TaxTMI 
TaxTMI 
2026 (4) TMI 1407
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Learned Income Tax Appellate Tribunal (ITAT), Kolkata Bench "B", for the assessment year AY 2001-02, on the substantial questions of law formulated at the time of admission. 2. The facts of the case in a nutshell are that the assessee, a company incorporated under the Companies Act, 1956, with its registered office at 31, Chowringhee Road, Kolkata is engaged in manufacturing and selling graphite electrodes, calcined petroleum coke and generating power through two captive units (PU-I and PU-II) at Bangalore, filed its return for AY 2001-02. It claimed deduction under section 80-IA of Rs. 18.29 crores on profits from the power units, valuing captively consumed power at KSEB purchase rates per s. 80-IA(8). It also claimed under section 80H....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Aryak Dutta, learned Senior Standing Counsel, assisted by Mr. Madhu Jana, for the respondent at length. Since the issues involved are pure questions of law and have been settled by binding precedents of the Hon'ble Supreme Court and this Court, we proceed to decide the appeal on merits. 6. Firstly, the assessee, facing inadequate power supply from the Karnataka State Electricity Board (KSEB), established a captive power generating unit to meet its industrial needs, wheeling surplus power to KSEB at rates fixed under agreement. The Assessing Officer rejected the assessee's claim for deduction under Section 80-IA by excluding the electricity duty component from the market value of power supplied to its units, holding it excessive. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the surplus sale rate to SEB), inclusive of components like duty as part of the consumer tariff. "The market value... should be computed by considering the rate at which the State Electricity Board supplied power to the consumers in the open market..." and "the rate at which the State Electricity Board supplied power to the industrial consumers has to be taken as the market value for computing deduction under section 80-IA" 8. The Tribunal computed this without deducting duty. Mr. Khaitan further relies on paragraphs 30 and 31 of Commissioner of Income-Tax v. Jindal Steel and Power Ltd. reported in 460 ITR 162 (SC), which confirm that the SEB consumer rate constitutes the market value, not the supplier's sale rate, justifyi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction 80HHC. Mr. Khaitan, learned counsel for the assessee, also invokes the authoritative pronouncement of the Hon'ble Supreme Court in Shital Fibers Ltd. Versus Commissioner of Income Tax, reported in (2020) 476 ITR 309 (SC), to which the respondent concurs. In view thereof, no reduction in the business profits eligible for Section 80HHC on account of deduction under Section 80-IA is called for. We, accordingly, answer substantial question (b) in the negative, i.e., in favour of the assessee and against the Revenue. c. Whether, on the facts and in the circumstances of the case and in law, the learned Tribunal was justified in holding that while computing Book Profit under Section 115JB, only 80% of the profit computed under S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ections 80HHC and 115JB, treating the mode of computation as irrelevant, stands rejected by the Apex Court. We are in respectful agreement with the above exposition. Accordingly, we answer substantial question (c) in the negative, i.e., in favour of the assessee and against the Revenue. d. Whether, on the facts and in the circumstances of the case and in law, the learned Tribunal was justified in holding that incentive/subsidy received by the appellant in the form of remission of sales tax is not capital but revenue in nature, although the subsidy is granted for expansion of the unit located in a backward area and is directly related to investment in fixed capital, and hence is not chargeable to tax under the Act? 11. Fourthly, ....