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Income Tax Appellate Tribunal, ‘C‘ BENCH
आदेश / O R D E R PER M. BALAGANESH (A.M):
This appeal in A.Y.2016-17 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-9, Mumbai in appeal No.CIT(A)-9/Cir.4/84/2018-19 dated 20/09/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 29/12/2018 by the ld. Dy. Commissioner of Income Tax-4(3)(1), Mumbai (hereinafter referred to as ld. AO).
The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the disallowance made u/s.80IA of the Act in respect of electricity generated in power plant in Rajasthan by the assessee in the facts and circumstances of the instant case.
We have heard rival submissions and perused the materials available on record. We find that assessee is engaged in the business of manufacturing of textile and had ventured into generation of electricity. During the year under consideration, the assessee has claimed deduction u/s.80IA(4)(iv) of the Act totaling to Rs.29,89,120/-. The assessee had shown net profit from eligible unit of Rs.14,22,903/- as per the Act. The ld. AO observed that during the year under consideration, the eligible unit has sold 378208 units of electricity to Rajasthan State Government at Rs.4.28 per unit. Accordingly, receipts from sale of electricity amounting to Rs.16,18,730/- were credited to P & L Account of the assessee. However, while computing deduction u/s.80IA of the Act, the assessee had adopted the rate of sale of electricity @8.40 per unit as against Rs.4.28 per unit credited to the P & L account and accordingly, receipts were working out to Rs.31,76,947/- and deduction u/s.80IA of the Act claimed accordingly. This claim was denied by the ld. AO on the ground that the same does not match with the amount actually realized by the assessee by way of sale proceeds from Rajasthan State Electricity Board.
3.1. We find that assessee is a owner of a windmill situated in Rajasthan. It sells all the power units generated to Rajasthan State Electricity Board (RSEB) at the rate pre-determined by RSEB. Admittedly, the price paid by RSEB to the assessee is lower than the price charged by RSEB to its ultimate consumers. Admittedly, the assessee had sold electricity units to RSEB only at Rs.4.28 per unit and received sale consideration thereof. We find that the assessee before us is not a captive power undertaking. It is an undisputed fact on record that no part of electricity generated from windmill was utilized by the assessee for its own consumption. Though the deduction u/s.80IA of the Act is granted for generation of electricity i.e. 378208 units, for the purpose of computation of claim of deduction u/s.80IA of the Act, what is relevant is the number of units that were supplied by the assessee to the grid of RSEB. Admittedly, the assessee had entered into an agreement with RSEB wherein the price per unit was pre-fixed at Rs. 4.28 per unit. Hence, for the purpose of computing the profit from that eligible unit, the assessee had received sale proceeds from RSEB only @Rs.4.28 per unit. Hence, profit derived from such eligible unit had to be worked out taking into account sale consideration of Rs.4.28 per unit, which has been rightly granted by the ld. AO to the assessee. It is totally irrelevant as to at what rate the RSEB sells power to ultimate retail consumers. That rate is absolutely not relevant for the purpose of computation of profit derived from eligible unit for the purpose of computing deduction u/s.80IA of the Act in the hands of assessee herein. Hence, we find that the ld. CIT(A) had rightly denied the claim of the assessee. We also find that the case laws relied upon by the ld. AR which are also mentioned in the order of the ld. CIT(A) are rendered in the context of captive power units and since, assessee is not a captive power unit, those case laws are not applicable to the assessee herein and distinguishable on facts. Accordingly, the grounds raised by the assessee are dismissed.
In the result, appeal of the assessee is dismissed.
Order pronounced on 01/07/2021 by way of proper mentioning in the notice board.