ADITYA BIRLA NUVO LTD (SINCE AMALGAMATED WITH GRASIM INDUSTRIES LIMITED),MUMBAI vs. DCIT CC-1(4) EARLIER WITH ACIT(LTU) 1, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL, ‘K’ BENCH
MUMBAI
BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER
&
SMT RENU JAUHRI, ACCOUNTANT MEMBER
Aditya BirlaNuvo Ltd.
(Since Amalgamated with Grasim Industries Limited)
A2 Aditya Birla Centre, S. K.
Ahire Marg, Worli, Mumbai
Vs. Dy. CIT, Central Circle – 1(4)
Earlier with Asst. CIT(LTU) 1
Room No. 902, Old CGO
Building, 9th Floor, M. K. Road,
Mumbai-400 020
PAN/GIR No.AAACI1747H
(Appellant)
..
(Respondent)
Dy. CIT, Central Circle – 1(4)
Earlier with Asst. CIT(LTU) 1
Room No. 902, Old CGO
Building, 9th Floor, M. K.
Road,
Mumbai-400 020
Vs. Aditya BirlaNuvo Ltd.
(Since Amalgamated with Grasim Industries Limited)
A2 Aditya Birla Centre, S. K.
Ahire Marg, Worli, Mumbai
PAN/GIR No.AAACI1747H
(Appellant)
..
(Respondent)
Assessee by Shri Yogesh Thar a/w. Shri
Riken Shah & Ms. Sukanya
Jayaram
Revenue by Shri Himanshu Joshi, Sr. DR
Date of Hearing
31/10/2025
Date of Pronouncement
17/11/2025
ITA No.563/Mum/2025 & 1885/Mum/2018
Aditya Birla Nuvo Ltd.,
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आदेश / O R D E R
PER AMIT SHUKLA (J.M):
These cross appeals were earlier disposed of by two separate orders, one passed by the learned Accountant
Member and the other by the learned Judicial Member. A difference arose only on Ground No. 7 relating to the determination of fair market value for captive transfer of electricity for the purpose of computing deduction under section 80 IA. In view of this divergence, the matter was placed before the Hon’ble President under section 255(4) of the Act. The points of difference were thereafter referred to the Hon’ble Third Member for resolution. The Hon’ble Third
Member has now rendered his detailed opinion, and the appeals have been placed before us to pass the consequential confirmatory order that must follow the majority view.
2. At the outset, it deserves to be recorded without any ambiguity that except for Ground No. 7 there was no disagreement between the learned Members. The learned
Judicial Member concurred entirely with the findings and conclusions of the learned Accountant Member on all other issues, including the reasoning spread across paragraphs 22
and 23 of the Accountant Member’s order and the corresponding conclusions in the Judicial Member’s order.
Therefore, all such issues stand affirmed as they were originally decided, and no interference or modification is required on those grounds.
ITA No.563/Mum/2025 & 1885/Mum/2018
Aditya Birla Nuvo Ltd.,
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3. The only issue that required reference to the Hon’ble Third
Member arises from Ground No. 7. The learned Accountant
Member took the view that the question of determining the fair market value of electricity supplied by the captive power plant to the Rayon unit should be restored to the Assessing
Officer or Transfer Pricing Officer for a fresh determination after making reasonable adjustments on the basis of industrial tariff rates applicable under the State Electricity
Board. The learned Judicial Member disagreed, holding that the assessee had adopted a proper internal comparable uncontrolled price by benchmarking the transaction at the same rate at which it purchased electricity from the State
Electricity Board, that is, Rs 6.62 per unit. In the view of the learned Judicial Member, this internal CUP represented the most reliable and appropriate benchmark for the purpose of section 80 IA and required no downward adjustment. Thus, the core question that travelled to the Hon’ble Third Member was whether the rate at which the assessee purchased power from the State Electricity Board constitutes a valid and acceptable CUP for determining the fair market value under section 80 IA(8).
4. The Hon’ble Third Member examined the issue in substantial detail. He evaluated the statutory framework of section 80 IA(8) which requires that when goods or services of an eligible business are transferred to any other business carried on by the assessee, the consideration recorded in the accounts must correspond to the market value of such goods or services. He analysed the nature of the assessee’s
ITA No.563/Mum/2025 & 1885/Mum/2018
Aditya Birla Nuvo Ltd.,
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electricity purchases from the State Electricity Board, the pattern of tariff determination by GUVNL, the absence of any deviation from approved industrial tariff, and the economic rationale underlying the internal transfer price adopted by the assessee. He also took note of the submissions recorded in the earlier orders of the learned Members and the factual matrices that prompted the divergence of opinion.
5. After considering all relevant material, the Hon’ble Third
Member expressed his conclusions in paragraph 46 of his order. Paragraph 46 forms the fulcrum of the majority view, and for completeness it is necessary to incorporate and discuss it fully in this confirmatory order. The Hon’ble Third
Member held as follows:-
“46. 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 arm’s length price of sale or supply of power by the captive power plant to the Rayon Plant. In other words, the price of Rs
6.62 per unit charged by the captive power plant to the Rayon
Plant can be considered as the arm’s length value of power supplied by the captive power plant to the Rayon Plant. Thus, I agree with the view expressed by the learned Judicial Member that the deduction claimed by the assessee under section 80 IA of the Act should be allowed without making any downward adjustment. Having held so, I do not intend to dwell upon the remaining questions as they are of academic importance and not necessary for deciding the issue arising in Ground No. 7. Records may be returned to the registry for placing before the concerned Division Bench to pass the concerned order as per majority view.”
ITA No.563/Mum/2025 & 1885/Mum/2018
Aditya Birla Nuvo Ltd.,
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6. The foregoing findings of the Hon’ble Third Member are decisive. The Third Member has clearly held that the rate at which the assessee purchased electricity from the State
Electricity Board represents a reliable and appropriate CUP for internal benchmarking. The internal CUP adopted by the assessee is based on an actual purchase transaction with an independent public utility provider at regulated tariff, which reflects fair market conditions. The Hon’ble Third Member has therefore accepted this benchmark as the correct market value for the purpose of section 80 IA. In view of this majority position between the Hon’ble Judicial Member and the Hon’ble Third Member, the adjustment made by the Assessing
Officer or Transfer Pricing Officer cannot be sustained.
Ground No. 7 thus stands allowed in favour of the assessee and the deduction under section 80 IA must be computed on the basis of the rate of Rs 6.62 per unit without any downward modification.
7. To summarise, all the findings recorded by the Division
Bench on all other grounds stands except to the extent modified by the majority view on Ground No. 7, Ground No. 7
is thus, allowed in favour of the assessee. Accordingly, the appeals are disposed of.
Order pronounced on 17th November, 2025. (RENU JAUHRI) (AMIT SHUKLA)
ACCOUNTANT MEMBER
JUDICIAL MEMBER
Mumbai; Dated 17/11/2025
KARUNA, sr.ps
ITA No.563/Mum/2025 & 1885/Mum/2018
Aditya Birla Nuvo Ltd.,
Copy of the Order forwarded to :
BY ORDER,
(Asstt.