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Facts
The revenue appealed against the CIT(A)'s order allowing the assessee's use of an internal comparable uncontrolled price (CUP) for benchmarking inter-unit power transfer transactions, rejecting the TPO's external CUP. The CIT(A) found the assessee's chosen comparable appropriate.
Held
The Tribunal held that the assessee's case was identical to previous appeals for other assessment years. Following the coordinate bench's decision in those cases, which relied on a Third Member's ruling, the Tribunal found the price charged by the assessee (Rs. 6.62 per unit) to be a valid CUP, upholding the CIT(A)'s order.
Key Issues
Whether the CIT(A) was justified in allowing the use of an internal CUP for benchmarking inter-unit power transfer, rejecting the TPO's external CUP and treating the power consuming unit as the tested party.
Sections Cited
133(6), 80A(6), 80IA(8), 92F(ii), 10B, 254(1)
AI-generated summary — verify with the full judgment below
Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the revenue is directed against the order of learned Commissioner of Income Tax (Appeals)55, Mumbai (in short, the ld. CIT(A)) dated 05/12/2023 for the Assessment Year (AY) 2016-17. The assessee has raised following grounds of appeal:
1. "Whether on the facts 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.
(AY: 2016-17) ASR Multimetals Pvt. Ltd. b) TPO called the information under Section 133(6) of the IT 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.
The Appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.
The appellant craves leave to amend, or alter any grounds or add a new grounds, which may be necessary.”
Rival submissions of both the parties have been heard and record perused. At the outset of hearing, the learned Authorized Representative (AR) of the assessee submits that all the grounds of appeal
raised by revenue are squarely covered by the decision of the Tribunal in assessee’s own case for A.Y. 2017-18, 2018-19 and 2020-21 in 4933 and 4931/Mum/2024 respectively, wherein the decision of third member in case of Aditya Birla Nuvo Ltd. vs. DCIT in dated 18.09.2025 has been followed.
3. On the other hand, the ld. Senior Departmental Representative (SR. DR) for the revenue supported the order of Assessing Officer (AO).
4. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities. On carefully perusal of orders of lower authorities and the grounds of appeal raised by the assessee, we find that grounds of appeal raised by revenue, we find that on similar grounds of (AY: 2016-17) ASR Multimetals Pvt. Ltd. appeal in assesses own case for A.Y. 2017-18, 2018-19 and 2020-21, in revenues appeals in ITA (s) No. 4935, 4933 and 4931/Mum/2024, the coordinate bench of Tribunal passed the following order.
7. 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. 8. As the facts prevailing in for AY 2018-19 and 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.”
5. Considering the decision of coordinate bench of Tribunal in assesses own case for A.Y. 2017-18, 2018-19 and 2020-21, wherein similar grounds of appeal is decided against the revenue, thus, respectfully following the same, we do not find merit in the grounds of appeal raised by the revenue.