The ACIT, Kakinada V. Sri Lalitha Enterprises Industries pvt. ltd., Peddapuram

ITA 138/VIZ/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6579 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 24-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K SETHI
• Keywords: Reopening of assessment; Search and seizure; Reassessment proceedings
• Section: 143(3); 153A; 147; 148; 263; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO S . 138 TO 140 / VIZ /201 6 (ASST. YEAR : 20 0 7 - 0 8, 2008 - 09 & 20 12 - 1 3 ) ACIT, CIRCLE - 1, KAKINADA. V S . M/S. SRI LALITHA ENTERPRISES INDUSTRIES PVT. LTD., 4 - 1 - 57, VADLAMURU ROAD, PEDDAPURAM, EAST GODAVARI DISTRICT PAN NO. AAKCS 3233 N (APPELLANT) (RESPONDENT) C.O. NOS. 32 TO 34/VIZ/2016 ( ITA NO S . 138 TO 140 / VIZ /201 6) (ASST. YEAR : 20 07 - 08, 2008 - 09 & 2012 - 13 ) M/S. SRI LALITHA ENTERPRISES INDUSTRIES PVT. LTD., 4 - 1 - 57, VADLAMURU ROAD, PEDDAPURAM, EAST GODAVARI DISTRICT VS . ACIT, CIRCLE - 1, KAKINADA. PAN NO. AAKCS 3233 N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI M.K. SETHI SR. DR DATE OF HEARING : 04 / 0 9 /201 7 . DATE OF PRONOUNCEMENT : 25 / 1 0 /201 7 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THESE APPEAL S BY THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S OF COMMISSIONER OF 2 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) INCOME TAX (APPEALS) - 2 , GUNTUR , ALL DATED 05 /0 1 /201 5 FOR THE ASSESSMENT YEARS 200 7 - 0 8, 2008 - 09 & 2012 - 13 . 2. THE ONLY EFFECTIVE GROUND RAISED IN THE CROSS OBJECTION NO. 32/VIZ/2016 IN ITA NO. 138/VIZ/2016 FOR THE ASSESSMENT YEAR 2007 - 08 IS , AS UNDER: - 2. THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE NOTICE UNDER SECTION 148 IS NOT IN ACCORDANCE WITH LAW AND AS SUCH HE OUGHT TO HAVE QUASHED THE NOTICE UNDER SECTION 148 AS ILLEGAL AND ALSO QUASHED THE REASSESSMENT PROCEEDINGS AS VOID AUTHORITIES BELOW INITIO. THE ABOVE GROUND GOES TO THE ROOT OF THE MATER, T HEREFORE, WE PROCEEDED TO DECIDE THE ISSUE OF NOTICE U/S. 148 OF THE ACT. ITA NO. 138/VIZ/2016 & C.O.NO.32/VIZ/ 2016 3 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF PADDY MILLING AND RICE SALES , FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007 - 08 ON 29/10/2007 ADMITTING TOTAL INCOME OF 1,09,41,510/ - . SUBSEQUENTLY, A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT') WAS CONDUCTED IN THE GROUP CASES OF THE ASSESSEE COMPANY . CONSEQUENTLY , A NOTICE UNDER SECTION 153A WAS ISSUED ON 26/08/2009 . THE ASSESSEE FILED ANOTHER RETURN ADMITTING TOTAL INCOME AT THE SAME FIGURE AS PER THE ORIGINAL RETURN OF INCOME. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 30/12/2010. SUBSEQ UENTLY, A NOTICE UNDER SECTION 148 WAS ISSUED TO 3 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) THE ASSESSEE ON 10/01/2014 FOR REOPENING OF THE ASSESSMENT . WHEN THE ASSESSEE HAS ASKED THE ASSESSING OFFICER FOR FURNISHING REASONS TO REOPEN THE ASSESSMENT, A COPY OF THE REASONS RECORDED , IS SUBMITTED ON 05/03/2014. THE ASSESSEE , AFTER RECEIVING REASONS FOR REOPENING , HAS SUBMITTED A DETAILED NOTE TO THE ASSESSING OFFICER ON 27/03/2014 THAT WE WERE INFORMED THAT WE H A VE NOT FILED PROFIT & LOSS, BALANCE SHEET OF POWER GENERATION UNDERTAKING , WHICH IS PART AND PARCEL OF THE ASSESSEE COMPANY ALONG WITH RICE MILL UNIT, BUT ONLY F ORM NO. 10CCB FILED. T HERE IS NO TRU TH IN SAYING THAT OUR COMPANY HAS NOT FILED PROFIT & LOSS ACCOUNT, BALANCE SHEET AND OTHER RELEVANT FINANCIAL STATEMENTS OF POWER GE NERATION UNIT ALONG W ITH FORM NO.10CCB AS A LL THE STATEMENTS INCLUDING PROFIT & LOSS ACCOUNT, BALANCE SHEET, MONTH - WISE POWER UNITS PRODUCED , MONTH - WISE CONSUMPTION OF HUSK AND OTHER RELEVANT INFORMATION WAS FILED. MOREOVER, DURING THE ASSESSMENT PROCEEDINGS , THE BOOKS OF ACCOUNT MAINTAINED SEPARATELY FOR POWER GENERATION ARE PRODUCED BEFORE THE ASSESSING OFFICER FOR VERIFICATION AND PRAYED THAT REOPENING OF ASSESSMENT ON THE SAME GROUNDS THAT HAVE ALREADY BEEN DEALT WITH IN THE ASSESSMENT PROCEEDI NGS UNDER SECTION 143(3) READ WITH SECTION 153A , IS LIABLE TO BE DROPPED. 4 . INSOFAR AS ADOPTION OF SALE VALUE OF POWER PER UNIT AT 4.50 PS. G ENERATED DURING THE YEAR, YOU HAVE RECORDED THE REASONS T H A T 3.2 5 PS. P ER UNIT HAS TO BE ADOPTED BEING THE PRICE PAID BY THE AP T RANSCO FOR THE UNIT S OBTAINED FROM OTHER SIMILAR POWER GENERATION UNITS. 4 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) READ WITH SECTION 263 OF THE ACT FOR THE ASSESSMENT YEAR 2006 - 07, THE DETAILS OF THE POWER PLAN T UNIT WITH REGARD TO SALE PRICE ADOPTION AT 4.50 PS. P ER UNIT GENERATED IS RAISED THROUGH THE ASSESSING OFFICER S LETTER DATED 09/05/2013 AND OU R COMPANY FILED A DETAILED EXPLANATION THROUGH OUR LETTER DATED 15/05/2013 WHICH WAS CONSIDERED BY THE ASSESSING OFFICER POSITIVELY AND NOT MADE ANY ADDITION ON THIS COUNT. HE PRAYED THAT REOPENING PROCEEDINGS MAY BE DROPPED. HOWEVER, THE ASSESSING OFFICER IN THE ASSESSMENT ORDER PASSED UNDER SECTION PASSED UNDER SECTION 143(3) READ WITH SECTION 147 DATED 23/12/2014 , HAS OBSERVED THAT ON VERIFICATION OF RETURN OF INCOME AND THE ENCLOSURES AS WELL AS INFORMATION FURNISHED DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS , IT IS NOTED THAT THE ASSESSEE - COMPANY HAS FURNISHED ONLY FORM NO. 10CCB AND PROFIT & LOSS ACCOUNT , BUT IT WAS NOT ACCOMPANIED BY THE BALANCE SHEET OF THE POWER GENERATION UNDERTAKING. HENCE, THE COMPANY IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA FROM THE PROFITS DERIVED FROM THE POWER GENERATION UNDERTAKING AND , AS SUCH , THE DEDUC TION CLAIMED TO THE TUNE OF 2,62,97,269/ - NEEDS TO BE DISALLOWED, WHICH HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. FURTHER, WHILE CALCULATING THE EL I GIBLE DEDUCTION UNDER SECTION 80 - IA FROM T HE PROFITS DERIVED FROM THE POWER GE NERATION UNDERTAKING, THE ASSESSEE COMPANY HAS ADOPTED SALE VALUE OF POWER AT 4.50 PS. P ER UNIT GENERATED , WHICH WAS THE RATE THAT HAVE BEEN PAID 5 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) BY THE ASSESSEE COMPANY TO THE AP TRANSCO FOR CONSUMPTION BY RICE MILL UNIT. HOWEVER, THE AP TRANSCO WAS AD O PTED A RATE OF 3.25 PS. PER UNIT FOR THE UNITS OBTAINED FROM OTHER SIMILAR POWER PLANTS. AS SUCH , THE RATE OF 3.25 PS. P ER UNIT HAS TO BE ADOPTED IN THE ASSESSEES CASE FOR DETERMINING THE ELIGIBLE DEDUCTION UNDER SECTION 80 - IA. ACCORDINGLY, HE CALC ULATED EXCESS DEDUCTION CLAIMED AND ALLOWED 91,15,062/ - AND ASSESSMENT IS COMPLETED BY ALLOWING DEDUCTION UNDER SECTION 80 - IA OF 1,71,82,206/ - . 5. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). 6 . IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS , ALL THE DETAILS WERE FILED BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER AFTER CONSIDERING THE DETAILS FILED BY THE ASSESSEE , ASSESSMENT IS COMPLETED . THEREFORE, NOTICE ISSUED UNDER SECTION 148 IS NOT VALID AND SUBMITTED THAT THE ASSESSMENT PASSED BY THE ASSESSING OFFICER MAY BE QUASHED. HOWEVER, LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, HE UPHELD REOPENING OF THE ASSESSMENT BY OBSERVING THAT THE ASSESSEE COMPANY FAILED TO FURNISH PROFIT & LOSS ACCOUNT, BALANCE SHEET AND OTHER RELEVANT STATEMENTS OF POWER GENERATION , T HEREFORE, ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80 - IA OF THE ACT. 7 . SO FAR AS MERITS OF THE CASE IS CONCERNED, I . E. ASSESSEE ADOPTED THE RATE AT 4.50 PS. PER UNIT , WHICH IS PAID BY THE ASSESSEE TO THE AP 6 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) TRANSCO IS ACCEPTED BY THE LD. CIT(A) BY FOLLOWING THE COORDINATE BENCH OF THE MADRAS TRIBUNAL IN THE CASE OF M/S. EVEREADY SPINNING MILLS PVT. LTD . IN ITA NO. 1571/MDS/ 2011 DATED 30/11/2011. 8 . ON BEING AGGRIEVED , REVENUE IS IN APPEAL AND THE ASSESSEE IS IN CROSS OBJECTION BEFORE THE TRIBUNAL. 9. LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT IN THIS CASE, THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT ON 30/12/2010 BY CONSIDERING ALL THE DETAILS I.E. BOOKS OF ACCOUNT MAINTAINED SEPARATELY FOR POWER GENERATION, FORM NO . 10CCB, PROFIT & LOSS ACCOUNT , BALANCE SHEET, MONTH - WISE POWER UNITS PRODUCED, MONTH - WISE CONSUMPTION OF HUSK AND OTHER RELEVANT FACTORS. THEREFORE, THE ASSESSING OFFICER HAS ISSUED A NOTICE UNDER SECTION 148 FOR REOPENING OF THE ASSESSMENT WHICH IS BEYOND FOUR YEARS , IS NOT A VALID . LEARNED COUNSEL FOR THE ASSESSEE HAS POINTED OUT FROM THE PAPER BOOK AT PAGE NO. 20 , DATED 03/09/2010 , WHEREIN THE ASSESSING OFFICER DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS ASKED VARIOUS DETAILS IN RESPECT OF CLAIM MADE BY THE ASSESSEE UNDER SECTION 80 - IA. IN PAPER BOOK AT PAGE NO. 2 1 AT QUESTION NO.26, THE ASSESSING OFFICER SPECIFICALLY ASKED WHETHER YOU ARE MAINTAINED SEPARATE BOOKS OF ACCOUNT FOR POWER PLANT UNIT OR NOT. IN RESPONSE TO THAT, ASSESSEE FILED A DETAILED REPLY IN PAPER BOOK AT PAGE NO. 22, WHICH IS POINTED OUT AND SUBMITTED TO THE ASSESSING OFFICER AFTER CONSIDERING ALL THE DETAILS IN RESPECT OF CLAIM MADE BY THE ASSESSEE UNDER SECTION 80 - IA , ASSESSMENT 7 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) IS COMPLETED AND THEREFORE, NOTICE UNDER SECTION 148 IS NOT VALID. IT IS ALSO SUBMITTED BEFORE THE ASSESSING OFFICER THAT BY POINTING OUT AT PAGE NO. 22 THAT THE RATE ADOPTED BY THE ASSESSEE AT 4.50 PS. PER UNIT IS ALSO SUBMITTED BEFORE THE LD. CIT(A) . THEREFORE, THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE RATE ADOPTED BY THE ASSESSEE IS UPHELD . HE ALSO POINTED OUT THAT SO FAR AS RATE OF ADOPTION IS CONCERNED FOR THE ASSESSMENT YEAR S 2006 - 07 AS WELL AS 2009 - 10, THE ASSESSING OFFICER HAS ACCEPTED THE RATE OF 4.50 PS. PER UNIT AND THEREFORE ISSUANCE OF NOTICE ON THE SAME ASPECT WHICH IS ALREADY CONSIDERED BY THE ASSESSING OFFICER IS NOT VALID AND THEREFORE, THE ENTIRE NOTICE UNDER SECTION 148 IS INVALID AND THE SAME IS LIABLE TO BE QUASHED. 10 . ON THE OTHER HAND, L EARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 11 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 12 IN THIS CASE, ORIGINAL ASSESSMENT IS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT ON 30/12/2010. SUBSEQUENTLY, A NOTICE UNDER SECTION 148 IS ISSUED ON 10/01/2014 ON THE GROUND THAT THERE IS AN ESCAPEMENT OF INCOME WITHIN THE MEANING OF SECTION 147 OF THE ACT. SUBSEQUENTLY , THE REASONS FOR REOPENING ARE FURNISHED WHICH ARE REPRODUCED AS UNDER: - 'FOR THE ASSESSMENT YEAR 2007 - 08, THE ASSESSMENT WAS ORIGINALLY C OMPLETED U/S. 143(3) R.W.S. 153 A ON 30/12/2010 . 8 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) A) AS SEE N FROM THE COMPUTATION OF TOTAL INCOME, IT IS NOTICED THAT THE ASSESSEE COMPANY HAS ADMITTED TOTAL INCOME OF RS. 1,09,41,511/ - AFTER CLAIMING DEDUCTION UNDER CHAPTER VIA I.E., DEDUCTION U/S. 80IA AT RS.2,62,97,269/ - . AS PER SUB - SECTION (7) TO SEC TION 80I A R.W.R. 1 8 BBB OF I.T. RULES, IN ORDER TO CLAIM THE DEDUCTION U/S. 801 A, A SEPARATE REPORT IS TO BE FURNISHED BY EACH UNDERTAKING OR ENTERPRISE OF THE ASSESSEE CLAIMING DEDUCTION U/S. 80 IA AND SHALL BE ACCOMPANIED BY THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE UNDERTAKING OR ENTERPRISE AS IF THE UNDER TAKING OR THE ENTERPRISE WERE A DISTINCT ENTITY. HOWEVER, ON VERIFICATION OF ROI AND THE ENCLOSURES AS WELL AS INFORMATION FURNISHED DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, IT IS NOTICED THAT THE ASSESSEE - COMPANY HAS FURNISHED ONLY FORM NO. 10CCB BUT IT WAS NOT ACCOMPANIED BY THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE POWER GENERATION UNDERTAKING. SINCE THE ASSESSEE - COMPANY FAILED TO FURNISH THE P & L ACCOUNT BALANCE SHEET AND O THER RELEV ANT FINANCIAL STATEMEN TS OF PO WER G ENE RATION UNIT, IT IS CLEAR THAT THE ASSESSEE C OMPANY HAS NOT FULFILLED THE CONDITIONS LAID DOWN AS PER THE PROVISIONS OF SECTION 80 I A SO AS TO QUALIFY FOR THE DEDUCTION CLAIMED. HENCE, THE ASSESSEE - COMPANY IS NOT ELIGIBLE FOR DEDUCTION CLAIMED U/S. 80IA FROM THE PROFITS DERIVED FROM THE POWER GENERATION UNDERTAKING AND AS SUCH THE DEDUCTION CLAIMED TO THE TUNE OF RS , 2,62.97,269/ - NEEDS TO BE DISALLOWED WHICH HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT . B) WHILE CALCULATING THE ELIGIBLE DEDUCTION U/S.80IA FROM THE PROFITS DERIVED FROM POWER GENERATION UNDERTAKING, THE ASSESSEE - COMPANY HAS ADOPTED SALE VALUE OF POWER AT RS.4.50/ - PER UNIT GENERATED WHICH WAS THE RATE THAT HAVE BEEN PAID BY THE ASSESSEE - COMPANY TO AP TRANSCO FOR CONSUMPTION BY RICE MILL UNIT. HOWEVER, THE A.P. TRANSCO WAS ADOPTING A RATE OF RS.3.25/ - PER UNIT FOR THE UNITS OBTAINED FROM OTHER SIMILAR POWER PLANTS. AS SUCH THE RATE OF RS. 3.25 PER UNIT HAS TO BE ADOPTED IN TH E ASSESSEE'S CASE FOR DETERMINING THE ELIGIBLE DEDUCTION U/S.80IA WHICH IS WORKED OUT AS UNDER : - SALE VALUE OF 72,92,050 UNITS CONSUMED AT THE VALUE OF RS. 3.25 PER UNIT ... RS.3,36,99,162 SALE VALUE OF STEAM USED .... RS. 2,34,97,975 RS. 4,71,97,137 LESS: EXPENSES AS CLAIMED .... RS. 3,00,14,931 PROFIT FROM POWER PLANT .... RS.1,71,82,206 DEDUCTION 80IA AS CLAIMED BY THE ASSESSES ... RS.2,62,72,268 LESS: DEDUCTION U/S.80IA AS WORKED OUT ABOVE ... RS. 1,71,82,206 EXCESS DEDUCTION CLAIMED & ALLOWED .... RS. 90,90,062 IN VIEW OF THE ABOVE, AS PER REASONS RECORDED (A) ABOVE, THE TOTAL DEDUCTION U/S.80 IA CLAIMED AT RS. 2,62,72,268/ - NEEDS TO BE DISALLOWED IN VIEW O F SUB - SECTION (7) OF SECTION 80I A R.W.R.18BBB SINCE THE FORM NO. 10 CCB HAS NOT BEEN ACCOMPANIED BY THE SEPARATE PROFIT & LOSS ACCOUNT AND BALANCE SHEET OF THE UNDERTAKING OF THE POWER GENERATION UNIT FURTHER, FROM THE 9 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) REASONS RECORDED (B) ABOVE, IT IS EVIDENT THAT THE ASSESSEE - COMPANY HAS CLAIMED EXCESS DEDUCTI ON U/S.80LA OF RS. 90,90,062/ - IF AT ALL THE SUCH DEDUCTION IS TO BE ALLOWED. THEREFORE, TH E INCOME CHARGEABLE TO TAX HAS E SCA P ED ASSESSMENT FOR THE A. Y. 2007 - 08. 13 FROM THE ABOVE , IT APPEARS TO US TH A T ONE OF THE REASONS FOR REOPENING IS THE ASSESSEE COMPANY FAILED TO FURNISH PROFIT & LOSS ACCOUNT, BALANCE SHEET AND OTHER RELEVANT FINANCIAL STATEMENTS OF POWER GENERATION UNIT AND THEREFORE THE ASSESSEE IS NOT ELIGIBLE FOR 80 - IA DEDUCTION. IN THE PA PER BOOK AT PAGE NO. 20, THE ASSESSING OFFICER AS K ED THE ASSESSEE TO FILE ALL THE DETAILS BEFORE PASSING THE ASSESSMENT ORDER, SUCH AS BOOKS OF ACCOUNT OF THE POWER PLANT, NUMBER OF EMPLOYEES, RAW - MATERIAL CONSUM PTION QUANTITY - WISE AND QUALITY - WISE, MONTH - WISE BREAK UP ETC. IN RESPONSE TO THAT, PAPER BOOK AT PAGE NO. 22, ASSESSEE HAS GIVEN A DETAILED REPLY ALONG WITH ALL THE DETAILS, SUCH AS BOOKS OF ACCOUNT FOR POWER PLANT GIVING THE DETAILS OF MATERIAL CONSUMPTION, EXPENDITURE INCURRED AND POWER UNITS GE NERATED ALONG WITH ITS BYE PRODUCTS LIKE STEAM . THE DETAILS OF EMPLOYEES EMPLOYED IN POWER PLANT UNIT, DETAILS OF RAW MATERIAL USED FOR PRODUCTION OF POWER AND IT S BYE PRODUCT STEAM WITH QUANTITY - WISE DETAILS, P HOTOSTAT COPY OF BALANCE SHEET ENCLOSED ALONG WITH DETAILED LETTER. THE DETAILS OF MONTH - WISE PRODUCTION OF POWER PRODUCTION, REGISTER AND THE SAME IS PRODUCED ALONG WITH COVERING LETTER (THESE DETAILS FILED, ARE NOT DISPUTED BY THE DEPARTMENT). THE ASSESSING OFFICER AFTER CONSIDERING THE DETAILED EXPLANATION ALONG WITH DETAILS , PASSED AN ASSESSMENT ORDER BY ALLOWING DEDUCTION UNDER SECTION 80IA OF THE ACT. WE FIND THAT THE ASSESSEE HAS 10 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) DISCHARGED HIS DUTY BY FURNISHING ALL THE DETAILS WHICH ARE NECESSARY FOR COMPLETION OF ASSESSMENT. IN THIS CASE, NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 148 IS BEYOND FOUR YEARS. AS PER PROVISO TO SECTION 147 OF THE ACT, THE ASSESSING OFFIC ER HAS TO ALLEGE SPECIFICALLY THAT THERE A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR COMPLETING THE ASSESSMENT. WE FIND THAT THERE IS NO SUCH SPECIFIC FINDING GIVEN BY THE ASSESSING OFFICER IN THE REASONS RECORDED . 14 THAT APART, AS PER THE ASSESSMENT ORDER AT PAGE NO.6 (NOTE NOT TO THE ASSESSEE) , THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS FILED FORM NO. 10CCB AND SEPARATE BOOKS OF ACCOUNT FOR THE POWER PLANT AND CLAIMED 80IA DEDUCTION. THEREFORE, FROM THE ABOVE, IT IS VERY CLEAR THAT THE ASSESSEE HAS FILED ALL THE DETAILS BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER AFTER CONSIDERING THE DETAIL S FILED BY THE ASSESSEE , ALLOWED THE DEDUCTION UNDER SECTION 80IA OF THE ACT. THEREFORE, ONCE THE ASSESSEE HAS FILED ALL THE DETAILS BEFORE THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT AND THE ASSESSING OFFICER AFTER CONSIDERING ALL THE DETAILS PASSED THE ASSESSMENT ORDER, A NOTICE ISSUED SUBSEQUENT TO THAT WHICH IS BEYOND 04 YEARS IS NOT VALID AND THEREFORE THE SAME IS QUASHED. 1 5 INSOFAR AS ADOPTION OF UNIT RATE AT 4.50 PS. IS CONCERNED , IN THE REASONS RECORDED, IT WAS MENTIONED THAT THE ASSESSEE HAS CLAIMED EXCESS DEDUCTION UNDER SECTION 80IA ON THE GROUND THAT THE ASSESSEE 11 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) HAS ADOPTED RATE AT 4.50 PS. WHICH IS PAID BY THE ASSESSEE TO THE AP TRANSCO, HOWEVER, THE AP TRANSCO IS OBTAINI NG POWER PER UNIT AT 3.25 PS. FROM OTHER SIMILAR POWER PLANTS AND THEREFORE THE ASSESSING OFFICER HAS ALLOWED EXCESS DEDUCTION UNDER SECTION 80 - IA OF THE ACT. SO FAR AS THIS ASPECT, IN THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS , IN RESPONSE TO THE NOTICE ISSUED DATED 03/09/2010, THE ASSESSEE HAS SUBMITTED A DETAILED REPLY ON 04/11/201 0 WHEREIN AT QUESTION NO.18, IT IS SUBMITTED THAT THE COMPANY IS PAYING AN AMOUNT OF 4.50 PS. PER UNIT TO AP TRANSCO FOR UTILIZATION OF POWER FROM STATE GOVERNMENT IS TAKEN AS SALE FIGURE FOR ARRIVING PROFIT AS PER THE PROVISIONS OF SECTION 80IA AND THE BILLS PAID TO AP TRANSCO EVIDENCING THE PAYMENT OF ABOVE HEREWITH ENCLOSED. THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE ACCEPTED THE RA TE ADOPTED BY THE ASSESSEE THAT THE RATE ON WHICH PER UNIT PAID BY THE ASSESSEE TO THE AP TRANSCO I.E. 4.5 PER UNIT. THEREFORE, IT IS NOT CORRECT TO SAY THAT THE ASSESSING OFFICER HAS COMPLETED ASSESSMENT WITHOUT CONSIDERING THE RELEVANT MATERIAL. THE ASSESSEE HAS SUBMITTED THE RELEVANT MATERIAL TO THE ASSESSING OFFICER I.E. BILLS PAID BY THE ASSESSEE TO THE AP TRANSCO AND AFTER CONSIDERING THE SAME, THE ASSESSING OFFICER ALLOWED, THEREFORE IT IS NOT CORRECT TO SAY THAT THERE IS AN ESCAPEMENT OF INCOME. WE ALSO FIND THAT AFT ER CONSIDERING ALL THE DETAILS FILED BY THE ASSESSEE IN PAPER BOOK AT PAGE NOS. 20 TO 25, IN RESPECT OF CLAIM OF 80IA AS WELL AS ADOPTION OF RATE PER UNIT AFTER CONSIDERING THE SAME ASSESSMENT IS 12 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) COMPLETED. THEREFORE, THE ASSESSEE F ILED ALL RELEVANT MATERIAL TRULY AND CORRECTLY BY CONSIDERING THE SAME, ASSESSMENT IS COMPLETED. WE FIND NO FAILURE ON THE PART OF THE ASSESSEE. THAT APART , NOTICE ISSUED BY THE ASSESSEE IN THIS CASE ON 10/01/2014 IS BEYOND 4 YEARS AS PER THE PROVISO TO SECTION 147 NOTICE CAN BE ISSUED IN A CASE WHERE ESCAPEMENT OF INCOME ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO FILE ALL THE MATERIAL NECESSARY FOR COMPLETING THE ASSESSMENT. IN THIS CASE, THE ASSESSEE FILED ALL THE NECESSARY MATERIAL FACTS TO COMPLETE THE ASSESSMENT. THEREFORE, IT IS NOT CORRECT TO SAY THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS. IN VIEW OF THE ABOVE, NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 148 IS NO T VALID AND IS HEREBY QUA SHED. IN VIEW OF THE QUASHING OF NOTICE ISSUED UNDER SECTION 148, WE ARE NOT INCLINED TO GO ON MERIT S OF THE CASE. 1 6 . IN THE RESULT, APPEAL FILED BY THE REVENUE IN ITA NO. 138/VIZ/2016 IS DISMISSED AND THE CROSS OBJECTION NO. 32/VIZ/2016 FILED BY THE ASSESSEE IS ALLOWED. ITA NO.139 /VIZ/2016 & C.O.NO. 33/VIZ/2016 1 7 . FACTS OF TH IS CASE ARE SIMILAR TO THE FACTS OF ITA NO. 139/VIZ/2016 . THEREFORE, IN VIEW OF OUR DECISION ABOVE, APPEAL FILED BY THE REVENUE IN ITA NO. 139/VIZ/2016 IS DISMISSED AND THE CROSS OBJECTION NO.33/VIZ/ 2016 FILED BY THE ASSESSEE IS ALLOWED. 13 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) ITA NO.140/VIZ/2016 & C.O.NO. 34/VIZ/2016 1 8. FACTS OF THE CASE IN BRIEF ARE THAT I N THE ASSESSMENT ORDER , THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE COMPANY HAS TWO POWER GENERATION UNITS ON WHICH 80 - IA DEDUCTION IS ALLOWABLE. AS RELATED TO UNIT - 1 , THE ASSESSEE COMPANY HAS COMPUTED THE PROFIT FROM THE ELIGIBLE BUSINESS I.E. POWER UNIT BY CONSIDERING THE UNIT RATE AT 4.50 PS. AND AS RELATED TO UNIT - 2, THE ASS ESSEE COMPANY HAS COMPUTED PROFIT FOR ELIGIBLE BUSINESS BY CONSIDERING THE VALUE AT 3.40 PER UNIT . WHILE COMPUTING THE TOTAL INCOME , THE ASSESSEE COMPANY CLAIMED 80IA DEDUCTION OF 10,67,88,695/ - OUT OF THIS, 2,47,18,782/ - FOR UNIT - 1 AND 8,20,69,913/ - FOR UNIT - 2 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED BY LETTER DATED 11/02/2015 TO FURNISH BASIS FOR ARRIVING AT 4.50 PS. PER UNIT VALUE FOR ADOPTING SALE VALUE FOR UNIT - 1 FOR THE PURPOSE OF CLA I MING DEDUCTION UNDER SECTION 80IA OF THE ACT. FURTHER, HE WAS ASKED TO SHOW - CAUSE AS TO WHY 3.25 PS. PER UNIT PRICE SHOULD NOT BE CONSIDERED AS THE APEPDCL IS PAYING THE SAME AMOUNT FOR THE POWER PURCHASED BY IT. THE ASSESSEE HAS SUBMITTED A DETAILED NO TE BEFORE THE ASSESSING OFFICER AS FOLLOWS: - ' I T IS TO INFORM YOU THAT WHILE ARRIVING TH E DEDUCTION TO BE CLAIMED U/S.80 IA IN CASE OF UNIT - 1, WE HAVE ADOPTED RS.4.50 PER UNIT WHICH WAS THE RATE THAT THE COMPANY HAS BEEN PAID TO APTRANSCO FOR CONSUMPTION OF ELECTRICITY DURING THE YEAR UNDER CONSIDERATION. OUR COMPANY'S PO WER PLANT IS A CAPTIVE POWER PLANT MEANING THE ENTIRE POWER THAT IS BOTH ELECTRICITY AND STEAM PRODUCED TO BE UTILIZED BY THE COMPANY ITSELF AND HENCE SELLING THE POWER TO OUTSIDER DOES NOT ARISE AS WE CANNOT SELL THE SAME. THE COMPANY, BEING AN INDUSTRIAL CONSUMES, THE AP TRANSCO IS 14 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) SUPPLYING POWER TO OUR COMPANY AT THE RATE OF RS.7.36 PER UNIT FOR THE YEAR UNDER CONSIDERATION AND WE HAVE ADOPTED RS.4.50 PER UNIT WHICH WAS THE RATE ADOPTED OF OUT 1 ST YEAR OF 80IA CLAIM THAT IS ASST. YEAR 2004 - 05 . SINCE THEN WE ARE ADOPTING THE SAME RATE IN SPITE OF THE INCREASING THE PRICE PAID TO THE APTRANSCO FOR SUPPLY OF POWER. HAD THE ASSESSEE NOT BEEN WITH POWER PLANT THE COMPANY WOULD HAVE PURCHASED' THE POWER FROM THE APTRANSCO @7.36 PER UNIT (THIS PRICE BEING 4.50 IN THE YEAR 2004 - 05). THUS PRICE AT WHICH THE ELECTRICITY HOARD SUPPLIES TO THE CONSUMER IS TO BE CONSIDERED TO THE MARKET VALUE, AS PER THE PROVISIONS OF SUB - SECTION 8 OF SECTION 801 A, FOR TRANSFER OF POWER BY THE ASSESSEE'S POWER GENERATION UNDER TAKING FOR CAPTIVE CONSUMPTION. THAT IS TO SAY THE ENTERPRISE'S (THE POWER PROJECT) PROFIT IS TO BE DERIVED, AS PER THE PREVISIONS OF SUB SECTION 5 OF SECTION 80IA AS IF SUCH ENTERPRISE BEING T HE ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND IN SUCH CASE THE MARKET VALUE SHALL BE THE PRICE PER UNIT SUPPLIED TO THE RICE MILL WHICH WILL BE CONSIDERED AS MARKET VALUE AS PER THE PROVISION OF S UB - SEC TION 8 OF SECTION 80IA . THE ASSESSEE PLACING RELIANCE ON THE FOLLOWING CASE LAWS: - 1. EVEREADY SPINNING MILLS PVT . LTD., VS. ACIT, CIRCLE - 1,, TIRUPU R REPORTED 2011 TMI - 210427 - ITAT CHANNEL , 2. ADDL.CIT VS. ZINDAL STEAL & POWER LTD REPORTED 2006 TMI - 65524 - ITAT DELHI - H . WE ARE TAKING THIS OPPORTUNITY TO BRING YOU THE FACT THAT, THE ABOVE POINT WAS ALSO DISCUSSED IN THE EARLIER YEARS OF THE ASSESSMENTS OF THE COMPANY FOR THE ASST. YEAR 2005 - 06, 2006 - 07 AND 2009 - 10 AND OUR CONTENTION WAS ACCEPTED BY A LLOWING RS.4.50 PER UNIT FOR THE PURPOSE OF CALCULATION OF THE PROFITS OF POWER PLANT. IN CASE OF POWER GENERATION UNIT - II, OUR COMPANY IS HAVING PERMISSION TO SELL THE BALANCE UNITS, THAT IS TOTAL POWER UNITS PRODUCED LESS POWER UNITS CONSUMED BY RICE MI LL DIVISION, ON L Y TO AP TRANSCO AT THE PRICE FIXED BY IT. AT THIS POINT OF TIME, IT IS TO BRING TO YOUR KIND NOTICE THAT, THE DETERMINATION OF PRICE BETWEEN THE ASSESSEE AND ELECTRICITY BOARD CANNOT BE CONSIDERED AS PRICE FIXED IN COMPETITIVE ENVIRONMENT AND UNDER FREE MARKET CONDITIONS. THE PRICE DETERMINED IN SUCH SCENARIO CANNOT BE EQUATED WITH SITUATION WHERE PRICE IS DETERMINED IN NORMAL COURSE OF COMPETITIVE ENVIRONMENT . HENCE, THE PRICE AT WHICH THE ASSESSEE SOLD ITS POWER TO THE ELECTRICITY BOARD CANNOT BE EQUATED WITH MARKET RATE AS PER THE PROVISIONS OF SUB - SECTION 8 OF SECTION ON 80IA. HENCE, I N CASE OF UNIT - II ALSO THE PRICE PAID BY THE ASSESSEE TO THE AP TRANSCO TO TAKEN AS MARKET PRICE BUT NOT THE PRICE PAID BY BOARD TO THE ASSESSEE. 15 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) 1 9. THE ASSESSING OFFICER AFTER CONSIDERING THE DETAILED EXPLANATION FILED BY THE ASSESSEE OBSERVED THAT EVEN THOUGH THE COST OF PRODUCTION OF POWER FOR BOTH THE UNITS IS SAME, IT HAS BEEN FOUND THAT THE ASSESSEE IS VALUING POWER FROM BOTH THE UNITS AT DIFFERE NT RATES. THE POWER FROM UNIT - 1 IS USED TOTALLY FOR CAPTIVE POWER AND UNIT - 2 IS PARTLY USED FOR CAPTIVE POWER AND THE EXCESS IS SOLD TO ELECTRICITY BOARD. FOR THE POWER SOLD TO ELECTRICITY BOARD IT IS GETTING 3.40 PS. PER UNIT. AS THE SAME POWER FROM ONE SINGLE UNIT WHEN IT IS SOLD TO TWO PERSONS CANNOT BE VALUED AT TWO DIFFERENT PRICES. THE ASSESSEE COMPANY VALUED THE TOTAL UNITS PRODUCED FROM UNIT - 2 AT THE RATE OF 3.40 PS. PER UNIT. BUT THE PARENT COMPANY I.E. RICE MILL IS RECEIVING POWER FROM TWO DIFFERENT POWER UNITS AT TWO DIFFERENT PRICES I.E. AT 4.50 PS. PER UNIT FROM UNIT - 1 AND 3.40 PS. PER UNIT FROM UNIT - 2. IF UNIT - 1 IS NOT COMPLETELY CAPTIVE, HE WOULD HAVE VALUED IT AT 3.40 PS. PER UNIT ONLY. ACCOR DINGLY, THE ASSESSING OFFICER IS OF THE OPINION THAT THE ASSESSEE HAS ADOPTED 4.50 PS. PER UNIT FOR UNIT - 1 JUST TO INCREASE THE QUANTUM OF DEDUCTION UNDER SECTION 80IA AND THEREFORE THE CLAIM OF THE ASSESSEE IS REJECTED. ACCORDINGLY, HE IS RECOMPUTED TH E DEDUCTION UNDER CHAPTER - VIA FOR UNIT - 1 & 2 SEPARATELY AND ASSESSMENT IS COMPLETED. 20. THE LD. CIT(A) BY CONSIDERING THE DECISION OF THE CHENNAI BENCHES IN THE CASE OF M/S. EVEREADY SPINNING MILLS PVT. LTD. (SUPRA) AND ALSO JINDAL STEEL AND POWER LTD .,. (2007) (16 SOT 509) HE OBSERVED THAT THE RATE HAS TO BE CONSIDERED FOR ARRIVING AT THE VALUE OF THE CAPTIVE POWER 16 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) GENERATED FOR THE PURPOSES OF COMPUTING THE DEDUCTION UNDER SECTION 80IA SHALL BE RATE AT WHICH THE ASSESSEE WOULD HAVE INCURRED TO PURCHASE THE SAME AMOUNT OF POWER FROM AN OUTSIDE SOURCE AND NOT THE RATE AT WHICH THE GOVERNMENT UNDERTAKING WOULD HAVE PURCHASED THE POWER FROM THE POWER PLANT. THE RATE SHALL BE CONSIDERED, BASED ON FREE MARKET CONDITIONS AND NOT IN THE BASIS OF RESTRICTIVE CON VENANTS IMPOSED BY THE GOVERNMENT UNDERTAKINGS. THUS, HE ALLOWED THIS GROUND OF APPEAL RAISED BY THE ASSESSEE. 21. ON BEING AGGRIEVED, REVENUE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 22. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER PA SSED BY THE ASSESSING OFFICER. 2 3. LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. EVEREADY SPINNING MILLS PVT. LTD. IN ITA NO. 1571/MDS/2011 BY ORDER DATED 30/11/2011. IT IS FURTHER SUBMITTED THAT T HE PRICE ADOPTED BY THE ASSESSEE IS ACCEPTED BY THE DEPARTMENT FOR THE ASSESSMENT YEAR 2006 - 07 BY ORDER DATED 17/05/2013 AND FOR THE ASSESSMENT YEAR 2009 - 10 BY ORDER DATED 17/0 5/2013 AND STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). 2 4. IN THIS CASE, ASSESSEE HAS ADOPTED THE RATE AT 4.50 PS. PER UNIT WHICH IS PAID BY THE ASSESSEE TO THE AP TRANSCO. THE ASSESSING OFFICER IS OF THE OPINION THAT THE ASSESSEE IS SUPPLYING TO AP EPDCL AT 3.40 PS. 17 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) PER UNIT AND THEREFORE THE SAME HAS TO BE CONSIDERED IN THE CASE OF UNIT - 1 OF THE ASSESSEE ALSO . THE VERY SAME ISSUE HAS BEEN CONSIDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN M/S. EVEREADY SPINNING MILLS PVT. LTD. (SUPRA) AND HELD AS UNDER: - 6. WE HAVE PERUSED THE ORDERS AND HEARD THE CONTENTION OF LEARNED D.R. T HE SHORT QUESTION ARISING HERE I S WHETHER THE PER UNIT RATE OF ELECTRICITY, FOR THE PURPOSE OF COMPUTING THE PROFITS WINDMILLS OF THE ASSESSEE, HAS TO BE TAKEN A T RS. 2.70 OR AT RS. 3.50. RS. 2.70 WAS T HE PRICE GIVEN BY ELECTRICITY BOA RD TO THE ASSESSEE FOR ELECTRICITY GENERATED BY THE WINDMILLS BUT, SUCH ELECTRICITY WHEN SUPPLIED BY THE ELECTRICITY BOARD TO THE YARN MANUFACTURING UNIT OF THE ASSESSEE, THEY HAD CH ARGED FROM THE ASSESSE E RS. 3.50 PER UNIT. THERE IS NO DISPUTE THAT THE POWER MANUFACTURED BY THE ASSESSEE FROM ITS WINDMIL L S THOUGH MEANT FOR THE USE OF CAPTIVE CONSUMPTION IN ITS YARN MANUFACTURING UNIT, WAS NOT PHYSICALLY THE SAME AS WAS ACTUALLY USED BY THE YARN MANUFACTURING UNITS. THE WINDMILLS WERE DISPARATELY SITUATED VIS - A - VIS THE YARN MANUFACTURING UNIT. ASSESSEE WAS LEFT WITH NO GO OTHER THAN SUPPLY THE ELE C TRI C ITY TO THE ELECTRICITY BOARD. IT IS NOT THAT THE SAME POWER THAT W AS PRODUCED B Y THE ASSESSEE WAS SUPPLIED BY THE ELECTRICITY BOARD TO ITS YARN MANUFACTURING UNIT. THE ADJUSTMENT IN THE BILLS AS A BARTER ARRANG EMENT WAS, THEREFORE, ONLY FOR THE CONVENIENCE OF THE ELECTRICITY BOARD. SUB - SECTION ( 8) OF SECTION 8 0 - IA PROVIDES THAT WHERE AN ASSESSEE, WHICH IS ELIGIBLE FOR 80 - IA BENEFITS, TRANSFERRED ITS GOODS OR SERVICE TO ITS BUSINESS OTHER THAN THE ELIGIBLE BUSINESS, THE CONSIDER ATION IF ANY RECORDED FOR SUCH TRANSFER IN THE ACCOUNTS OF THE ELIGIBLE BUSINESS, SHOULD CORRESPOND TO T HE MARKET VALUE OF SUCH GOODS OR SERVICES. OSTENSIBLY, IN THIS CASE, THE A.O. WAS OF THE OPINION THAT THE CONSIDERATION FOR TRANSFER OF POWER TO CAPTIVE CONSUMPTION TO THE YARN MANUFACTURING UNIT WAS RECORDED AT A C ONSIDERATION WHICH DID NOT CORRESPOND TO ITS MARKET VA L UE. IN OTHER WORDS, A. O PERCEIVED 2.70 AS THE MARKET VALUE , BEING THE PRICE AT WHICH ASSESSED SOLD POWER TO ELECTRICITY BOARD AND NOT 3.50 PER UNIT AT WHICH ASSESSEE, IN TURN, PURCHASED T H E POWER FRO M THE ELECTRICITY BOARD FOR ITS YARN MANUFACTURING UNIT. IN TERMS OF ELECTRICITY (SUPPLY) ACT, 1948, LEGISLATURE HAS P UT RESTRICTIONS ON ESTABLISHM ENT O N POWER GENERATING UNITS AND THEIR FUNCTIONING. POWER GENERATING CONCERNS ARE ALLOWED TO USE POWER FOR CAPTIVE CONSUMPTION OF THEIR OTHER UN ITS, AND THE SURPLUS, IF ANY, HAS TO BE S U PPLIED OR TRANSFERRED TO STATE ELECTRICITY BOARDS . SECTION 43 OF ELECTR I CITY (SUPP L Y) ACT, 1948 AUTHORIZES STATE ELECTRICITY BOARD TO ENTER INTO ARRANGEMENTS FOR PURCHASE AND SALE OF ELECTRICITY UNDER CERTAIN CONDI TIONS MENTIONED THEREIN. SECTION 43A OF THE SAID ACT ALSO LAYS DOWN RULES AND CONDITIONS FOR DETERMINING TARIFF FROM THE SALE OF ELECTRICITY BY A GENERATING COMPANY TO STATE ELECTRICITY B O ARDS. THE TARIFF IS DETERMINED ON THE BASIS OF VARIOUS PARAMETERS MENTIONED THEREIN. A PRIVATE PERSON REQUIRES A SPECIFIC 18 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) CONSENT TO SET UP A POWER GENERATING UNIT AND IT HAS TO COMPLY WITH THE RESTRICTIONS FOR USE OF POWER GENERATED AND THE TARIFF AT WHICH THE POWER CAN BE SUPPLIED TO ELECTRICITY BOARD. THUS THE DETERMI NING OF TARIFF BETWEEN ASSESSES AND ELECTRICITY BOARD CANNOT BE CONSIDERED AS AN EXERCISE UNDERTAKEN IN A COMPETITIVE ENVIRONMENT AND UNDER MARKET CONDITIONS. PRICE DETERMINED IN SUCH A SCENARIO CANNOT BE EQUATED WITH A SITUATION WHERE THE PRICE IS DETERMI NED IN THE NORMAL COUR SE OF COMPETITIVE ENVIRONMENT. THUS, THE PRICE AT WHICH ASSESSEE SOLD ITS POWER TO THE ELECTRICITY BOARD CANNOT BE EQUATED WITH MARKET RATE AS UNDERSTOOD FOR THE PURPOSE OF SECTI ON 80DA(8) OF THE ACT. NOW THE QUESTION THAT REMAINS IS WHETHER THE PRICE RECORDED BY THE ASSESSEE AT RS. 3.50 PER UNIT FOR PURCHASING POWER FROM THE ELECTRICITY BOARD FOR ITS YARN MANUFACTURING UNIT CAN BE CONSIDERED THE MARKET VALUE. ASSESSEE UNDOUBTEDLY IS AN INDUSTRIAL CONSUMER AND THE BOARD SUPPLIES POWER TO SUCH INDUS TRIAL CONSUMERS AT THE RATE OF RS. 3.50 PER UNIT. HAD THE ASSESSEE NOT BEEN SADDLED WITH THE RESTRICTIONS OF SUPPLYING SURPLUS POWER TO THE STATE ELECTRICITY BOARD, IT WOULD HAVE SUPPLIED THE POWER TO ULTIMATE CUSTOMERS AT A PRICE NOT LESS THA N RS. 3.50 PER UNIT, BEING THE RATE CHARGED BY THE BOA RD FROM ITS INDUSTRIAL CONSUMERS. THUS, UNDER THE GIVEN CIRCUMSTANCES, IT WOULD APPROPRIATE TO HOLD THAT THE CONSIDERATION RECORDED BY THE ASSESSEE FOR TRANSFER OF POWER FOR CAPTIVE CONSUMPTION, WHICH I S AT THE RATE OF RS. 3.50 PER UNIT, CORRESPONDS TO THE MARKET VALUE OF SUCH POWER JINDAL STEEL AND POWER LTD. (20 07) (16 - SOT 509), WE ARE OF THE OPINION THAT THIS DECISION BETTER SUPPORTS THE CA SE OF THE ASSESSEE. IN TAKING THIS, WE ARE ALSO ROBORANTED BY THE DECISION OF BOMBAY BENCH OF THIS TRIBUNAL, IN THE CASE OF WEST COAST PAPER M ILLS LTD. V. JCIT 100 TTJ (MUMBAI) 833. WE ARE, THEREFORE, OF THE OPINION THAT ASSESSE E HAS TO SUCCEED IN ITS APPEAL AND PROFITS OF ELIGIBLE UNDERTAKING HAS TO BE DETERMINED O N THE BASIS OF ANNUAL LANDING COST OF ELECTRICITY PURCHASED BY THE ASSESSEE FROM TNEB. 2 5. FROM THE ABOVE DECISION , IT IS CLEAR THAT FOR THE PURPOSE OF 80IA, PROFIT OF ELIGIBLE UNDERTAKING HAS TO BE DETERMINED ON THE BASIS OF ACTUAL LENDING COST OF ELECTRICITY PURCHASED BY THE ASSESSEE FROM TAMILNADU ELECTRICITY BOARD AND THE TRIBUNAL HAS COME TO A CONCLUSION BY FOLLOWING THE DECISION IN THE CASE OF JINDAL STEE L AND POWER LTD . (SUPRA) AND ALSO THE CASE BOMBAY BENCH OF THE TRIBUNAL IN THE CASE OF WEST COAST PAPER MILLS LTD. VS. JCIT [100 TTJ (MUMBAI) 833]. THEREFORE, RESPECTFULLY FOLLO WI NG THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. EVEREADY SPINNING MILLS PVT. LTD. (SUPRA), WE DO NOT FIND ANY 19 ITA NO S . 138 - 140/VIZ/2016 C.O.NOS. 32 - 34/VIZ/2016 ( M/S. SRI LALITHA ENTERPRISES INDUSTRIES (P) LTD. ) REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). THUS, THIS APPEAL FILED BY THE REVENUE IS DISMISSED. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ONLY SUPPORTIVE TO THE LD. CIT(A)S ORDER, THEREFORE IT HAS BECOME INFRUCTUOUS AND IS DISMISSED. 2 6. IN THE RESULT, ALL THE APPEAL S FILED BY THE REVENUE ARE DISMISSED AND THE CROSS OBJECTION NO S . 32 & 33/VIZ/2016 FILED BY THE ASSESSEE ARE ALLOWED AND THAT OF C.O.NO.34/VIZ/2016 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 2 5 T H DAY OF OCTOBER , 201 7 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 5 T H OCTOBER , 201 7 . VR/ - COPY TO: 1. THE ASSESSEE - M/S. SRI LALITHA ENTERPRISES INDUSTRIES PVT. LTD., 4 - 1 - 57, VADLAMURU ROAD, PEDDAPURAM, E . G . DIST RICT . 2. THE REVENUE ACIT, CIRCLE - 1, KAKINADA. 3. THE P CIT - 2, VISAKHAPATNAM. 4. THE CIT(A) - 2, VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.