DCIT, CIR. 5(1), KOLKATA vs. KESORAM INDUSTRIES LIMITED, KOLKATA

First we shall take up the revenue’s appeal in ITA No. 240/Kol/2021 for AY 2010-11 for adjudication.

The only issue raised by the revenue is against the order of Ld. CIT(A) whereby the claim of the assessee u/s 80IA(8) of the Income Tax Act, 1961 (hereinafter referred to as the Act) amounting to Rs. 49,62,86,623/- has been allowed by holding that the rate for the electricity transferred from the power plants to the cement manufacturing units has to be determined with reference to the rate charged by the concerned State Electricity Board as against the rate at which the electricity is sold to State Electricity Board in accordance with the provisions of section 80A(6).

At the outset, the ld. Counsel for the assessee submitted that the issue is squarely covered in favour of the assessee and against the revenue by the decision of Co-ordinate Bench in assessee’s own case in earlier years in AY 2008-09 and 2009-10 in ITA No. 1722/Kol/2012 and Others and succeeding financial years AY 2013-14, 2014-15 and 2015-16 in ITA No. 1433/Kol/2019 and others vide order dated 29.11.2009. The ld. Counsel for the assessee submitted that the facts being similar ,the present appeal of the revenue may kindly be dismissed by following the said decisions of the Tribunal in assessee’s own case in preceding and succeeding years. The Ld. DR fairly conceded that the issue has been decided by the Co-ordinate Benches of Tribunal in the preceding and succeeding assessment years, however he strongly relied on the assessment order and grounds of appeal.

Having heard the rival submissions and perusing the material on record including the decisions of the Co-ordinate Benches in the preceding and succeeding assessment years as referred to above by the Ld. Counsel for the assessee, we observe that the issue of tariff at which the electricity generated by the assessee in its plants to its cement manufacturing units has to be determined on the basis of transfer rate charged by the concerned State Electricity Board in its bills raised upon the assessee. The Co-ordinate bench has discussed the provisions concerning open access policy in The Electricity Act, 2003 and relevant regulations formulated in that regard by the respective State Electricity Commissions and accordingly decided the assessee’s cases in its favour. We note that the Ld. CIT(A) while deciding the appeal of the assessee has allowed the claim of the assessee by following orders of the Co-ordinate benches in preceding and succeeding assessment years. Therefore, we are inclined to uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue. The appeal of the revenue is dismissed.

Now we will take up the assessee’s appeal in ITA No. 508/Kol/2020 for AY 2010-11.

The only issue raised by the assessee is against the order of Ld. CIT(A) partly confirming the disallowance made u/s 14A read with Rule 8D(2) (iii) to the extent of 0.5% of average investments considering only those investments which have yielded dividend income to the assessee by ignoring the fact that the AO has been mechanically passed this order without pointing out as to how the suo motto disallowance made by the assessee is incorrect.

Having considered the facts on record and after hearing the rival parties on the issue including the appellate order, we observe that the Ld. CIT(A) has directed the AO to compute the disallowance at 0.5% of those investments which yielded dividend income to the assessee by following the decision of the Special Bench , Delhi in the case of ACIT vs. Vireet Investment Pvt Ltd. As reported in 165 ITD 27 and also the decision of the co-ordinate Benches in assessee’s own case in AY 2008-09 and 2009- 10 in ITA No. 1722/Kol/2012 & others. Since the Ld. CIT(A) has followed the Special Bench and the Co-ordinate Benches decisions in earlier years while partly allowing the appeal of the assessee. Therefore, we do not find any infirmity in the order of the Ld. CIT(A), accordingly the same is upheld by dismissing the appeal of the assessee.

In the result, the appeal of the assessee as well as that of the revenue are dismissed.