TaxTMI 
TaxTMI 
2025 (8) TMI 1384
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....Tax Appellate Tribunal, "C" Bench, Kolkata [Tribunal] in ITA/1989/Kol/2019 for the assessment year 2015-2016. The appeal was admitted on 31.1.2024 on the substantial questions of law. We have elaborately heard Mr. Tilak Mitra, learned advocate for the appellant and Mr. J. P. Khaitan, learned senior counsel assisted by Mr. Pratyush Jhunjhunwalla, learned advocate for the respondent. It cannot be disputed by the revenue that the substantial questions of law no.(iii), (iv), (v), (vi), (vii) and (viii) are covered by the decision of this Court in the case of Principal Commissioner of Income Tax Vs. Star Paper Mills Ltd., [2025] 172 taxmann.com 391 as well as the decision in Principal Commissioner of Income Tax, Central-I vs. Rungta Mines Ltd....
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....take note of the Electricity Act, 2003. Section 2(8) of the Act defines "Captive Generating Plant" to mean a power plant set up by any person to generate electricity primarily for its own use and includes its power plant set up by any cooperative society or association of persons for generating electricity primarily for use of members of such cooperative society or association. Section 9 of the Act deals with Captive Generation. Subsection 1 of Section 9 commences with a non obstante clause and states that notwithstanding anything contained in the Electricity Act, 2003, a person may construct, maintain or operate a Captive Generating Plant and dedicated transmission lines. 16. The first proviso states that the supply of electricity....
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....rate. This being not the legal position when the decision in ITC Limited was rendered, the said decision could not have been relied upon by the TPO/assessing officer. 18. We concur with the views expressed by the learned tribunal that the consumer/contracting parties will certainly desire to purchase electricity at lesser rate than the rates offered by State Electricity Board whereas the Captive Power Plants/generating companies would desire to get maximum rate on the sale of power in unregulated and uncontrolled transaction and both the parties would settle at mutually agreed rates irrespective of the rates at which the State Electricity purchases power from other generating units. 19. The learned tribunal in the case of ....
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....b) WHETHER in facts of the case and in law, the Hon'ble ITAT is justified in not appreciating the finding of the TPO that the assessee's generating unit cannot as such claim any benefit under section 80IA of the Income Tax Act computed on the basis of rates charged by the distribution licensee from the consumer. The benefit can only be claimed on the basis of the rates fixed by the tariff regulation commission for sale of electricity by the generating companies to the distribution company? 20. The Court took note of the decision of the Hon'ble Supreme Court in CIT Versus Jindal Steel and Power Limited. In the said case, the assessee having found that the electricity supplied by the State Electricity Board was inadequate....
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....market value of the power supplied by the assessee to its industrial units should be computed by considering the rate at which the State Electricity Board supplied power to the consumers in the open market and not comparing it with the rate of power when sold to a supplier, i.e., sold by the assessee to the State Electricity Board as this was not the rate at which an industrial consumer could have purchased power in the open market. It is clear that the rate at which power was supplied to a supplier could not be the market rate of electricity purchased by a consumer in the open market. On the contrary, the rate at which the State Electricity Board supplied power to the industrial consumers has to be taken as the market value for computing d....
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.... to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. It was further held that the State Electricity Boards rate when it supplies power to the consumer have to be taken as market value for computing the deduction under Section 80IA of the Act. Thus, applying the decision of the Hon'ble Supreme Court in Jindal Steel and Power and in the light of the reasoning given in the preceding paragraphs, we hold that the learned tribunal rightly dismissed the appeals filed by the revenue." In the light of the above decision, the substantial question nos.(iii) to (viii) are answered against the revenue. This leaves us with the first two substantial questi....