TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 308
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.... was justified in upholding the decision of CIT (A) that deduction u/s. 80IA(4) is allowable to the assessee for generation of power for captive consumption? [3.2] Without prejudice to the Revenue's stand that allowance of deduction u/s. 80ΙΑ (4) by the CIT (A) ought not to have been upheld by the ITAT, whether the facts and the circumstances of the case and in law, the ITAT was justified in allowing assessee's claim of deduction of Rs.49.78 crores u/s. 80IA (4) of the Act, since the assessee had adopted rate of such power of Rs. 5.42 per unit for captive consumption as against the market rate of Rs.2.11 per unit being supplied by the Gujarat Electricity Board to is consumers?" TAX APPEAL NO. 149 OF 2014: "(i) Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in substituting A.O's working with its own subjective estimate, reducing the disallowance of interest made by the A.O. under Section 14A r.w.s. 36(1) (iii) of the Act, even though the ITAT had itself upheld the said disallowance in principle ? (ii) Whether on the facts and in the circumstances of the case and in law, ....
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....239 OF 2022: "Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in allowing the assessee's claim for deduction u/s. 80IA of the Income Tax Act, 1961 for generating power for captive consumption, when the assessee had adopted rate on which the GUVNL supplied power to its consumers ignoring the rate on which power generating company supplied its power to GUVNL?" 3. At the outset, learned advocates for both the sides submitted that the issue of deduction under Section 80IA of the Act allowable to the respondent assessee for generation of power for captive consumption is no more res-integra in view of the decision of the Hon'ble Supreme Court of India in case of Commissioner of Income Tax v. Jindal Steel and Power Ltd., reported in 460 ITR 162. 4. So far as question with regard to deduction under Section 80IA(4) allowable to the assessee in case of generation of power for captive consumption is concerned, the same is decided by the Hon'ble Apex Court in the aforesaid decision of Jindal Steel and Power Ltd.(Supra)as under: "18. There is also no dispute that the assessee or rather, the captive power plants of....
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....ity to the State Electricity Board ie Rs. 2.32 per unit, should be the market value of electricity. Assessee cannot claim two rates for the same good ie.. electricity. When it supplies electricity to the State Electricity Board at the rate of Rs. 2.32 per unit, it cannot claim Rs. 3.72 per unit for supplying the same electricity to its sister concern ie, the industrial units. This view of the assessing officer was confirmed by the CIT (A). 21. We have noticed that the Tribunal had rejected such contention of the revenue which has been affirmed by the High Court. In this proceeding, we are called upon to decide as to which of the two views is the correct one." 5. So far as the question of applicability of the market rate for the purpose of allowing deduction of Section 80IA, the issue of allowability of the market rate is also decided by the Apex Court in case of the aforesaid decision of Jindal Steel and Power Ltd. (Supra) as under: "28. Thus, 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 compari....
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....would have to be taken as the market value for computing deduction under section 80-IA of the Act. 30. Thus on a careful consideration, we are of the view that the market value of the power supplied by the State Electricity Board to the industrial consumers should he construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied 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. The State Electricity Board's rate when it supplies power to the consumers have to be taken as the market value for computing the deduction under section 80-IA of the Act. 31. That being the position, we hold that the Tribunal had rightly computed the market value of electricity supplied by the captive power plants of the assessee to its industrial units after comparing it with the rate of power available in the open market Le., the price charged by the State Electricity Board while supplying electricity to the industrial consumers. Therefore, the High Court was fully justified in deciding the appeal against the revenue. 32. Revenue....
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....and allowed deduction under Section 80IA(4) to the respondent assessee for generation of power for captive consumer and Tribunal has also considered the rate per unit for captive consumption more than the rate per unit of the power supplied by the Gujarat Electricity Board to its consumer, no interference is called for in the impugned orders of the Tribunals. The Tax Appeal Nos. 18 of 2014, 900 of 2018, 901 of 2018, 902 of 2018 and 239 of 2022 are, therefore, dismissed. 7. So far as question Nos. (i) to (iii) in case of Tax Appeal No. 149 of 2014 are concerned, with regard to disallowance of interest under Section 36(1)(iii) of the Act and disallowance of interest under Section 14A read with Section 36(1)(iii) of the Act, it was submitted by learned advocates for both the sides that the said issues are decided by this Court in case of the respondent assessee in Tax Appeal No. 82 of 2013 as under: "3.8 The moot question here is as to whether the CIT (Appeals) and the Tribunal were right in setting aside the order of Assessing Officer, whereby it disallowed the sum of Rs.91.80 lakh, applying the provisions of Section 14A of the Act on the ground that the assessee had u....