TaxTMI 
TaxTMI 
2023 (4) TMI 1294
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....ptive power plant is not uncontrolled transactions and thereby ignoring the facts brought on the record by the A.O?" 3. "Whether on points of law and on facts & circumstances of the case, the Id. CIT(A) was erred in giving finding by ignoring the facts that when the external comparable uncontrolled price was available then as to why purchase price by CSPDCL -cannot be taken for determination of comparable uncontrolled price (CUP)?" 4. The order of Ld. CIT (A) is erroneous both in law and on facts. 5. Any other ground as may be raised during the course of appeal. 2. Succinctly stated, the assessee company which is engaged in manufacturing of M.S.ingot and trading of iron, steel and coal had filed its return of income for AY 2016-17 on 25.09.2016, declaring an income of Rs. Nil. The case of the assessee was thereafter selected for scrutiny assessment under section 143(2) of the Act. 3. During the course of assessment proceedings, it was observed by the AO on a perusal of Form No.3CEB that the assessee company had entered into a Specified Domestic Transaction, i.e. expenditure incurred towards payments made to a person specified in section 40A(2)(b) of....
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.... 8. The CIT(A) after deliberating at length on the contentions advanced by the assessee found favour with the same. It was observed by the CIT(A) that the price at which Chhattisgarh State Power Distribution Company Ltd. had purchased power from Captive Power plants, i.e. at the rate of Rs.3.07 per unit could not have been adopted as a comparable transaction for benchmarking the ALP of per unit rate of electricity purchased by the assessee company from its AEs. The CIT(A) while concluding as hereinabove relied on a host of the orders of Income tax Appellate Tribunal as well as the order of the Hon'ble jurisdictional High Court in the case of M/s. Godavari Power & Ispat Ltd., Tax case no. 31,32 and 34 of 2012, dated 02.08.2013. For the sake of clarity the observation of the CIT(A) are culled out as under:- 2.3 I have gone through the submission of the appellant and also perused the assessment order. As per the above facts, the assessee has purchased power @ 4.75pu whereas the TPO has adopted purchase rate at Rs. 3.07pu. This is the rate at which CSPDCL (Chhattisgarh State Power Distribution Company Ltd) purchases power from CPP(Captive Power Producers) which cannot be co....
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....onsumers directly. The same is the case here. Whereas CSPDCL sells power to the assessee at higher rate, but assessee has to execute PPA with CSEB to sell the lower rate. Even this rate could not be received by the assessee and actual rate of power is still lower. Due to these reasons the CUP derived on the basis of purchase price by CSPDCL cannot be adopted as the rate at which the assessee has purchased the power to from its sister concern. On Similar facts, recently by hon'ble Delhi ITAT has decided the appeal in the case of Nalwa Steel Power Limited vs. ACIT ITA no. 7176/DEL/2017. In this case the above facts have been recognized that generating stations are under obligation to sell the extra power at the lowest price and this lowest price cannot be considered as equivalent to the market price as defined u/s. 80IA(8) of the Act. In their decision hon'ble members have considered decision of ITAT Delhi in the case of M/s. General Steel Power Limited which is also located in the state of Chhattisgarh like the Plant of the assessee. The relevant parts of the decision in the Nalwa Steel (Supra) are as under : We have heard both the parties and perused all the releva....
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....h CSEB was selling to industrial consumers as on 01.04.2008. The above rate -of Rs.3.92 included electricity duty at the rate of 8% of energy charges and cess ofRs.0.05 paise per unit. Since according to the Assessing Officer, the assessee has not been making actual sales to its other units because the power generated is const, led captively by other units. According to him, since the assessee is only generating power but it does not have the licence to distribute it, it cannot charge the electricity duty at the rate of 8% and cessO.05% on the transfer of power. Thus, according to him, the assessee has inflated the sale of power by Rs. 0.293 per unit and has accordingly inflated the deduction u/s 80IA by a sum of Rs.3.63 per unit. We find the Id. CIT (A)following various decisions including the decision of the Delhi Bench of the Tribunal in the case of Jindal Steel & Power Limited reported in (2007) 16SOT 509 decisions of the Mumbai Bench of the Tribunal in the case of D.C.WLtd. Vs. Addl. CIT (A) vide ITA Nos. 5560 & 5569/Mum/2008 deleted the addition made by the Assessing Officer . We do not find any infirmity in the order of the Ld.CIT(A) on this issue. 60. We find the Delhi Benc....
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....dered the \ 1 ITA No. 1116/De\/2Q 11 various decisions cited before us. The only issue to be decided in the impugned ground is regarding the action of the Assessing Officer in excluding Rs. 0.2932/-per unit while computing the market price of power for the purposes of computing deduction admissible to power units u/s 80-1A of the I. T. Act. We find the assessee in the instant case has sold the electricity to its captive plant at the rate of Rs.3.92 per unit i.e. rate at which CSEB was selling to industrial consumers as on 01.04.2008. The above rate of Rs.3.92included electricity duty at the rate of 8% of energy charges and cess of Rs.0.05 paise per unit. Since according to the Assessing Officer, the assessee has not been making actual sales to other units because the power generated is consumed captively by other units. According to him, since the assessee is only generating power but it does not have the licence to distribute it, it cannot charge the electricity duty at the rate of 8% and cess 0.05% on the transfer of power. Thus, according to him, the assessee has inflated the sale o fpower by Rs. 0.293 per unit and has accordingly inflated the deduction u/s 80IA by a sum of Rs.3....
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.... 3.72 per unit can be considered to be the market value for the purposes 0 Section 80-IA(8) of the Act. The answer, to our mind is in the affirmative. This is for the reason that the assessee as an industrial consumer is also buying power from the Boar, and the Board supplies such power at the rate of Rs. 3.72 per unit to its consumers. This is the price at which the consumers are able to procure the power. We may consider hypothetical situation as well. Had the assessee not been saddled with restrictions of supplying surplus power to the State Electricity Board, it would have supplied power the ultimate consumers at rates similar to those of the Board or such other competitive rates, meaning thereby that price received by the assessee would be in the vicinity of Rs.3.72 per unit i.e. charged by the Board from its industrial consumers/users. Thus, under the given circumstances, it would be in the fitness of things to hold that the consideration recorded by the assessee's undertaking generating electric power for transfer of powers/or, captive consumption at the rate of Rs. 3. 72 per unit corresponds to the market value of power. Therefore, on this aspect, we uphold the....
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....e us. 10. As observed by the registry the present appeal filed by the revenue involves a delay of 137 days. The Ld. DR on being queried about the aforesaid delay had taken us through a letter dated 27.03.2021 placed on our record, which reads as under: "Kindly refer to your honour's defect notice dated in respect of appeal No. ITA 14/RPR/2021 in which it is mentioned that the appeal is time barred by 137 days. 2. In compliance to above defect notice, it is submitted that Central Government passed an ordinance and notify on the Gazette of India "Taxation and other laws ( Relaxation and Amendment of certain provisions) Act, 2020 No. 38 of 2020 dated 29th September 2020" for extension of time limit for filing of any appeal, wherein time is extended till 31.03.2021. Therefore, kindly rectify the defects by considering the above notification." We observe that the Hon'ble Supreme Court on March 08, 2021 vide its suo-motto order had initially excluded the period from March 15, 2020 till March 14, 2021 for calculating the period of limitation. Further, the Hon'ble Supreme Court had thereafter vide its order dated April, 27, 2021 restored its earlier order dated Marc....
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....n'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 compulsorily sell it to the Board. 29. The power sold by the Chhattisgarh-Company to the Board is a sale to a company which itself supplies power to the consumers. It is not sale of power to the consumer. 30. The Steel-Division of the Assessee is a consumer. The CPP of the Assessee supplies electricity to the Steel-Division. Had the Steel-Division not taken power from the CPP then it had to purchase power from the Board. The CPP has charged the same rate from the Steel-Division that the Steel-Division had to pay to the Board if the power was purchased from the Board. 31. The market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel-Division could have purchased power in the open m....