EVERADY SPINNING MILLS PVT. LTD.,TIRUPPUR vs. ACIT, CENTRAL CIRCLE-3,, COIMBATORE

ITTPA 8/CHNY/2026Status: DisposedITAT Chennai27 April 2026AY 2018-1912 pages
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What were the facts?

The assessee, Eveready Spinning Mills Pvt. Ltd., filed appeals against the final orders of assessment for Assessment Years (AY) 2018-19 and 2022-23, passed by the Assistant Commissioner of Income Tax (ACIT). The primary issue concerns the disallowance of deduction claimed under Section 80IA for electricity consumed by the captive spinning division. For AY 2018-19, the assessee declared total income and book profit. The case was selected for scrutiny, and the Assessing Officer (AO) referred the matter to the Transfer Pricing Officer (TPO) regarding the Arms Length Price (ALP) of specified domestic transactions, including power purchase from the wind mill division and capital consumption by the spinning division. The assessee benchmarked the internal power transfer at Rs. 6.35 per unit, considering the TNEB rate of Rs. 6.90 per unit. The TPO rejected this, applying TNEB's power purchasing rate, leading to an adjustment of Rs. 23,04,12,652. The Dispute Resolution Panel (DRP) confirmed the adjustment. The appeals also involve a disallowance of Rs. 23,454 for belated remittance of employee contribution.

What did the Tribunal hold?

The Tribunal held that for the purpose of Section 80IA, the rate at which TNEB supplies power to consumers in the open market should be considered, not the rate at which TNEB procures power. This is based on the Supreme Court's decision in CIT vs. Jindal Steel and Power Ltd., which held that the State Electricity Board's rate when supplying power to industrial consumers constitutes the market value for computing deduction under Section 80IA. The Tribunal found that the assessee's rate was less than the TNEB supply rate, making the disallowance incorrect. The Tribunal directed the AO to delete the disallowance and allow the deduction as claimed. Regarding the contention that the Jindal Steel & Power Ltd. judgment is not applicable due to amendments to Section 80A(6) and Explanation to Section 80IA(8), the Tribunal noted that the Calcutta High Court in Rungta Mines Limited and Star Paper Mills Ltd. considered these amendments and still followed the Supreme Court's decision. The DRP had also decided this issue in favour of the assessee for AY 2020-21. Therefore, the Tribunal found the revenue's contention unsustainable. Concerning the belated remittance of employee contribution, the Tribunal upheld the disallowance made by the AO, citing the Supreme Court's decision in Checkmate Services Pvt. Ltd. The decision for AY 2018-19 was applied mutatis mutandis to AY 2022-23, directing the TPO to delete the TP adjustment. The appeal for AY 2018-19 was partly allowed, and the appeal for AY 2022-23 was allowed.

What were the issues?

1. Whether the market value of electricity supplied by the assessee's wind mill division to its spinning division, for the purpose of claiming deduction under Section 80IA, should be determined based on the rate at which TNEB supplies power to consumers in the open market, or the rate at which TNEB procures power from wind mill units? (Section 80IA) 2. Whether the disallowance of Rs. 23,454 towards belated remittance of employee contribution is justified? (Section 43B) Assessee's Contentions: - The issue regarding the market value for Section 80IA deduction is settled by the Supreme Court in CIT vs. Jindal Steel and Power Ltd. The market value should be the rate at which the State Electricity Board supplies power to industrial consumers. - Coordinate benches of the Tribunal and the DRP have consistently ruled in favour of the assessee on similar issues, including in the assessee's own case for AY 2017-18 and AY 2020-21. - The TNEB invoice to the spinning unit, showing a credit to windmill units at Rs. 6.90, supports the assessee's rate. - The Supreme Court's decision in Jindal Steel & Power Ltd. applies even after the amendment to Explanation to Section 80IA(8) and the insertion of sub-section (6) to Section 80A. - The disallowance for belated remittance of employee contribution is not sustainable, following the Supreme Court's decision in Checkmate Services Pvt. Ltd. Revenue's Contentions: - The revenue relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 80IA,Section 115JB,Section 43B,Section 80A,Section 92F,Section 92BA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: SHRI GEORGE GEORGE KAND MS. PADMAVATHY.S

Hearing: 22.04.2026Pronounced: 27.04.2026

PER PADMAVATHY.S, A.M: These appeals by the assessee are against the separate final orders of assessments passed by Asst. Commissioner of Income Tax, Central Circle-3, Coimbatore (in short "ACIT") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 31.12.2025 for Assessment Year (AY) 2018-19 and for AY 2022-23 dated 12.01.2026. The common issue contended by the assessee in both these appeals pertain to the

The order continues below.

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