The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT), allowed deduction under Section 80IAof the Income Tax Act, 1961 for thermal power plants thereby granting relief to Birla Corporation.
The issue raised in the Department’s appeal relates to the assessee’s, Birla Corporation Limited claim for deduction under section 80IA in respect of the thermal power plants set up by it at Satna, M.P. and Chanderia, Rajasthan.
The electricity generated by the two power plants was transferred to the assessee’s cement manufacturing units. Further, electricity was also sold to independent third parties during the year under reference. Having regard to the provisions of sub-section (8) of section 80IA of the Income Tax Act.
The electricity transferred from the power plants to the cement manufacturing units was valued by the assessee with reference to the amount charged by the concerned State Electricity Board in its bills raised upon the assessee. The assessee took into consideration the average rate charged by the State Electricity Board for the previous month even though the rates at which electricity was sold by the assessee to third parties were higher than the rate charged by the State Electricity Board.
The Assessing Officer (AO) held that no deduction was available to the assessee under section 80IA. On appeal, the CIT(A) accepted the assessee’s working and granted relief to it.
The Counsel for the assessee submitted that in assessee’s own case the Tribunal held that when it was permissible for the assessee to sell electricity to consumers at rates higher than that paid to the State Electricity Board, the prices charged by the State Electricity Board were a very good indication of the market value of electricity. This Hon’ble Tribunal thus concluded that the assessee did not commit any error in adopting such prices for working out the amount eligible for deduction under section 80IA.
A Coram consisting of Rajpal Yadav, Vice President and Dr Manish Borad, Accountant Member concluded that “Since the issues raised before us are squarely covered by the decision of this Tribunal in assessee’s own case for preceding assessment year i.e. AY 2010-11 and Revenue being unable to controvert this fact by placing any other binding precedence in its favour, we fail to find any infirmity in the finding of the CIT(A).”
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