ITC Limited, Kolkata V. ACIT, Rg-8, kolkata, Kolkata

MA 17/KOL/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7783 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANKAR HALDAR JCITSRDR
• Assessee Lawyers: J P KHAITAN
• Section: 80IA

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER (MISC. APPLICATION) M.ANO.17-18/KOL/2019 (ARISING OUT ITA NO.685/KOL/2014 &1267/KOL/2014) / ASSESSMENT YEAR:2009-10 ITC LTD. 37, J.L. NEHRU ROAD, KOLKATA-71 [ PAN NO.AAACI 5950 L ] / V/S . ACIT, RANGE-8, P-7, CHOWRINGHEE SQUARE, KOLKAKTA-69 (ORIGINAL APPELLANT) (ORIGINAL R ESPONDENT) (APPLICANT) .. (RESPONDENT) / BY ASSESSEE SHRI J.P. KHAITAN, SR, ADVOCATE / BY RESPONDENT SHRI SHANKAR HALDAR, JCIT-SR-DR / DATE OF HEARING 22-02-2019 / DATE OF PRONOUNCEMENT 23-04-2019 / ORDER PER S.S.GODARA, JUDICIAL MEMBER:- THESE TWO ASSESSEES MISCELLANEOUS APPLICATION(S) FILED U/S. 254(2) OF THE INCOME TAX APPELLATE TRIBUNAL ACT, 1963, IN SHO RT THE ACT SEEK TO MODIFY / RECTIFY OUR ORDER DATED 27.11.2018 PARTLY ALLOWIN G ITS MAIN APPEAL ITA NO.685/KOL/2014 AND DISMISSING REVENUES CROSS-APPE AL ITA NO.1267/KOL/2014. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. WE NO TICE AT THE OUTSET THAT THE ASSESSEES PLEADINGS ARE IDENTICAL IN BOTH OF ITS MISC. APPLICATION. WE THUS TAKE FORMER MA NO.17/KOL/2019 AS THE LEAD CASE. MA NO17-18/KOL/2019 M/S ITC LTD.. VS. DCIT, RNG-8, KOL. PA GE 2 3. THIS ASSESSEES FIRST SUBSTANTIVE GRIEVANCE RAIS ES IN THE INSTANT LEAD MISCELLANEOUS APPLICATION SEEKS TO CORRECT OUR IMPU GNED ORDER TAKING ITS EMPLOYEES STOCK OPTION PLAN ESOP FIGURE AT 26,17,37,836/- INSTEAD OF THE CORRECT AMOUNT OF 2,61,73,34,836/-. THE REVENUE IS VERY VERY FAIR IN NOT DISPUTING THE LATTER CORRECT FIGURE. WE THEREFORE D IRECT NECESSARY MODIFICATION IN OUR ORDER IN ASSESSEES APPEAL ITA NO.685/KOL/2014 TO THIS EFFECT. THE ASSESSEES ESOP CLAIM SHALL NOW BE READ AS OF 2,61,73,34,836/-. ITS FIRST GRIEVANCE RAISED IN THE INSTANT MISCELLANEOUS APPLI CATION IS TREATED AS ACCEPTED. 4. NEXT COMES THE ASSESSEES LATTER SUBSTANTIVE GRO UND SEEKING TO MODIFY OUR ORDER IN REVENUES THIRD SUBSTANTIVE GROUND IN CROSS APPEAL ITA NO.1267/KOL/2014 SEEKING TO REVIVE ASSESSING OFFICE RS ACTION DISALLOWING ITS SEC. 80IA DEDUCTION CLAIM AMOUNTING TO 63,02,26,000/- FOR THE ELIGIBLE CAPTIVE UNDERTAKING. OUR ORDER IN ISSUE HAD FOLLOWED ANOTHE R CO-ORDINATE BENCHS DECISION IN ASSESSEES CASE ITSELF IN ASSESSMENT YE AR 2002-03 AS UNDER: 16. THE REVENUES THIRD SUBSTANTIVE GROUND SEEKS T O REVIVE THE ASSESSING OFFICERS ACTION DISALLOWING ASSESSEES SECTION 80IA DEDUCTIO N CLAIM AMOUNTING TO RS. 63,02,26,000/- FOR ITS ELIGIBLE CAPTIVE UNDERTAKIN GS. WE FIND THE INSTANT ISSUE ALSO TO BE NO MORE RES INTEGRA AS ABOVE CO-ORDINATE BENCH D ECISION IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR UPHELD THE CIT(A) SIMIL AR FINDINGS AND LEFT IT OPEN FOR THE ASSESSING OFFICER TO FINALIZE THE NECESSARY COM PUTATION AS FOLLOWS: 4. GROUND NO. 2 RELATES TO THE CLAIM OF DEDUCTION U/S 80IA MADE BY THE ASSESSEE IN RESPECT OF VARIOUS CAPTIVE POWER UNDERT AKINGS LOCATED IN THE DISTRICT OF BHADRACHALAM AND KOVAI. THE AO NOTED TH AT THE ASSESSEE HAS MADE CLAIM OF RS. 69,57,61,000/- IN RESPECT OF 4 PO WER UNDERTAKINGS BELONGING TO IT ON THE BASIS OF FORM NOS. 100CCB FI LED BY THE ASSESSEE. IN RESPECT OF POWER UNDERTAKING AT BHADRACHALAM THE AO NOTED THAT THE ASSESSEE GENERATED 12,02,11,841 UNITS OF ELECTRICIT Y WHICH WAS TRANSFERRED TO PAPER UNDERTAKING AT A PRICE OF RS. 3.3643/UNIT AS THERE WAS NO SALE TO OUTSIDER. THIS PRICE CONSISTS OF ADDITIONAL DEMAND CHARGES ALSO. THE AO WAS OF THE VIEW THAT WHILE COMPUTING THE TRANSFER PRICE , ADDITIONAL DEMAND CHARGES HAS TO BE EXCLUDED. THEREFORE, HE DECIDED T HE TOTAL TRANSFER PRICE OF RS. 35,15,93,155/- AGAINST THE PRICE OF RS. 40,44,2 6,809/-. THE AO ALSO NOTED THAT THE ASSESSEE IS BOUND TO PAY TO THE STATE GOVE RNMENT ELECTRICITY DUTY ON THE UNITS GENERATED BY THE CAPTIVE PLANT AND HE CAL CULATED THE COST ELEMENT TO BE PAID TO THE STATE GOVERNMENT AT RS. 223.86 LACS. THEREFORE, HE WAS OF THE VIEW THAT THIS HAS TO BE REDUCED WHILE COMPUTING TH E PROFIT AND ACCORDINGLY HE RECOMPUTED THE PROFIT FROM POWER UNDERTAKING - I AT RS. 6,42,55,155/- AND REDUCED THE DEDUCTION ACCORDINGLY. 4.1 IN RESPECT OF POWER UNDERTAKING - II, THE AO NO TED THAT THE ASSESSEE GENERATED 8,97,59,276 UNITS AND SET TRANSFER PRICE AT RS. 3.36/UNIT. HERE ALSO MA NO17-18/KOL/2019 M/S ITC LTD.. VS. DCIT, RNG-8, KOL. PA GE 3 THE ASSESSEE HAS TAKEN INTO ACCOUNT ADDITIONAL DEMA ND CHARGES WHILE COMPUTING THE TRANSFER PRICE WHICH WAS RE-CALCULATE D BY THE AO. THE AO FURTHER NOTED THAT THE ASSESSEE HAS TO PAY TO THE S TATE GOVERNMENT, ELECTRICITY DUTY ON THE UNITS GENERATED BY THE CAPT IVE PLANT AND HE COMPUTED THE ELECTRICITY DUTY TO BE PAID AT RS. 167.15 LAKHS AND TO THAT EXTENT HE WAS OF THE VIEW THAT THE PROFIT HAS TO BE REDUCED FROM THI S CAPTIVE POWER PLANT. ACCORDINGLY, THE AO RECOMPUTED THE PROFIT AT RS. 15 ,69,04,973/-. 4.2 IN RESPECT OF POWER UNDERTAKING - IV, THE AO OB SERVED THAT THE UNDERTAKING GENERATED STEAM USED FOR GENERATION OF ELECTRICITY BY THE CAPTIVE POWER UNDERTAKINGS. THE AO TOOK THE VIEW THAT THE T WO UNITS ARE FUNCTIONALLY INTEGRATED AS A SINGLE UNIT SO FAR AS GENERATION OF STEAM AND ELECTRICITY AND VICE VERSA ARE CONCERNED. SINCE THE ASSESSEE HAS AR TIFICIALLY BIFURCATED THE TWO UNITS, THEREFORE, HE WAS OF THE OPINION THAT NO DEDUCTION U/S 80IA CAN BE ALLOWED IN RESPECT OF THE STEAM UNIT AS THE ASSESSE E HAS ALREADY CLAIMED DEDUCTION FOR GENERATION OF ELECTRICITY IN RESPECT OF CAPTIVE POWER UNDERTAKINGS. 4.3 IN RESPECT OF POWER UNDERTAKING - I, KOVAI, THE AO NOTED THAT THE ASSESSEE GENERATED 5,43,96,500 UNITS WHICH WAS TRAN SFERRED AT THE RATE OF RS. 4.10 PER UNIT AND WHILE CALCULATING THE TRANSFE R PRICE, THE ASSESSEE HAS NOT CONSIDERED THE ELECTRICITY DUTY PAID TO THE STA TE GOVERNMENT EVEN THOUGH THE ASSESSEE HAS PAID A SUM OF RS. 9.90 LAKHS IN CO NNECTION WITH THE AFORESAID UNDERTAKING. THE AO, THEREFORE, RE-DETERM INED THE COST AND COMPUTED THE PROFIT AT RS. 11,24,50,000/-. THE AO A LSO REDUCED THE BROUGHT FORWARD LOSS AMOUNTING TO RS. 1,03,03,000/- WHILE C OMPUTING THE PROFIT FROM THE KOVAI UNIT AS PER THE PROVISIONS OF SEC. 80IA(5 ). THUS, TOTAL DEDUCTION U/S 80IA WAS RESTRICTED TO RS. 32,33,07,128/- IN PLACE OF RS. 69,57,61,000/- CLAIMED BY THE ASSESSEE. THE ASSESSEE WENT IN APPEA L BEFORE CIT(A). CIT(A) TOOK THE VIEW IN RESPECT OF THE CAPTIVE POWE R UNDERTAKINGS THAT THE ISSUE IS EXACTLY IDENTICAL TO THE ONE RAISED IN ASS ESSEE'S OWN CASE IN A.Y 2002-03 AND ACCORDINGLY, HE ALLOWED DEDUCTION TO TH E ASSESSEE BY OBSERVING AS UNDER: 'I) CAPTIVE POWER UNDERTAKING ISSUE: THE ENTIRE CLAIM WAS FULLY DISALLOWED SINCE THE ASS ESSING OFFICER HELD THAT THE POWER HAS ONLY BEEN SUPPLIED TO OTHER UNDE RTAKINGS OF THE APPELLANT ON A CAPTIVE BASIS AND NOT TO OUTSIDERS. HOWEVER, I FIND THAT THIS ISSUE IS EXACTLY IDENTICAL TO THE ONE RAISED I N THE ASSESSEE'S OWN CASE IN AY 2002-03. THE MATTER WAS DECIDED IN FAVOU R OF THE APPELLANT COMPANY BY BOTH THE CIT(A) AND THE HON'BLE TRIBUNAL . IN FACT, THE ASSESSING OFFICER HAS RECORDED IN THE ASSESSMENT OR DER THAT ' ..... THE DEPARTMENT HAS CONTESTED AGAINST THE SAID APPELLATE ORDERS BEFORE THE HIGHER JUDICIAL FORUMS.' THE CIT(A) AND ITAT HA VE ALSO UPHELD THE CAPTIVE UNDERTAKING ISSUE IN THE APPELLANT'S FAVOUR IN AY 2003-04 AND AY 2004- 05 AND THE CIT(A) HAS ALSO SIMILARLY HELD FOR AY 2006-07 AND AY 2007-0S. THEREFORE, RESPECTFULLY FOLLOWING T HE ABOVE MENTIONED DECISIONS 1 HOLD THAT THE DEDUCTION UNDER SECTION 80IA IS FULLY AVAILABLE TO THE COMPANY IN RESPECT OF THE CA PTIVE POWER UNDERTAKINGS.' 4.4 IN RESPECT OF THE STEAM UNDERTAKING ISSUE, THE CIT(A) NOTED THAT ONE POWER UNDERTAKING VI, BHADRACHALAM GENERATES STEAM FOR CAPTIVE USE OF OTHER UNDERTAKINGS AT BHADRACHALAM AND ALLOWED THE DEDUCTION BY OBSERVING AS UNDER: MA NO17-18/KOL/2019 M/S ITC LTD.. VS. DCIT, RNG-8, KOL. PA GE 4 '1 FIND THAT IT HAS BEEN REPEATEDLY ESTABLISHED THA T STEAM IS POWER AS PER THE DELHI TRIBUNAL DECISION IN SIAL SBEC BIOENE RGY LTD. VS.. DCIT [S3 TT] 866 (2004)] AND DCIT V. MAHARAJA SHREE UMAI D MILLS [120 TTJ 711 (2009)]. FURTHER, THE HON'BLE SUPREME COURT HAD DISMISSED THE DEPARTMENT'S SLP AGAINST THE JUDGEMENT OF THE M ADRAS HIGH COURT IN THE CASE OF TANFAC INDUSTRIES LTD. (TC NO. 1773 OF 2008) [319 ITR 8, 9] WHEREIN THE HIGH COURT HAD DISMISSED THE DEPARTMENT'S APPEAL AGAINST THE DECISION OF THE TRIBUNAL WHICH H AD HELD THE DEDUCTION UNDER SECTION 80IA WAS APPLICABLE ON THE VALUE OF STEAM USED FOR CAPTIVE CONSUMPTION. THE APPELLANT COMPANY HAS ALSO SUBMITTED THAT IT IS A SEPARATE / INDEPENDENT UNDER TAKING WHICH PRODUCES POWER IN THE FORM OF STEAM AND WHICH IS TR ANSFERRED TO OTHER UNDERTAKINGS AT MARKET VALUE FOR CAPTIVE USE. THIS WAS SUPPORTED BY THE AUDITED STATUTORY FORM 10CCB REPORT WHICH LISTS OUT ALL ASPECTS RELATED TO THE SAID INDEPENDENT UNDERTAKING LIKE DA TE OF COMMENCEMENT, STATUTORY INSPECTION/CLEARANCES, STAT EMENT OF COSTS, FIXED ASSETS, PROFIT & LOSS A/C AND BALANCES SHEET AND THE PROCESS FLOW CHART. I ALSO FIND THAT IN RESPECT OF THE SAID FACT S, THE ASSESSING OFFICER HAS ACCEPTED THE POSITION AND HAD NOT MADE ANY ISSU E. FURTHER, THE MARKET VALUE OF STEAM HAD BEEN PROPERLY DETERMINED BASED ON A MARKET VALUE REPORT BY PRICE WATERHOUSE & CO. THIS MARKET VALUE WAS SEPARATELY TAKEN AS COST AS PER SECTION 80IA(8) FOR THE COMPUTATION OF DEDUCTION FOR THE ELECTRICITY UNDERTAKINGS. THEREFO RE, THERE WAS NO CASE OF DOUBLE DEDUCTION. THEREFORE, IN VIEW OF THE ABOVE DISCUSSION AND FINDING, I HOLD THAT THE DEDUCTION IS FULLY AVA ILABLE TO THE APPELLANT COMPANY IN RESPECT OF THE SAID POWER UNDERTAKING VI FOR GENERATION OF STEAM FOR CAPTIVE CONSUMPTION.' 4.5 ON THE ISSUE OF BROUGHT FORWARD LOSSES INCURRED PRIOR TO THE INITIAL YEAR, CIT(A) TOOK THE VIEW THAT THE DEDUCTION U/S 80IA HA S TO BE COMPUTED FROM THE INITIAL YEAR AND ALL LOSSES OF EARLIER YEARS PRIOR TO THE INITIAL YEAR HAVE TO BE IGNORED. 4.6 ON THE ISSUE OF INCLUSION OF ADDITIONAL DEMAND CHARGES FOR DETERMINING THE MARKET VALUE, CIT(A) DECIDED THE ISSUE IN FAVOU R OF THE ASSESSEE IN VIEW OF THE DECISION OF THE TRIBUNAL FOR A.Y 2002-03 IN ASSESSEE'S OWN CASE. SIMILARLY, IN RESPECT OF ISSUE WHETHER ELECTRICITY DUTY SHOULD BE INCLUDED WHILE DETERMINING THE COST, CIT(A) TOOK THE VIEW IN FAVOU R OF THE ASSESSEE FOLLOWING THE DECISION OF THE TRIBUNAL FOR A.Y 2002-03 IN ASS ESSEE'S OWN CASE. 4.7 WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CO NSIDERED THE SAME. WE HAVE ALSO GONE THROUGH THE GIST OF THE SUBMISSIONS FILED BY THE ID. AR AS WELL AS THE ORDER OF THE AO ON WHICH THE ID. DR HAS RELI ED. THE MAIN SUBMISSIONS OF THE ID. AR ARE THAT THIS ISSUE IS DULY COVERED B Y THE DECISION OF THIS TRIBUNAL IN ASSESSEE'S CASE FOR A.Y 2002-03. WE HAVE PERUSED THE ITAT ORDER FOR A.Y 2002-03 IN ITA NO. 18/KOL/2006 IN THE CASE OF THE A SSESSEE. WE NOTED THAT THE TRIBUNAL UNDER PARA 10.13 OF ITS ORDER ACCEPTED THE RATE AS HAS BEEN WORKED OUT BY THE CIT(A) TO BE THE FAIR MARKET VALU E BY HOLDING AS UNDER: '10.13 THE LD. AIR FURTHER SUBMITTED THAT IN THE IN STANT CASE THE ASSESSEE WOULD BE ENTITLED TO DETERMINE ITS PROFITS OF THE POWER UNIT BY CONSIDERING THE TARIFF RATE DETERMINED AT RS. 4.45 PER UNIT AS PER THE POLICY OF THE APSEB. KEEPING IN VIEW THE RATIO OF T HE DECISION OF THE HON'BLE SUPREME COURT IN THIRU AROORAN SUGARS LTD. (SUPRA), WE ARE OF THE VIEW THAT THE MARKET PRICE IN CASE OF A CAPT IVE UNIT SHOULD BE THE MA NO17-18/KOL/2019 M/S ITC LTD.. VS. DCIT, RNG-8, KOL. PA GE 5 PRICE THAT THE ASSESSEE WOULD HAVE PAID TO AN OUTSI DER IF THE SAME COMMODITY/SERVICES WERE TO BE PROCURED BY THE ASSES SEE I.E. THE LANDED COST. HOWEVER IN THE INSTANT CASE THE ACTUAL PRICE IS UNREASONABLY HIGH SINCE THE RATE OF APSEB CONTAINS CERTAIN FIXED CHARGES WHICH ARE NOT DIRECTLY RELATABLE TO THE CAP TIVE PLANT. FURTHER THE AVERAGE RATE COMPUTED IN CONJUNCTION WITH THE A PGPCL HAS NOT BEEN RIGHTLY CONSIDERED BY THE ASSESSEE SINCE THE S AID PARTY IS A RELATED PARTY. THE TARIFF RATE COMPUTED BY THE ASSE SSEE IN ACCORDANCE WITH THE GUIDELINES BY APSEB IS THE MOST REASONABLE AND SCIENTIFIC WAY TO DERIVE THE MARKET PRICE. THIS RATE WORKED OU T TO RS. 4.45 PER UNIT. THE LD CTT(A) HAD FURTHER REDUCED THIS RATE B Y DELETING THE SURCHARGE AND ADDITIONAL DUTY AND WORKED OUT THE UN IT RATE AT RS. 4.368 WHICH HAS ALSO BEEN ACCEPTED BY THE ASSESSEE. IN VIEW OF THE CLEAR FINDINGS BY THE CIT(A) AND THE DECISION OF TH E SUPREME COURT AND THE MUMBAI TRIBUNAL WE ARE OF THE VIEW THAT THE DECISION OF THE CIT(A) IS CORRECT AND THERE IS NO INFIRMITY IN THE SAID DECISION. HENCE THIS GROUND OF THE REVENUE IS ALSO DISMISSED.' FROM THE SAID FINDING OF THE TRIBUNAL IT IS APPAREN T THAT THE ASSESSEE HAS COMPUTED THE PROFIT FOR CLAIMING DEDUCTION BY TAKING TARIFF RATE @ RS. 4.45/UNIT AS PER THE POLICY OF APSEB. THIS RATE OF APSEB CONTAINS FIXED CHARGES WHICH ARE NOT DIRECTLY RELATABLE TO THE CAPTIVE PLANT. CIT(A) REDUCED THIS RATE BY D ELETING THE SURCHARGE AND ADDITIONAL DUTY AND WORKED OUT THE UNIT RATE @ RS.4.368. THE T RIBUNAL, THEREFORE, CONFIRMED THE MARKET RATE/UNIT ON THE BASIS OF THE POLICY OF APSE B AS REDUCED BY THE SURCHARGE, ADDITIONAL DUTY. THUS IN VIEW OF THE DECISION OF TH IS TRIBUNAL FOR A.Y 2002-03, THE ASSESSEE, IN OUR OPINION, IS ENTITLED FOR DEDUCTION U/S 80LA IN RESPECT OF THE CAPTIVE POWER UNDERTAKING BUT FOR THE PURPOSE OF ASCERTAINI NG THE PROFIT, MARKET VALUE SHOULD BE TAKEN IN RESPECT OF THE TWO POWER UNDERTAKINGS G ENERATING ELECTRICITY. WE NOTED THAT DURING THE IMPUGNED ASSESSMENT YEAR THE ASSESS EE HAS CLAIMED DEDUCTION U/S 80IA AFTER DETERMINING THE PROFIT ON THE BASIS OF T HE POWER TARIFF RATE AS PER APERC I.E. RS. 3.3643/UNIT. THIS INCLUDES DEMAND CHARGES, ADDITIONAL DEMAND CHARGES AND VARIABLE CHARGES. THE AO REDUCED THE ADDITIONAL DEM AND CHARGES BUT THE CIT(A) ALLOWED THE RELIEF TO THE ASSESSEE HOLDING THAT DE TERMINATION OF THE MARKET VALUE / BASED ON THE STATE GOVERNMENT ELECTRICITY POWER TAR IFF INCLUSIVE OF ADDITIONAL DEMAND CHARGES HAS BEEN SPECIFICALLY DECIDED BY CIT(A) AND TRIBUNAL FOR THE A.Y. 2002-03 AND THE ASSESSEE HAS STRICTLY FOLLOWED THE SAME. A CCORDINGLY, LD. CIT(A) DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. WE NOTED THAT THE TRIBUNAL IN PARA 10.13 OF ITS ORDER FOR A.Y. 2002-03 HAS ACCEPTED THE RATE PER UN IT AS WORKED OUT BY LD. CIT(A). LD. CIT(A) REDUCED THE TARIFF RATE BY SURCHARGE AND ADDITIONAL DUTY. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THIS TRIBUNAL, WE DIRECT THE AO COMPUTE THE PROFIT ELIGIBLE FOR DEDUCTION U/S 80IA ON THE BASIS OF THE AFORESAID FINDING GIVEN BY THE TRIBUNAL FOR A.Y. 2002-03. WE ADOPT THE ABOVE DETAILED REASONING MUTATIS MUTAN DIS TO DECLINE REVENUES INSTANT THIRD SUBSTANTIVE GROUND AS WELL. NECESSAR Y COMPUTATION SHALL FOLLOW AT THE ASSESSING OFFICERS END AS PER LAW. 5. IT IS SUFFICIENTLY CLEAR THEREFORE THAT WE HAD F OLLOWED LEARNED CO-ORDINATE BENCHS ORDER PERTAINING TO ASSESSMENT YEAR 2002-03 IN ASSESSEES CASE ITSELF. IT TRANSPIRES DURING THE COURSE OF HEARING THAT THE LEGISLATURE ENACTED THE NEW ELECTRICITY ACT, 2003 POST FACTO ASSESSMENT YEA R 2002-03 GOVERNING THE MA NO17-18/KOL/2019 M/S ITC LTD.. VS. DCIT, RNG-8, KOL. PA GE 6 FIELD IN THE IMPUGNED ASSESSMENT YEAR 2009-10. THE VERY ISSUE AS TO WHETHER THE TRIBUNALS SAID EARLIER ORDER IN ASSESSMENT YEA R 2002-03 WOULD OPERATE OR NOT POST FACTO THE ABOVE LEGISLATIVE DEVELOPMENTS W AS CONSIDERED BY YET ANOTHER CO-ORDINATE BENCHS DECISION IN M/S BIRLA C ORPORATION CASE IN ITA NOS.971/KOL/2012, 942 & 298/KOL/2013 DECIDED ON 25.08.2017. THE SAID LATTER LEARNED CO-ORDINATE BENCH OBSERVES THAT THOS E EARLIER FINDINGS NO MORE THIS HOLD FIELD AFTER THE NEW ELECTRICITY ACT COMIN G INTO FORCE AS UNDER:- 5.6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK AND THE RELEVANT PR OVISIONS OF THE ELECTRICITY ACT, 2003 AS DETAILED SUPRA. WE FIND THAT THE MAIN THR UST OF ORDER OF LD CITA WAS BY PLACING RELIANCE ON THE DECISION OF THIS TRIBUNAL I N THE CASE OF ITC LTD, WHICH WAS MODIFIED BY THE HONBLE JURISDICTIONAL HIGH COURT. THE LD AR FAIRLY BROUGHT TO OUR ATTENTION THE DECISION OF HONBLE JURISDICTIONAL HI GH COURT IN THE CASE OF ITC LTD BEFORE US AND HAD DULY DISTINGUISHED THE SAME AS NO T APPLICABLE TO THE FACTS OF THE INSTANT CASE , AS ADMITTEDLY, THE ASST YEAR BEFORE HONBLE CALCUTTA HIGH COURT IN ITC LTD WAS ASST YEAR 2002-03. THE SAID DECISION IN IT C LTD FOR ASST YEAR 2002-03 WAS RENDERED BY TAKING INTO ACCOUNT THE RELEVANT PROVIS IONS OF INDIAN ELECTRICITY ACT, 1910 AND ELECTRICITY (SUPPLY) ACT, 1948. THESE ACTS WER E REPEALED AND A NEW ELECTRICITY ACT 2003 WAS INTRODUCED WITH EFFECT FROM 10.6.2003. HENCE FOR THE ASST YEARS 2008- 09 AND 2009-10 (I.E THE YEARS UNDER APPEAL BEFORE U S) , THE ASSESSEE WOULD BE GOVERNED BY THE PROVISIONS OF ELECTRICITY ACT, 2003 . 5.6.1. WE HAVE ALREADY SEEN THAT THE ITCS CASE IN HONBLE CALCUTTA HIGH COURT, PROCEEDED ON THE BASIS THAT THE OPEN MARKET FOR THE CAPTIVE POWER PLANT WAS ONLY A DISTRIBUTION COMPANY OR A COMPANY ENGAGED BOTH IN G ENERATION AND DISTRIBUTION AND THAT THE RATE AT WHICH ELECTRICITY COULD BE SOLD BY THE CAPTIVE POWER PLANT WAS THE ONE FIXED BY THE TARIFF REGULATORY COMMISSION. HOWEVER, SUCH POSITION HAS UNDERGONE SEA CHANGE INASMUCH AS DURING THE RELEVANT PREVIOUS YEA RS IT WAS OPEN TO THE ASSESSEE TO SELL EVEN TO A CONSUMER AND THE PRICE FOR SALE T O A DISTRIBUTION COMPANY OR TO A CONSUMER THAT COULD BE MUTUALLY AGREED UPON NOTWITH STANDING THE TARIFF FIXED BY THE STATE REGULATORY COMMISSION. WE FIND THAT DURING T HE PREVIOUS YEAR RELEVANT TO THE ASST YEAR 2009-10, THE ASSESSEE INFACT SOLD ELECTRI CITY AT RATES HIGHER THAN THAT CHARGED FROM IT BY THE STATE ELECTRICITY BOARD. THE ASSESSEE NEVERTHELESS MADE THE COMPUTATION FOR THE PURPOSE OF SECTION 80IA OF THE ACT WITH REFERENCE TO THE PRICE CHARGED FROM IT BY THE STATE ELECTRICITY BOARD. I N SUCH CIRCUMSTANCES, WE HOLD THAT, WHEN IT WAS PERMISSIBLE FOR THE ASSESSEE TO SELL EL ECTRICITY TO CONSUMERS AND DISTRIBUTION LICENSEES AT RATES HIGHER THAN THAT PA ID BY IT TO THE STATE ELECTRICITY BOARD, THE PRICE CHARGED BY THE STATE ELECTRICITY BOARD WO ULD BE A VERY GOOD INDICATION OF THE MARKET VALUE OF ELECTRICITY AND THE ASSESSEE DI D NOT COMMIT ANY ERROR IN ADOPTING SUCH PRICE FOR WORKING OUT THE AMOUNT ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. 5.6.2. WE FIND THAT THE RELIANCE PLACED BY THE LD A R ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF THIRU AROORAN SUGARS LTD. V CIT, (1997) 227 ITR 432 (SC) , WHEREIN AT PAGE 441, IT WAS HELD AS UNDER:- IN VIEW OF THE AFORESAID, IT IS VERY DIFFICULT TO UPHOLD THE CONTENTION OF MR. NARIMAN THAT IN ORDER TO FIND OUT THE MARKET PRICE, THERE HAS TO BE AN ACTUAL MARKET WHERE THERE WILL BE A CONCOURSE OF BUYERS A ND SELLERS. THIS ARGUMENT WAS SPECIFICALLY REJECTED BY LORD PEARSON L. J., IN THE CASE OF MA NO17-18/KOL/2019 M/S ITC LTD.. VS. DCIT, RNG-8, KOL. PA GE 7 BUILDING AND CIVIL ENGINEERING HOLIDAYS SCHEME MANA GEMENT LTD. V. POST OFFICE [1966] 1 QB 247 (CA), IN THE FOLLOWING WORDS (PAGE 268): WHAT IS MEANT BY MARKET VALUE ? IT IS NOT REASON ABLE TO SUPPOSE THAT FOR THE PURPOSES OF THIS PROVISO THERE IS NO MARKET VALUE U NLESS THERE IS A CONCOURSE OF BUYERS AND SELLERS. THERE IS NO NEED TO INFER TH AT THERE MUST BE AN OPEN MARKET, OR THAT THERE MUST BE A PRICE FLUCTUATING A CCORDING TO THE PRESSURES OF SUPPLY AND DEMAND. IN THAT CASE LORD DENNING ALSO EXPLAINED THE CONCEP T OF MARKET VALUE IN THE FOLLOWING WORDS (PAGE 264): WHAT IS THE MARKET VALUE OF THESE STAMPS ? . . . IT DOES NOT CONNOTE A MARKET WHERE BUYERS AND SELLERS CONGREGATE. THE MA RKET VALUE HERE MEANS THE PRICE AT WHICH THE GOODS COULD BE EXPECTED TO B E BOUGHT AND SOLD AS BETWEEN WILLING SELLER AND WILLING BUYER, EVEN THOU GH THERE MAY BE ONLY ONE SELLER OR ONE BUYER, AND EVEN THOUGH ONE OR BOTH MA Y BE HYPOTHETICAL RATHER THAN REAL. THESE ARE THE PRINCIPLES UNIVERSALLY APPLIED TO FIN D OUT THE PRICE AT WHICH THE GOODS ARE ORDINARILY SOLD IN THE OPEN MARKET. FOR DETERMI NATION OF MARKET VALUE, THERE IS NO PRE-REQUISITE THAT AN OPEN MARKET WHERE BUYERS AND SELLERS CONGREGATE TO BUY AND SELL GOODS MUST EXIST. IN THE INSTANT CASE, THE ASS ESSEE-COMPANY ACTUALLY BOUGHT SUGARCANE FROM A LARGE NUMBER OF GROWERS YEAR AFTER YEAR IN THE ORDINARY COURSE OF BUSINESS. THE PRICE AT WHICH IT BUYS SUGARCANE MUST BE TAKEN TO BE THE MARKET PRICE. IF THE PRICE IS CONTROLLED BY THE SUGARCANE CONTROL ORDER, THE CONTROLLED PRICE WILL BE TAKEN AS THE MARKET PRICE, BECAUSE IT IS AT THIS PR ICE THAT A WILLING BUYER AND A WILLING SELLER ARE EXPECTED TO TRANSACT BUSINESS. AS LORD DENNING POINTED OUT, IT DOES NOT MAKE ANY DIFFERENCE TO THIS POSITION THAT THE ASSES SEE WAS THE ONLY BUYER IN THE REGION WHERE ITS FACTORY WAS LOCATED. (EM PHASIS ADDED) 5.6.3. THE LD AR SUBMITTED THAT AS HELD IN THE AFOR ESAID JUDGEMENT OF THE HONBLE SUPREME COURT, THE PRICE PAID BY AN ASSESSEE FOR PU RCHASE OF RAW MATERIAL REPRESENTS THE MARKET PRICE OF SUCH RAW MATERIAL PR ODUCED BY THE ASSESSEE. THE SAID JUDGMENT WAS HELD NOT TO APPLY IN ITCS CASE BECAUS E THE HONBLE COURT WAS OF THE VIEW THAT ELECTRICITY COULD NOT BE SOLD TO THE CONS UMER BECAUSE OF SPECIFIC PROHIBITION IN THE ERSTWHILE ELECTRICITY ACT AND AS SUCH THE PR ICE TO THE CONSUMER COULD NOT BE TAKEN INTO ACCOUNT. WE FIND THAT THAT IS NOT THE PO SITION IN THE INSTANT CASE. HENCE WE ARE IN AGREEMENT WITH THE ARGUMENTS OF THE LD AR. 5.6.4. WE FIND THAT THE METHOD ADOPTED BY THE ASSES SEE VIZ. TO TAKE THE AVERAGE RATE CHARGED BY THE STATE ELECTRICITY BOARD FOR THE PREV IOUS MONTH IS QUITE APPROPRIATE AND REASONABLE FOR DETERMINING THE MARKET VALUE FOR THE MONTH OF SUPPLY. THE ANNUAL WEIGHTED AVERAGE ADOPTED BY THE LD CITA WOULD RESUL T IN VARIATIONS OCCURRING DURING THE YEAR AT DIFFERENT TIMES BEING MADE APPLICABLE U NIFORMLY FOR THE WHOLE YEAR. IN OUR CONSIDERED OPINION, THE ASSESSEES METHOD IS MORE A PPROPRIATE AS IT FACTORS IN VARIATIONS AS AND WHEN THEY TAKE PLACE. 6. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DI SPUTE ALL THESE DEVELOPMENTS AND ALSO THE FACT THAT OUR IMPUGNED OR DER HAD NOT TAKEN INTO CONSIDERATION THIS LATTER CASE LAW ALREADY COMPLIED IN PAPER BOOK WE TREAT OUR MA NO17-18/KOL/2019 M/S ITC LTD.. VS. DCIT, RNG-8, KOL. PA GE 8 EARLIER DIRECTION AS PER ASSESSMENT YEAR 2002-03 OR DER AS AN APPARENT ERROR REQUIRING NECESSARY MODIFICATION U/S 254(2) OF THE ITAT ACT. WE THEREFORE MAKE IT CLEAR THAT THE ASSESSING OFFICER SHALL HOLD FRAME HIS CONSEQUENTIAL COMPUTATION IN TUNE WITH THE PROVISIONS IN NEW ELEC TRICITY ACT, 2013 SO FAR AS ASSESSEES SEC. 80IA DEDUCTION CLAIM IN REVENUES A PPEAL IS CONCERNED. THE ASSESSEE SUCCEEDS IN ITS INSTANT SECOND SUBSTANTIVE GROUND AS WELL AS LEAD MA NO.17/KOL/2018. THE ASSESSEES LATTER MA NO. 18/ KOL/2019 IS RAISING THE VERY GROUNDS IN REVENUES APPEAL (SUPRA) IS RENDERE D INFRUCTUOUS. 7. THE ASSESSEES FORMER MA NO.17/KOL/2019 IS ALLOW ED WHEREAS LATTER MA 18/KOL/2019 IS DISMISSED AS RENDERED INFRUCTUOUS . ORDER PRONOUNCED IN THE OPEN COURT ON 23/04/2019 SD/- SD/- ( ) ( ) (DR. A.L. SAINI) (S.S. GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP '- 23/04 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE -M/S ITC LTD. 37, J.L>NEHRU ROAD, KOLKATA -71 2. /REVENUE-DCIT, RANGE-8, AAYAKAR BHAWAN, 5 TH FL, P-7, CHOWRINIGHEE SQ. KOLKATA-69 3. 2 3 / CONCERNED CIT 4. 3- / CIT (A) 5. 82, 2, KOLKATA / DR, ITAT, KOLKATA 6. / GUARD FILE. BY ORDER/ , /TRUE COPY/ 2,