ACIT-CIRCLE 6(1)(1) MUMBAI, MUMBAI vs. ADITYA BIRLA REAL ESTATE LIMITED, MUMBAI

ITA 7767/MUM/2026Status: DisposedITAT Mumbai30 September 2026AY 2013-1435 pages
AI SummaryDismissed

What were the facts?

The assessee, Aditya Birla Real Estate Limited, generates power through captive power plants (CCTPP and MCTPP) and transfers electricity to its cement manufacturing units. For AY 2013-14 and AY 2016-17, the assessee benchmarked the arm's length price (ALP) of this electricity transfer using the monthly rates at which its cement units purchased electricity from independent suppliers, Chhattisgarh State Power Distribution Company Limited (CSPDCL) and Madhya Pradesh Poorv Kshetriya Vidyut Vitaran Company Limited (MPPKVVCL). The Transfer Pricing Officer (TPO) rejected this approach, considering the captive power plants as the tested parties and using generation-side procurement rates from CSPDCL and MPPKVVCL. The TPO proposed upward adjustments of ₹63,89,23,479 for AY 2013-14 and ₹43,10,44,227 for AY 2016-17. The Commissioner of Income-tax (Appeals) deleted these adjustments, leading to the present appeals by the Revenue.

What did the Tribunal hold?

The Tribunal held that the rates at which the assessee's cement units purchased electricity from CSPDCL and MPPKVVCL were valid internal Comparable Uncontrolled Prices (CUPs) for benchmarking the transfers from the captive power plants (CCTPP and MCTPP). The Tribunal reasoned that these consumer-side rates represented the actual prices paid to independent suppliers for electricity in the relevant locations and were the prices at which the consuming units could obtain electricity for their manufacturing operations. The TPO's approach of substituting these with generation-side procurement rates was not justified because those were prices at a different stage of the supply chain and were not shown to be prices available to the assessee's consuming units. The Tribunal noted that the distribution company's tariff, even with its additional functions, was accepted as comparable under the CUP method in similar cases by higher courts. The factual position and the principle applied were materially the same for both AY 2013-14 and AY 2016-17. Consequently, the Tribunal upheld the orders of the learned CIT(A) deleting the transfer-pricing adjustments.

What were the issues?

1. Whether, for the purpose of determining the arm's length price (ALP) of electricity transferred from captive power plants to cement manufacturing units under Section 92CA of the Income Tax Act, 1961, the appropriate comparable uncontrolled price (CUP) is the rate at which the consuming cement units purchased electricity from State distribution companies, or the rate at which those distribution companies procured electricity from generating companies. Assessee's Contentions: - The rates paid by the consuming cement units to CSPDCL and MPPKVVCL represent actual prices paid to unrelated parties for electricity in the relevant regions, providing a reliable market reference. - The TPO erred in substituting consumer-side rates with generation-side rates, which are not available to the consuming units. - Relied on the decisions of the Delhi High Court in DCM Shriram and the Calcutta High Court in Rungta Mines. Revenue's Contentions: - The TPO conducted a detailed benchmarking exercise and FAR analysis, treating the captive power plant as the tested party. - Consumer tariffs charged by distribution companies are not comparable to the price of electricity generated by captive plants, as they include transmission, distribution, and other costs not incurred by the captive plant. - The TPO's approach of using generation-side rates is appropriate for benchmarking the price of electricity generated by the captive power plant.

Which sections of the Income-tax Act were involved?

Section 92CA,Section 143(2),Section 142(1),Section 143(3),Section 144C(1),Section 144C(3),Section 133(6),Section 80-IA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘H’ BENCH

Before: SHRI AMIT SHUKLA & SHRI G.M. DOSS

For Appellant: Shri Chaitanya Joshi, CA &, Shri Vinayak Bhat, CA
For Respondent: Shri Ajay Chandra, CIT DR
Hearing: 30/09/2026Pronounced: 30/09/2026

PER AMIT SHUKLA (J.M): These two appeals by the Revenue, for AY 2013–14 and ITA No. 7766/Mum/2026 for AY 2016–17, arise from the respective orders dated 27 April 2026 passed by the learned Commissioner of Income-tax (Appeals)-55, Mumbai, in the Century Textiles and Industries Limited. The issue raised in both appeals is common: the arm’s length price of electricity transferred from the assessee’s captive power plants to its cement manufacturing units. The facts and grounds are substantially the same, the only material difference being the assessment year and the amount of the transfer-pricing adjustment.

The order continues below.

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