INDIAN METALS AND FERRO ALLOYS LTD,BHUBANESWAR V. DCIT, CIRCLE-1(1), BHUBANESWAR

SA 13/CTK/2024

AI Insights

The case involves Indian Metals and Ferro Alloys Ltd., a public limited company engaged in the production of ferro chrome, which filed a stay petition against a tax demand of ₹32,22,55,950 for the assessment year 2021-22. The demand arose from a dispute over the Arm's Length Price determined by the Transfer Pricing Officer for power transferred from the company's Captive Power Plant to its manufacturing units. The company argued that the price set by the Transfer Pricing Officer was not in line with the market value as prescribed by the Odisha Electricity Regulatory Commission. The Tribunal's decision to set aside the assessment order and refer the matter back for reconsideration rendered the stay application infructuous.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716998 (ITAT-CUTTACK)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Stay Application
• Pronouncement Date: 19-08-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2021-2022
• Appeal Filed On: 31-12-2024
• Other Referred Cases: ACIT vs. M/s. ACB India Ltd., DCM Shriram Ltd.
• Laws Referred To: Section 80-IA of the Act, Section 80-IA(8) of the Act r.w.s. 92BA of the Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside; Transfer pricing; Application of stay

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH AT KOLKATA [Virtual Court] Before SHRI DUVVURU RL REDDY, VICE PRESIDENT (KZ) & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER S.A. No.: 13/CTK/2024 Arising out of I.T.A. No.: 506/CTK/2024 Assessment Year: 2021-22 Indian Metals and Ferro Alloys Ltd. Vs. DCIT, Circle-1(1), Bhubaneswar (Appellant) (Respondent) PAN: AAACI4818F Appearances: Assessee represented by : Sachit Jolly, Senior Advocate. Department represented by : Ashim Kumar Chakraborty, CIT DR. Date of concluding the hearing : 21-May-2025 Date of pronouncing the order : 19-August-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: The assessee has filed the present Stay Petition SA No. 13/CTK/2024 in ITA No. 506/CTK/2024 dated 07.04.2025 requesting for stay of demand of ₹32,22,55,950/- for AY 2021-22. 2. It is stated in the petition that the assessee, during the year under consideration, is a public limited company incorporated under the laws of India and is a leading, fully integrated producer of ferro chrome in India. The assessee filed its return of income for AY 2021-22 on 23.03.2022, declaring total income of ₹131,72,47,344. The assessee has set up a 150 MW Captive Power Plant ('Captive Power Plant' or 'CPP'), Printed from counselvise.com Page | 2 S.A. No.: 13/CTK/2024 AOO I.T.A. No.: 506/CTK/2024 Assessment Year: 2021-22 Indian Metals and Ferro Alloys Ltd. located at Choudwar, Odisha which is engaged in generation and supply of power to the manufacturing units of the Company located at Choudwar and Therubali, Odisha. The Captive Power Plant has three power generating units, all of which are eligible undertakings for the purpose of Section 80-IA of the Act. The power generated by the CPP is captively consumed by IMFA manufacturing units. Such transfer of power qualifies as a reportable specified domestic transaction in terms of Section 80-IA(8) of the Act r.w.s. 92BA of the Act. Accordingly, a benchmarking analysis was carried out in accordance with the Transfer Pricing provisions and the same was duly reported in the Transfer Pricing Study Report. The Applicant in its transfer pricing report noted that during the year the total quantity of power was transferred to the manufacturing units at Choudwar and Therubali and to the grid. It was concluded that for transfer of power by eligible unit to non-eligible units, Comparable Uncontrolled Price Method was the most appropriate method for carrying out the benchmarking analysis. The market value for the power supplied by the eligible units to the manufacturing units was determined at ₹ 5.45 per KWH based on the rate prescribed for retail supply in Tariff Order issued by Odisha Electricity Regulatory Commission with respect to for the FY 2020-21 i.e. the price that would have been paid by the manufacturing units in purchasing electricity from the power distribution company in Odisha. The Ld. Transfer Pricing Officer ('Ld. TPO') vide notice dated 01.09.2023, sought to redetermine the per unit price to ₹2.94 basis being the average rate of the sale of power generated by independent captive power plant (CPP) as determined through tariff order issued by OERC. In accordance with the Arm's Length Price determined by the Ld. TPO, the Ld. AO made an Printed from counselvise.com Page | 3 S.A. No.: 13/CTK/2024 AOO I.T.A. No.: 506/CTK/2024 Assessment Year: 2021-22 Indian Metals and Ferro Alloys Ltd. addition of ₹62,97,51,510/-, being the deduction u/s 80-IA claimed by the assessee. Aggrieved by the onerous action of the Ld. TPO, the assessee filed objections before the Ld. Dispute Resolution Panel (Ld. DRP). The Ld. DRP upheld the decision of the Ld. AO in the draft assessment order. Accordingly, the impugned final order dated 28.10.2024 has been passed giving rise to the demand of ₹32,22,55,950, which is being disputed in appeal before the Tribunal. Subsequently, the assessee filed a detailed application for a stay of demand with the Jurisdictional Assessing Officer. The application stated that the appeal, filed before this Hon'ble Tribunal, involves an issue addressed by a decision of the Hon'ble Supreme Court of India. A copy of the stay request letter was submitted to the Jurisdictional Assessing Officer on 04.12.2024. The Jurisdictional Assessing Officer, however, disposed of the application on 26.12.2024, without addressing the merits of the case. The officer directed the assessee to deposit 20% of the demanded tax immediately and provide proof of payment within seven days. Therefore, the assessee is filing the present application, requesting this Hon'ble Tribunal for a stay on pending demand. 3. We have heard the rival submissions. The Ld. DR submitted that for the purpose of section 80-IA of the Act in the case of specified domestic transactions, the Arm's Length Price is to be considered as the market value. The assessee placed reliance upon the decision of the Coordinate Bench of ITAT, Delhi in the case of ACIT vs. M/s. ACB India Ltd. in ITA No. 5469/Del/2019 and CO No. 133/Del/2019 order dated 31.12.2024 in support of the claim that the market rate is to be construed to be at Arm's Length Price as per para 7 thereof. Printed from counselvise.com Page | 4 S.A. No.: 13/CTK/2024 AOO I.T.A. No.: 506/CTK/2024 Assessment Year: 2021-22 Indian Metals and Ferro Alloys Ltd. 4. We have considered the submissions made. In the instant case, vide our order of even date, the assessment order has been set aside to the Ld. AO for making a reference to the Dispute Resolution Panel as per our directions in view of the decision of the Hon'ble Delhi High Court in the case of DCM Shriram Ltd. (supra). Since the assessment order has been set aside and the issue has to be reconsidered, therefore, the stay application is infructuous and is hereby dismissed. 5. In the result, the stay application in SA No. 13/CTK/2024 filed by the assessee is dismissed. Order pronounced in the open Court on 19th August, 2025. Sd/- Sd/- [Duvvuru RL Reddy] [Rakesh Mishra] Vice President (KZ) Accountant Member Dated: 19.08.2025 Bidhan (Sr. P.S.) Printed from counselvise.com Page | 5 S.A. No.: 13/CTK/2024 AOO I.T.A. No.: 506/CTK/2024 Assessment Year: 2021-22 Indian Metals and Ferro Alloys Ltd. Copy of the order forwarded to: 1. Indian Metals and Ferro Alloys Ltd., Bomikhal, Rasulgarh, Bhubaneswar, Odisha, 751010. 2. Assessment Unit, Income Tax Department. 3. CIT(A)- 4. CIT- 5. CIT(DR), Cuttack Bench, Cuttack. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Printed from counselvise.com "