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Facts
The revenue filed appeals against separate orders of the Ld.CIT(A) concerning assessment years 2017-18, 2018-19, and 2020-21. The appeals involve a delay in filing which was condoned by the tribunal. The core issue revolves around the transfer pricing adjustment made by the TPO regarding inter-unit power transfer for captive consumption.
Held
The Tribunal held that the Ld.CIT(A) was justified in allowing the internal CUP adopted by the assessee for benchmarking and rejecting the TPO's approach. The Tribunal agreed that the price at which the assessee purchased power from the distribution licensee could be applied as a valid CUP for determining the ALP.
Key Issues
Whether the Ld.CIT(A) was justified in allowing the internal CUP and rejecting the TPO's external CUP for benchmarking inter-unit power transfer, and whether the assessee was correctly identified as a power generator rather than a distributor for this purpose.
Sections Cited
133(6), 92CA(3), 144(C)(13), 80IA, 92F(ii), 80A(6), 80IA(8)
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Income Tax Appellate Tribunal, “K” BENCH, MUMBAI
Before: SMT. BEENA PILLAI & SHRI OMKARESHWAR CHIDARA
Assessment Year: 2018-19 Assessment Year: 2020-21 Assistant Vs. ASR Multimetals Commissioner of Private ltd. Income Tax, Mumbai 202, Steel Centre Iron Market Maharashtra - 400009 PAN: AAECA9439L (Appellant) (Respondent) Appellant by Shri Sunil Talati, A/R Respondent by Shri Bhagirath Ramawat, Sr. D/R Date of Hearing 04.11.2025 Date of Pronouncement 24.11.2025 ORDER Per: Smt. Beena Pillai, J.M.: The present appeals filed by revenue arise out of separate orders dated 24/07/2024 passed by the Ld.CIT(A) – 55, Mumbai [hereinafter the “Ld.CIT(A)”], for assessment years 2017-18, 2018- 19 and 2020-21.
There is a delay of two days in filing the present appeals before this Tribunal. The Ld.DR submitted that, the delay was unintentional and on bonafide grounds. The Ld.AR though, did not support the argument of the Ld.DR, could not controvert the fact that the delay is absolutely unintentional. After hearing both sides, we are convinced that the revenue was prevented by sufficient Accordingly, the application seeking condonation of delay stands allowed.
As the facts are identical in the instant appeals, we hereby pass a consolidated order by taking for AY 2017-18 as the lead year. For sake of convenience, grounds raised by revenue for AY 2017-18 are extracted as under:-
"Whether on the fact and circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the internal CUP adopted by the assessee for benchmarking of Specified Domestic Transactions of inter unit transfer of power and rejecting external CUP adopted by TPO ignoring following crucial facts: a) The assessee had adopted internal CUP as the price charged by the power distributing company to an end consumer in the state. The margin earned by the power distributor for functions performed, assets employed and risks assumed by it are embedded in the said price. As against the same, the assessee does not perform any function relating to distribution, nor does it assume any risk connected with distribution. b) TPO called the information under Section 133(6) of the Income Tax Act, 1961 and adopted external CUP by using the rates at which state power distribution companies had purchased power from the generating companies which is appropriate comparable as per FAR analysis.
2. Whether on the fact and circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the assessee for selecting power consuming unit as a tested party and rejecting TPO's act of selecting the power generating company as tested party for benchmarking of Specified Domestic Transactions of inter unit transfer of power ignoring the comparability factor and FAR analysis."
3. The Appellant prays that the order of the CIT(A) on the above grounds he set aside and that of the Assessing Officer be restored.
The Appellant craves leave to amend, or alter any grounds or add new grounds, which may be necessary.” 4. At the outset, it is submitted that the only issue contested by the revenue in instant appeals pertains to the claim of deduction u/s 80IA of the Act. It is submitted that, during the assessment proceedings, the Ld. TPO made adjustment in respect of inter-unit transfer of power by assessee which was used capitvely to meet its energy requirements.
4.1. The Ld. AR submitted that, the transaction was benchmarked by the assessee selecting CUP method as the most appropriate method and the rate was compared with the rate per unit of electricity purchased by the assessee from India Energy Exchange through Open Access. In support, the assessee submitted relevant electricity bills along with detailed working of units generated by the captive power-plant and consumed by steel manufacturing unit and the monthly bills raised against the same.
4.2. The Ld. TPO observed that, during the financial year relevant to assessment year 2017-18, total of 5,54,37,725 units of electricity were generated by exempt unit which was distributed for captive services @ Rs.7.01/- per unit. The Ld. TPO analysed the benchmarking of the assessee by holding that assessee was not a distributor but only a power generator and did not perform any distribution functions. The Ld. TPO thus, compared the prices at which the electricity was purchased in case of specified domestic transactions at Rs. 3.03/- per unit and made adjustment in the hands of the assessee.
4.3. The transfer pricing order was received by the AO and the draft assessment order was issued to the assessee. The assessee intimated the Ld. AO of preferring the appeal before the Ld. CIT(A) and accordingly, the final assessment order u/s 144(C)(13) was Aggrieved by the order of the Ld. AO, assessee preferred appeal before the Ld. CIT(A).
The Ld. CIT(A) after considering the submissions of the assessee relied on the order for assessment year 2016-17 passed by his predecessor and allowed the claim of the assessee.
Aggrieved by the order of the Ld. CIT(A), revenue is in appeal before this Tribunal for all the assessment years under consideration.
At the outset, both the parties submitted that on identical issue a Third Member in case of Aditya Birla Nuvo Ltd. Vs. Dy. CIT in AY 2013-14, order dated 18/09/2025, has been rendered.
6.1. The Ld. DR placed reliance on his submissions made before the Third Member. At the cost of repetition, the same is not reiterated herewith. He also filed written submission dated 20/11/2025 which is placed on record.
6.2. The Ld.AR on the contrary relied on the observations of the Ld. CIT(A) for AY 2016-17, as well as the categorical findings by Hon’ble Third Member in the case of Aditya Birla Nuvo Ltd. (supra).
We have perused the submissions advance by both the sides in light of the records placed before us.
It is noted that, on facts the case of present assessee is identically placed with the facts considered by the Hon’ble Third Member in the case of Aditya Birla Nuvo Ltd. (supra). The Hon’ble Third Member has categorically noted that, the assessee therein was supplying electricity for captive usage as against those assessees which were considered to be generating power for the purposes of distribution to third parties. The categorical observations by Tribunal are as under:-
“45. At this stage, I must observe, learned DR has heavily relied upon a decision of ITAT Hyderabad Bench in case of Sanghi Industries Ltd. Vs DCIT (supra) to contend that the rate at which the generating company supplies power to the distribution licensee will be the ALP. Upon carefully going through the aforesaid decision of the coordinate Bench I found it to be factually distinguishable. The Bench has recorded a finding of fact that the CPP had sold surplus electricity to 14 individuals at an average rate of Rs. 2.97/-per unit. Whereas, in the TP study it has adopted the rate of Rs. 7.85/- per unit. In contrast, in the present case, CP has sold power only to Rayon Plant for captive consumption at Rs. 6.62/- per unit and to no other party at any other rate. As against the aforesaid decision cited by learned DR, there are decisions of Hon'ble Delhi High Court in case. of PCIT Vs DCM Shriram Ltd.(supra) and that of Hon' ble Calcutta High Court in case of PCIT Vs Rungta Mines Ltd. as well as plethora of other decisions of ITAT favourable to assessee, which are directly on. the issue and have been rendered after considering all the relevant provisions of the Act, including, sections 80A(6), 80IA(8) with amended explanation, 92F(ii), Rule 10B etc., Therefore, these decisions carrying precedent value cannot be lightly brushed aside by branding them as per incuriam or having been rendered sub silentio of certain relevant provisions, merely because they are against the revenue.
Thus, upon considering the overall facts and circumstances of the case in the light of the judicial precedents cited before me, I am of the considered opinion that the price at which the assessee purchased power from the distribution licensee, GUVNL can be applied as a valid. CUP for determining the ALP of sale/supply of power by the CPP to the Rayon Plant. In other words, the price of Rs.6.62 per unit charged by CPP to the Rayon Plant can be considered as ALP of the power supplied by the CP to Rayon Plant. Thus, I agree with the view expressed by learned Judicial Member that the deduction claimed by the assessee u/s. 80IA of the Act should be allowed without making any downward adjustment.”
7.1. Based on the above observations, we do not find any reason to interfere with the findings of the Ld. CIT(A) and the same is upheld.
Accordingly, the ground/s raised by the revenue for AY 2017-18 stand dismissed.
As the facts prevailing in for AY 2020-21 are identical with AY 2017-18 adjudicated supra, the decision rendered by us hereinabove for AY 2017-18 shall apply mutatis mutandis for AYs 2018-19 & 2020-21 also.
Accordingly, grounds raised by the revenue for AY 2018- 19 and 2020-21 stand dismissed.
In the result, appeals for all the assessment years filed by the revenue stand dismissed.
Order pronounced in the open court on 24/11/2025