AI Drafter 
TaxTMI 
TaxTMI 
2026 (4) TMI 1776
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....eleting the addition of Rs. 109,56,03,138/- accepting the assessee's benchmarking for inter unit sale of electricity instead of adopting the ALP of Rs 3.06/kWh 2(ii) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in rejecting the comparable adopted by TPO without appreciating that the same is identical transaction with the transaction entered by the assessee in View of the FAR (Functions performed, Assets used & Risks undertaken) analysis as per the provision laid down under Rule 10B(2)(b) of the I.T. Rules, 1962. 2(iii) Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) was justified in allowing the comparable adopted by assessee without appreciating that the same has different FAR (Functions performed, Assets used & Risks undertaken) analysis as per the provision laid down under Rule 108(2)(b) of the I.T. Rules, 1962 and hence the same is not a comparable transaction under CUP method. 2(iv) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the appeal of the assessee on the basis of the decision of the Hon'ble ITAT for AY 2013-14 and 2014-15 in assessee's....
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.... not comparable with that of an external power distribution company. Instead, the TPO adopted a much lower rate based on tariff determined by regulatory authorities, particularly Rs.3.06 per unit, and consequently made a substantial downward adjustment in the value of electricity transferred. This resulted in a disallowance of deduction claimed under section 80IA of the Act to the extent of Rs.146,16,52,346/-. The Assessing Officer accepted the findings of the TPO and incorporated the same in the final assessment order, thereby significantly increasing the assessed income. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). 5. On the issue of depreciation on goodwill, the CIT(Appeals) has held that the goodwill in question arose pursuant to amalgamation of Narmada Chematur Petrochemicals Ltd. with the assessee under a scheme approved by the Hon'ble Gujarat High Court and denotes consideration paid for acquisition of a running business along with its commercial rights, business advantages and profit-earning apparatus. The CIT(Appeals) held that such goodwill squarely falls within the ambit of "intangible asset....
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....e learned counsel for the assessee has submitted that both the issues are squarely covered in favour of the assessee by decisions of the Tribunal as well as the Hon'ble jurisdictional High Court in the assessee's own case in earlier years. The learned Departmental Representative has not been able to point out any distinguishing feature in facts or law for the year under consideration. 9. On the issue of depreciation on goodwill, we find that the learned CIT(Appeals) has allowed the claim by holding that the goodwill arose on amalgamation of a running business pursuant to a scheme approved by the Hon'ble Gujarat High Court and it constituted the commercial rights eligible for depreciation under section 32(1)(ii) of the Act. We find that this issue has been consistently decided in favour of the assessee in earlier assessment years. The Ahmedabad Bench of the Tribunal in the assessee's own case for A.Y. 2015-16 in ITA No. 970/Ahd/2025 (DCIT vs. Gujarat Narmada Valley Fertilizer & Chemicals Ltd.) order dated 03/09/2025 has upheld the order of the CIT(Appeals) by following earlier years' decisions, observing as under: "Ld. Counsel for the assessee pointed out that the assess....
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....e of claim of deduction u/s. 80IA of the Act, Ld. Counsel for the assessee pointed out that the assessee had calculated deduction u/s. 80IA(4)(iv)(a) of the Act on the profits of its Co-generation Power and Steam Unit ('CPSU') by benchmarking the inter-unit transfer of electricity using internal CUP, i.e., the rate at which electricity was purchased by the non-eligible units from Dakshin Gujarat Vij Company Ltd. (DGVCL)... The TPO, however, rejected the benchmarking adopted by the assessee and proceeded to determine the arm's length price by adopting external CUP based on tariff rates determined by regulatory authorities, thereby making substantial adjustment to the value of electricity transferred and consequently reducing the deduction claimed under section 80IA... The Ld. CIT(A), however, noted that this issue stood squarely covered in favour of the assessee by the decisions of the Tribunal in assessee's own case for A.Ys. 2013- 14 & 2014-15, wherein it was held that the profits and gains derived from generation of power for captive consumption are eligible for deduction under section 80IA and that the same are to be computed by adopting the rate at which elect....