SATIA INDUSTRIES LIMITED,MUKTSAR vs. DCIT/ACIT CIRCLE I, BATHINDA, BATHINDA
Facts
Satia Industries Limited, a paper manufacturer, operates a captive power unit (Cogeneration Unit-1) generating electricity and steam for its manufacturing unit. For Assessment Year 2021-22, the assessee claimed an exemption under Section 80IA(4)(iv) for these specified domestic transactions (SDT), using the Transactional Net Margin Method (TNMM) to determine Arm's Length Price (ALP). The TPO, however, proposed adjustments applying external CUP for electricity and Cost-Plus method for steam, leading to a revised adjustment by the DRP of Rs. 6,66,54,028/-, which resulted in disallowance of Rs. 1,67,11,295/- from 80IA deduction and Rs. 51.74 lakhs from 80G.
Held
The Tribunal upheld the assessee's method for determining ALP of electricity at Rs. 6.07 per unit, finding it reasonable as it was below the general tariff rate of Rs. 8.75 per unit for biomass-based renewable energy projects, and thus allowed the related ground of appeal. It also found an error in the calculation of steam value due to double deduction of losses, rendering the Rs. 1.67 crore addition unsustainable. However, the Tribunal dismissed the appeal regarding the disallowance of CSR expenses under Section 80G, stating they are not allowable deductions as claiming them would defeat the basic requirement of CSR expenditure.
Key Issues
1. Determination of Arm's Length Price (ALP) for electricity and steam transferred from a captive power unit to a non-eligible manufacturing unit for claiming deduction under Section 80IA, including the appropriate transfer pricing method and consideration of distribution/transmission losses and power factor. 2. Validity of the disallowance of excess deduction claimed under Section 80IA due to alleged incorrect ALP and double deduction of losses in steam value. 3. Admissibility of Corporate Social Responsibility (CSR) contributions as a deduction under Section 80G of the Income Tax Act.
Sections Cited
Income Tax Act, 1961: Section 143(3), Income Tax Act, 1961: Section 144C(13), Income Tax Act, 1961: Section 144B, Income Tax Act, 1961: Section 92CA, Income Tax Act, 1961: Section 80IA, Income Tax Act, 1961: Section 80IA(4)(iv), Income Tax Act, 1961: Section 80IA(8), Income Tax Act, 1961: Section 80G, Income Tax Act, 1961: Section 92C, Income Tax Act, 1961: Section 92F, Electricity (Supply) Act, 1948: Section 43A, Companies Act, 2013, Income Tax (Appellate Tribunal) Rules, 1963: Rule 34(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. UDAYAN DASGUPTA
per se. Accordingly, AO’s action of rejecting the claim of 80G on CSR expenditure is
justified. Hence, assessee’s appeal on this ground is dismissed.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate
Tribunal) Rules, 1963 as on 16 .12.2025
Sd/- Sd/- (Dr. M. L. Meena) (Udayan Dasgupta) Accountant Member Judicial Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT concerned (4) The Sr. DR, I.T.A.T True Copy By Order
