TaxTMI 
TaxTMI 
2025 (9) TMI 1831
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....held by the ITAT, Bench A, Chennai vide in the case of Chettin and Cement Corporation Limited in ITA No. 1026 (Mds)/2005 ?" {B} "Whether, on the facts and circumstances of the case, the Tribunal was right in law in allowing the claim u/s. 80IA (4) as claimed by the assessee on the basis of purchase price of power from GEB ie. Rs. 4.55 per unit without appreciating the fact that A.O had rightly calculated the amount eligible for deduction u/s. 80IA after applying the rate at Rs. 2.11 per unit, which became 'Nil' after set-off of brought forward loss of Rs. 15005.66 lacs for the captive power plant unit on actual basis ?" TAX APPEAL NO. 818 OF 2013: {1} "Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in deleting the addition made on account of expenses incurred for replacement of membrance cells, treating the same as capital expenditure, by following the rule of consistency and without considering the issues on merits and also failed to observe that perpetuation of an error is no justice?" {2} "Whether, on the facts and circumstances of the case, the Tribunal was right in law in allowing the deduction u/s. 80....
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.... industrial units for captive consumption at the rate of Rs. 3.72 per unit. Assessing officer took the view that there was no justification on the part of the assessee to claim electricity charge at the rate of Rs. 3.72 for supply to its own industrial units when the assessee was supplying surplus power to the State Electricity Board at the rate of Rs. 2:32 per unit. Finally, the assessing officer held that Rs. 2.32 per unit was the market value of electricity and on that basis, reduced the profits and gains of the assessee thereby restricting the claim of deduction of the assessee under section 80-IA of the Act. 20. We have already analyzed Section 80-IA of the Act. There is no dispute that respondent assessee is entitled to deduction under section 80-IA of the Act for the relevant assessment year. The only issue is with regard to the quantum of profits and gains of the eligible business of the assessee and the resultant deduction under section 80-IA of the Act. The higher the profits and gains, the higher would be the quantum of deduction. Conversely, if the profits and gains of the eligible business of the assessee is determined at a lower figure, the deduction under se....
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....ear that tariff is determined on the basis of various parameters. That apart, it is only upon granting of specific consent that a private entity could set up a power generating unit. However, such a unit would have restrictions not only on the use of the power generated but also regarding determination of tariff at which the power generating unit could supply surplus power to the concerned State Electricity Board. Thus, determination of tariff of the surplus electricity between a power generating company and the State Electricity Board cannot be said to be an exercise between a buyer and a seller under a competitive environment or a transaction carried out in the ordinary course of trade and commerce. It is determined in an environment where one of the players has the compulsive legislative mandate not only in the realm of enforcing buying but also to set the buying tariff in terms of the extant statutory guidelines. Therefore, the price determined in such a scenario cannot be equated with a situation where the price is determined in the normal course of trade and competition. Consequently, the price determined as per the power purchase agreement cannot be equated with the market v....
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....duce evidence to justify the price of electricity sold by it to its paper unit, the same could not be availed of by the assessee. The electricity generated was sold by the assessee entirely to its paper unit. There was no surplus electricity to be supplied to the State Electricity Board and consequently, there was no contract between the assessee and the State Electricity Board determining the rate of tariff for the electricity supplied by the assessee to the State Electricity Board. On the other hand, it was noticed that the Electricity Act, 2003 had come into force whereby and whereunder, the rate at which electricity could be supplied is determined, notably by Sections 21 and 22 thereof. That apart, there is the tariff regulatory commission which has the mandate for fixing the rates for sale and purchase of electricity by the distribution licensee. Thus it was noted that there is an inbuilt mechanism to ensure permissible profit both to the generating companies and to the distribution licensees Therefore, it was held by the High Court that the assessee's generating unit could not claim any benefit under section 80-IA of the Act computing the profits and gains on the basis of....
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....nd maintain" an already existing asset, and the object of the expenditure must not be to bring a new asset into existence or to obtain a new advantage." After observing the aforesaid, when the Apex Court further examined the facts of the said case, it was found that each machine including the Ring Frame was an independent and separate machine capable of independent and specific function and, therefore, treated the expenditure as capital in nature. Such is not the fact situation in the present case because no material is referred to by the A.O. nor by the C.I.T. (Appeals) leading to the conclusion that the membrane itself can be treated as a separate and independent machine. Under these circumstances, it appears to us that reliance placed upon the decision by the A.O. while making departure from the earlier view taken was erroneous. 9. The Tribunal in the impugned order at paragraph No.11.1 has observed thus:- "11.1. The aforesaid decision has been followed by the Hon'ble jurisdictional High Court in their subsequent decision in Lalludas Children Trust V/s. C.I.T., 251 ITR 50(Guj). Similar view has been taken in the other decisions relied upon on behalf of....