SARANYA TEXTILES, COIMBATORE V. ACIT NON CORPORATE CIRCLE-2, COIMBATORE

ITA 1294/CHNY/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3285 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 29-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. ANITHA
• Assessee Lawyers: K. RAGHU
• Keywords: Transfer pricing

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , ! '!# $ , % BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ! ./ ITA NO.1294/CHNY/2019 & /ASSESSMENT YEAR: 2015-16 M/S. SARANYA TEXTILES 66, VVC LAYOUT, R.S. PURAM, COIMBATORE 641 002 VS. THE ASSISTANT COMMISSIONER OF INCOME TAX NON-CORPORATE CIRCLE-2, COIMBATORE [PAN: ABLFS 4387G] ( ' /APPELLANT) ( ()' /RESPONDENT) ' * + / APPELLANT BY : MR. K. RAGHU, C.A. ()' * + /RESPONDENT BY : MS. R. ANITHA , JCIT , * -. /DATE OF HEARING : 27.11.2019 /0& * -. / DATE OF PRONOUNCEMENT : 27.11.2019 1 / O R D E R PER SHRI GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -2, COIMBATORE (HEREINAFTER CALLED AS CIT(A)) IN APPEAL NO.104/1 7-18 DATED 05.04.2019 FOR THE ASSESSMENT YEAR 2015-16 . ITA NO.1294/CHNY/2019 :- 2 -: 2. MR. K. RAGHU, CHARTERED ACCOUNTANT REPRESENTED ON BEHALF OF THE ASSESSEE AND MS. R. ANITHA, JCIT REPRESENTED ON BEH ALF OF THE REVENUE. 3. IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRE SENTATIVE THAT THE ASSESSEE IS A PARTNERSHIP FIRM WHICH IS RUNNING SPI NNING MILLS. IT WAS A SUBMISSION THAT THE ASSESSEE HAD GENERATED ELECTRIC ITY FROM ITS WIND MILLS AND CAPTIVE CONSUMPTION OF THE SAID POWER WAS DONE. FOR THE PURPOSE OF QUANTIFICATION, THE ASSESSEE HAD ADOPTED A COST OF RS.5.50 PAISE PER UNIT WHICH WAS THE RATE AT WHICH THE TAMIL NADU ELECTRIC ITY BOARD WAS SUPPLYING ELECTRICITY TO THE ASSESSEE. IT WAS A SUBMISSION T HAT THE ASSESSING OFFICER ADOPTED A FIGURE OF RS.2.90 PAISE PER UNIT WHICH BE ING THE PURCHASE PRICE OF POWER BY THE TAMIL NADU ELECTRICITY BOARD FROM OTHE R WIND MILL OWNERS. IT WAS A SUBMISSION THAT BY CAPTIVE CONSUMPTION, THE ASSES SEE HAD SAVED AT THE RATE OF THE PURCHASE PRICE AND FOR DETERMINING THE ACTUA L PROFIT GENERATED BY THE ASSESSEE ON ACCOUNT OF THE CAPTIVE CONSUMPTION OF T HE POWER GENERATED FROM ITS WIND MILLS, THE RATE AT WHICH THE ASSESSEE WAS SUPPLIED ELECTRICITY BY THE TAMIL NADU ELECTRICITY BOARD WAS TO BE ADOPTED WHIC H WAS RS.5.50 PAISE PER UNIT. IT WAS A SUBMISSION THAT THE LEARNED CIT(A) DISMISSED THE ASSESSEES APPEAL WITHOUT ACCEPTING THE CONTENTION OF THE ASSE SSEE. IT WAS A SUBMISSION THAT IN RESPECT OF THE TRANSFER PRICING CALCULATION S, THE CO-ORDINATED BENCH OF THIS TRIBUNAL HAD IN THE CASE OF M/S.K.P.R. MILL LI MITED VS. THE ASSISTANT COMMISSIONER OF INCOME TAX IN I.T.A. NO.1915/MDS/20 17 DATED 24 TH JANUARY, 2018 HELD THAT THE ASSESSEE OUGHT TO HAVE PURCHASE POWER FROM THE TAMIL ITA NO.1294/CHNY/2019 :- 3 -: NADU ELECTRICITY BOARD AT RS.6.03 PAISE PER UNIT AN D THERE WAS NO JUSTIFICATION FOR THE TPO TO ADOPT THE RATE OF RS.3.59 PER UNIT B EING THE PRICE AT WHICH THE TAMIL NADU ELECTRICITY BOARD PURCHASED POWER FROM T HE WIND MILL OWNERS DURING THE ASSESSMENT YEAR 2013-14. IT WAS A SUBMI SSION THAT THE ACTUAL COST THAT WOULD HAVE INCURRED BY THE ASSESSEE IF THE CAP TIVE CONSUMPTION WAS NOT DONE WAS TO BE ADOPTED. 4. IN REPLY, THE LEARNED DEPARTMENTAL REPRESENTATIV E VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICE R AND THE LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 6. BY INVESTING IN THE WIND MILL, THE ASSESSEE HAS SAVED ITSELF FROM THE COST OF PURCHASING POWER FROM THE TAMIL NADU ELECTRICITY BOARD. OBVIOUSLY, IT IS WHAT THE ASSESSEE SAVES THAT IS TO BE CONSIDERED AN D NOT THE PRICE AT WHICH THE TAMIL NADU ELECTRICITY BOARD WOULD HAVE PURCHAS E POWER FROM THE ASSESSEES WIND MILL. THE TAMIL NADU ELECTRICITY B OARD COULD PURCHASE POWER AT RS.2.90 PAISE PER UNIT AND THEN THERE WOULD BE A DD-ON COST AND SERVICE CHARGE WHICH WOULD RESULT IN THE COST OF POWER REAC HING TO RS.5.50 PER UNIT COST TO THE ASSESSEE. THE DIFFERENTIAL WOULD BE TH E ACTUAL INFRASTRUCTURAL COST INCURRED BY THE TAMIL NADU ELECTRICITY BOARD. CONT RARY TO THE INFRASTRUCTURE OF TNEB IS THE INFRASTRUCTURAL COST OF THE ASSESSEE RE PRESENTING THE INVESTMENT IN THE WIND MILL WHICH IS A DEPRECIABLE ASSET ALSO. T HEREFORE, IT IS NOT THE PRICE AT ITA NO.1294/CHNY/2019 :- 4 -: WHICH THE TAMIL NADU ELECTRICITY BOARD WOULD PURCHA SE THE POWER FROM THE ASSESSEE THAT IS TO BE ADOPTED BUT THE PRICE AND CO STS THAT THE ASSESSEE SAVES BY MAKING THE INVESTMENT AND DOING CAPTIVE CONSUMPT ION. IN THE CIRCUMSTANCES, THE ASSESSING OFFICER IS DIR ECTED TO RE-COMPUTE THE DEDUCTIONS U/S.80IA BY ADOPTING THE FIGURE OF RS.5. 50 PER UNIT AS AGAINST RS.2.90 PER UNIT ADOPTED BY THE ASSESSING OFFICER. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2019 IN CHENNAI. SD/- SD/- ( '!# $ ) (INTURI RAMA RAO) . /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 2! /DATED: 27 TH NOVEMBER, 2019 . IA, SR. P.S 1 * (-34 54&- /COPY TO: 1. ' /APPELLANT 2. ()' /RESPONDENT 3. , 6- ( )/CIT(A) 4. , 6- /CIT 5. 4 78 (- /DR 6. 89 : /GF