assessee had correctly identified manufacturing unit as tested party and applied CUP as MAM and purchase price of electricity in open market from SEB to manufacturing units in uncontrolled conditions was ALP - Held, yes [Para 27] [In favour of assessee] (ii) The Hyderabad Bench of the Tribunal in the case of Sree Rayalaseema Hi Strength Hypo Ltd., reported in [2023] 146 taxmann.com 168 (Hyderabad-Trib), has held that :- Section 92C, read with section 80-IA, of the Income-tax Act, 1961 - Transfer pricing - Computation of arm's length price (Adjustments - Others) - Assessment years 2017-18 and 2018-19 - Assessee had a captive thermal power plant, in respect of which deduction under section 80-IA was claimed - It had also entered into specific domestic transaction with its AEs in respect of sale of power, and hence, adopted Rs. 8.74 per unit as ALP - TPO being of view that rate adopted by assessee included demand charges, energy char....
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.... 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 unit which was at higher rate than the power supplied to Chhattisgarh State Electricity Board; the Hon'ble High Court has held as under : "28. The Chhattisgarh-Company is a company which is generating power. It is neither consumer of the electricity, nor it is supplying power to a consumer. It also cannot sell power to any consumer directly: it has to comp....
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....IT(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 absolutely no justification on the part of the A.O in not following the binding judgment of the Hon'ble High Court in the case of CIT Vs. Godawari Power & Ispat Ltd. (supra) which seizes the issue under consideration. Admittedly, the Department had assailed the aforesaid judgment of....