THE INDIA CEMENTS LTD.,CHENNAI V. DCIT, CORPORATE CIRCLE-1(1), CHENNAI

ITA 2663/CHNY/2025

AI Insights

The case involves The India Cements Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2021-22. The primary issues in the appeal were the transfer pricing adjustment made by the Transfer Pricing Officer (TPO) regarding the captive power supply and the disallowance of deductions under Section 80-IA and Section 43B of the Income Tax Act, 1961. The Tribunal examined the methodology used by the TPO for determining the arm's length price (ALP) for the electricity supplied for captive consumption and found it inconsistent with judicial precedents and the provisions of the Act.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 829176 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Chennai
• Assessment Year: misc
• Appeal Filed On: 26-09-2025
• Other Referred Cases: Jindal Steel & Others vs. Civil Appeal No. 13771 of 2015, CIT vs Reliance Industries Ltd, M/s. Godavari Power and Ispat Ltd. vs. CIT, Sri Velayudhaswamy Spinning Mills vs. DCIT, Eveready Spinning Mills vs. ACIT, Saranya Textiles vs. ACIT, Commissioner of Income Tax vs. Gujarat Alkalies Chemicals Limited, Tata Chemicals Ltd. vs. ACIT, Sanghi Industries Ltd. vs. DCIT, PCIT vs Gujarat Fluorochemicals Ltd., CIT vs Reliance Industries Ltd., Star Paper Mills Ltd. vs. CIT, Birla Corporation Ltd. vs. CIT, Rungta Mines Ltd. vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: VIKRAM VIJAYARAGHAVAN
• Keywords: Set aside; Opportunity of being heard; Transfer pricing
• Section: 143(3); 43B; 92F

Judgement Text

"आयकर अपीलीय अधिकरण, ‘बी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI श्री जॉजज जॉजज क े, उपाध्यक्ष, एवं सुश्री पदमावती यस, लेखा सदस्य क े समक्ष BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENTAND MS. PADMAVATHY.S, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2663/Chny/2025 धििाजरण वर्ज /Assessment Year: 2021-22 The India Cements Ltd., No.827, Anna Salai, Anna Road H.O., Chennai – 600 002. PAN: AAACT 1728P Vs. The Dy. Commissioner of Income Tax, Corporate Circle-1(1), Chennai. (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Appellant by : Mr. Vikram Vijayaraghavan, Advocate प्रत्यर्थी की ओर से /Respondent by : Mr. Shiva Srinivas, CIT सुिवाई की तारीख/Date of Hearing : 07.01.2026 घोर्णा की तारीख /Date of Pronouncement : 13.01.2026 आदेश / O R D E R PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short \"CIT(A)\") passed u/s. 250 of the Income Tax Act, 1961 ( in short \"the Act\") dated 02.07.2025 for Assessment Year (AY) 2021-22. The grounds raised by the assessee are as under: “1. On the facts and in the circumstances of the case and in law, the order passed by the learned CIT(A), NFAC, is contrary to the facts on record and the applicable legal provisions, and therefore deserves to be set aside. 2. On the facts and in the circumstances of the case and in law, the NFAC/CIT(Appeals) has erred in confirming the disallowance of Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 2 -: deduction claimed under Section 80-IA for an amount of Rs.62,67,41,696, being the market value of electricity generated and supplied from various units of the undertaking for captive consumption. The NFAC /CIT(Appeals) has while accepting the existence of the Hon'ble Supreme Court's positive view on the issue in the case of Jindal Steel & Others (Civil Appeal No. 13771 of 2015) failed to follow the judicial hierarchy despite no dissimilarity in the facts between the two. He failed to appreciate that the market value for supply of power for captive consumption should be determined based on the rate at which electricity is supplied to the consuming units by SEB, and not the rate at which generating units sells excess electricity to third parties or State Electricity Boards. 3. On the facts and in the circumstances of the case and in law, the NFAC/CIT(Appeals) has erred in confirming the disallowance of gratuity and superannuation amounting to Rs.20,45,39,511/- claimed u/s 43B of the Income-tax Act, 1961, by incorrectly applying the due date specified under the relevant welfare Acts. The said amounts represent the employer's contribution, which, as per the provisions of Section 43B(b), is allowable as a deduction if actually paid on or before the due date of filing the return of income u/s 139(1). The CIT(A) failed to appreciate that the payments were made within the prescribed time under the Income- tax Act and are therefore fully allowable.” 2. The assessee is a public limited company engaged in diverse lines of business primarily related to the manufacture of sale of cement. The assessee filed the return of income for A.Y 2021-22 on 15.03.2022 declaring total income of Rs. 375,88,36,854/-. The return was processed u/s. 143 (1) of the Act determining the total income of the assessee at Rs. 404,90,67,630/-. The case was selected for scrutiny and the statutory notices were duly served at the assessee. A reference was made to the Transfer Pricing Officer (TPO) since the assessee had specified domestic transactions as tabulated below: S. No. Name of the AE Nature of the specified domestic transactions Amount (in INR) MAM 1. ICL Cements Plants Sale of power generated at Sankarnagar, Tamil Nadu 38,99,17,328 Such Other method 2. ICL Cementr Plants Sale of power generated at 16,81,29,915 Such Other Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 3 -: Vishnupuram, Telangana method ICL Cementr Plants Sale of power generated at Banswara, Rajasthan 6,86,94,453 Such Other method Total 62,67,41,696 2.1 The assessee has arrived at the Arms Length Price (ALP) computation towards captive power supply by the thermal power supply plants (unit eligible for deduction u/s.80IA) to the cement units (non-eligible unit) using CUP method by bench marking the rate at which the power is purchased by the captive unit from the Government Electricity Board (DISCOM). The details of the bench marking done by the assessee are as under – Thermal Power Plant Quantity of Captive Consumption (Transfer of power by the TPP to cement unit) Transfer Price/unit of electricity Value of Captive Consumption (In Units) (in INR.) (In INR) Sale of power generated at Sankarnagar, Tamil Nadu 19,22,67,600 7.23 1,39,00,94,748 Sale of power generated at Vishnupuram, Telangana 18,57,46,260 6.25 1,16,09,14,125 Sale of power generated at Banswara, Rajasthan 8,09,54,220 8.08 65,41,10,098 Total 3,20,51,18,971 2.2 The TPO did not accept the ALP computation of the assessee and benchmarked the impugned transaction at the rate at which the eligible unit sells power to TANGEGEDCO, Ajmer Vidyut Vitran Nigam Ltd (AVVNL) and Southern Power Distribution Company of Telengana Ltd (SPDCL). Accordingly the TPO arrived at the TP adjustment of Rs.118,93,39,443/- as under – Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 4 -: 2.3 The A.O passed a final assessment order incorporating the TP adjustment thereby restricting Section 80IA deduction claimed by the assessee to Rs. 62,67,41,695/-. The assessee filed further appeal before the CIT(A) and raised grounds pertaining to the TP adjustment as well the disallowance made u/s. 43B of the Act against provision for gratuity and interest while processing the return u/s. 143(1) of the Act which the A.O has incorporated in the order passed du/s. 143(3) of the Act. The CIT(A) confirmed the TP adjustment. With regard to disallowance made u/s. 43B of the Act, the CIT(A) gave direction to the A.O to collect evidence as to whether the assessee has paid the interest to bank within the due date to the tune of Rs.8,46,92,528/- and with regard to gratuity amounting to Rs.20,45,39,511/-, the CIT(A) gave a direction to the A.O to check whether the payments are made on or before the due date as per the relevant Act. The assessee is in appeal before the Tribunal against the order of the CIT(A). Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 5 -: 3. The Ld. Authorized Representative (AR) of the assessee submitted that the TPO has proposed the TP adjustment by considering the average price at which the eligible unit sells power to TANGEDCO/AVVNL/SPDCTL which is not an uncontrolled transaction. The ld AR further submitted that the assessee has considered the cement unit as the tested party and has bench marked the transaction with an uncontrolled price by applying the rate at which TANGEDCO/AVVNL/SPDCTL supplies power to the cement unit. The Ld. AR submitted that the issue of the rate to be adopted for captive supply of power for the purpose of Section 80IA has been considered by the Co-ordinate Bench in assessee's own case for A.Y 2018-19, where it has been held that: “7. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that an identical issue has been considered by the Tribunal in assessee’s own case for assessment year 201314 in ITA No. 737/Chny/2018, where the Tribunal under identical set of facts and also by following certain judicial precedents, including the decision of Hon’ble High Court of Bombay in the case of CIT vs Reliance Industries Ltd (Supra) held that while computing deduction u/s. 80IA of the Act for power generation companies for captive consumption, the rate charged by electricity distribution companies to its consumers should be considered instead of rate at which the power generating companies supply power to the electricity distribution companies. The relevant findings are as under: 18.5 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that an identical issue has been considered by the Tribunal in assessee’s own case for assessment year 2011-12 in ITA No.2412/Chny/2019 dated 12.12.2019, where the Tribunal under identical set of facts by following certain judicial precedents including the decision of Hon’ble Bombay High Court in the case of Reliance Industries Ltd., and the decision of Hon’ble Chhattisgarh High Court in the case of M/s.Godavari Power and Ispat Ltd., supra held that while computing deduction u/s.80IA for generation of power for captive consumption, the rate at which electricity board supply power to its consumers should be considered instead of the rate at which the power Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 6 -: generating companies supply its power to the electricity board. The relevant findings of the Tribunal are as under:- “31. We have considered the rival submission and perused the materials available on record. 32. A perusal of the facts in the present case clearly shows that the assessee has been captively consuming the electricity generated from its wind mill as also the Heat Waste Recovery Treatment Plant. Admittedly, the assessee is entitled to the deduction u/s.80IA of the Act in respect of the electricity generated and consumed. This is not in dispute. The dispute has risen for computing the deduction u/s.80IA of the Act. The issue admittedly is covered by the decision of the Co-ordinate Bench of this Tribunal in the case of Sri Velayudhaswamy Spinning Mills Vs Deputy Commissioner of Income Tax referred to supra and as also the decision in the case of Eveready Spinning Mills vs. Assistant Commissioner of Income Tax referred to supra. A similar view has also been taken in the case of M/s. Saranya Textiles vs. The Assistant Commissioner of Income Tax, wherein one of us is a party. This view of ours is also supported by the decision of the Hon’ble Gujarat High Court in the case of Commissioner of Income Tax vs. Gujarat Alkalies Chemicals Limited reported in 395 ITR 247(Guj.), wherein it has been held that the deduction u/s.80IA was allowable to the for generation of power for captive consumption and that the rate of power generation at which the electricity board supplied power to its consumers rather than the rate at which the power generating companies supply its power to the electricity board was to be taken as the price. Further, this view has been supported by the decision of the Hon’ble Bombay High Court in the case of Commissioner of Income Tax vs. Reliance Industries Limited in I.T.A. No.1056/Chny/2016 dated 0.01.2019 and as also the decision of the Hon’ble Chhattisgarh High Court in the case of Godavari power and Ispat Limited reported in [2014] 42 Taxman.com 551 (Chhattisgarh). As it is noticed that the learned CIT(A) has followed judicial discipline by following the decision of this Tribunal in the case of Sri Velayudhaswamy Spinning Mills Vs Deputy Commissioner of Income Tax and Eveready Spinning Mills vs. Assistant Commissioner of Income Tax referred to supra, as it is noticed this view has also been approved by the Hon’ble High Courts referred to supra, we find no error in the order of the learned CIT(A) which calls for any interference. It may be mentioned here that the deduction u/s.80IA is the deduction from the total income of the assessee the profits and gains of an eligible undertakings. The Hon’ble Gujarat High Court has categorically admitted that the Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 7 -: deduction u/s.80IA is permissible for captive consumption and even the rate at which the deduction is to be computed. Consequently, the issue is held in favour of the assessee and against the Revenue.” 18.6 In the present case, the facts are identical with that of the facts considered by the Tribunal in earlier year. The CIT(A) after considering relevant facts and also by following the decision of the ITAT, Chennai in the case of Eveready Spinning Mills (P) Ltd., vs. ACIT, (2012) 17 taxmann.com 254 and the decision in the case of Shri Velayudhaswamy Spinning Mills (P) Ltd., vs. DCIT, (2012) 19 taxmann.com 28 has deleted additions made by the AO by holding that market value of the power captively consumed should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power at which power could have been sold to SEBs because this is not the rate for which a consumer could have purchased power in the open market. Therefore, we are of the considered view that there is no error in the finding recorded by the ld.CIT(A) to delete additions made by the AO towards TP adjustment on deduction claimed u/s.80IA of the Act. Hence, we reject the ground taken by the Revenue.” 8. In this view of the matter and consistent with view taken by the coordinate bench, we are of the considered view that the DRP has completely erred in sustaining the additions made by the Assessing Officer towards downward adjustment to the transactions of inter unit transfer of power from captive power generating unit to the assessee company. Thus, we direct the Assessing Officer to delete additions made towards TP adjustment in respect of deduction claimed u/s. 80IA of the Act.” 4. The Ld. AR further submitted that the Hon'ble Supreme Court in the case of CIT vs. Jindal Steel and Power Ltd. [2024] 460 ITR 162 (SC), has held a similar view while considering identical issue Accordingly, the ld. AR argued that the impugned issued is covered by the decisions of the Hon'ble Supreme Court and the Co-ordinate Bench. 5. The Ld. Departmental Representative (DR), on the other hand, argued that the issue under consideration does not pertain to the quantum of deduction u/s. 80IA of the Act, but with regard to ALP adopted by the Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 8 -: assessee for supply of power to the capital unit. Therefore, the ld. DR argued that the decision of the Hon'ble Supreme Court cannot be directly applied in assessee's case. The Ld. DR further submitted that the Hyderabad Bench of the Tribunal in the case of Sanghi Industries Ltd. vs. DCIT [ITA No.104/Hyd/2022 dated 23.01.2025] has considered an identical issue and held that the rate at which the power is supplied by the power generating unit to electricity board should be the rate considered as ALP. 6. The Ld. AR in rebuttal submitted that the Coordinate Bench in the case of ACIT vs. Prabhu Spinning Mills Pvt. Ltd. [ITA No.433 & 435/Chny/2025 dated 13.08.2025] has considered the decision relied on by the ld. DR and has distinguished the same with regard to the rate to be adopted for the purpose of Section 80IA. 7. We have heard the parities, perused the material available on record. The thermal power generation unit of the assessee which is eligible for deduction u/s.80IA supplies power towards captive consumption to Cement unit. The impugned transaction is benchmarked by the assessee using CUP where by the rate at which the Cement Unit purchases power from TANGEDCO/AVVNL/SPDCTL is considered for the purpose of ALP. The TPO rejected the TP study by the assessee and held that the bench marking should be done using the rate at which the thermal power unit sells power to TANGEDCO/AVVNL/SPDCTL and accordingly made a TP adjustment. We in this regard notice that the impugned issue of rate to be adopted for benchmarking the captive supply of power by eligible unit is considered by the coordinate bench in the case of Prabhu Spinning Mills Pvt. Ltd (supra) where it has been held that – Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 9 -: “31. We have heard the rival contentions perused all the material available on record before us and gone through the orders of the authorities along with the judicial precedents relied on. Before adjudicating on whether the decisions of the Hon’ble Calcutta High Court placed on record by the Ld.AR have taken into consideration the change in law, i.e., the amendment of explanation to section 80-IA(8) of the Act, we would like to emphasize on the ratio laid down by the Hon’ble Supreme Court in the case of Jindal Steel & Power Ltd. referred to supra in respect of the issue of quantum of deduction u/s.80-IA of the Act as regards inter-unit transfer of electricity was concerned: “28. Thus, market value of the power supplied by the assessee to its industrial units should be computed by considering the rate at which the State Electricity Board supplied power to the consumers in the open market and not comparing it with the rate of power when sold to a supplier i.e., sold by the assessee to the State Electricity Board as this was not the rate at which an industrial consumer could have purchased power in the open market. It is clear that the rate at which power was supplied to a supplier could not be the market rate of electricity purchased by a consumer in the open market. On the contrary, the rate at which the State Electricity Board supplied power to the industrial consumers has to be taken as the market value for computing deduction under section 80-IA of the Act. 29. Section 43A of the 1948 Act lays down the terms and conditions for determining the tariff for supply of electricity. The said provision makes it clear that tariff is determined on the basis of various parameters. That apart, it is only upon granting of specific consent that a private entity could set up a power generating unit. However, such a unit would have restrictions not only on the use of the power generated but also regarding determination of tariff at which the power generating unit could supply surplus power to the concerned State Electricity Board. Thus, determination of tariff of the surplus electricity between a power generating company and the State Electricity Board cannot be said to be an exercise between a buyer and a seller under a competitive environment or a transaction carried out in the ordinary course of trade and commerce. It is determined in an environment where one of the players has the compulsive legislative mandate not only in the realm of enforcing buying but also to set the buying tariff in terms of the extant statutory guidelines. Therefore, the price determined in such a scenario cannot be equated with a situation where the price is determined in the normal course of trade and competition. Consequently, the price determined as per the power purchase agreement cannot be equated with the market value of power as understood in the common parlance. The price at which the surplus power supplied by the assessee to the State Electricity Board was determined entirely by the State Electricity Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 10 -: Board in terms of the statutory regulations and the contract. Such a price cannot be equated with the market value as is understood for the purpose of Section 80IA (8). On the contrary, the rate at which State Electricity Board supplied electricity to the industrial consumers would have to be taken as the market value for computing deduction under section 80-IA of the Act. 30. Thus on a careful consideration, we are of the view that the market value of the power supplied by the State Electricity Board to the industrial consumers should be construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board's rate when it supplies power to the consumers have to be taken as the market value for computing the deduction under section 80-IA of the Act. 31. That being the position, we hold that the Tribunal had rightly computed the market value of electricity supplied by the captive power plants of the assessee to its industrial units after comparing it with the rate of power available in the open market i.e., the price charged by the State Electricity Board while supplying electricity to the industrial consumers. Therefore, the High Court was fully justified in deciding the appeal against the revenue.” 32. From the above decision, it is quite clear that where the price at which surplus power supplied by assessee to State Electricity Board was determined entirely by State Electricity Board in terms of statutory regulations and contract, such a price could not be equated with market value as was understood for purpose of section 80-IA(8) and on the contrary, the rate at which State Electricity Board supplied electricity to industrial consumers would have to be taken as market value for computing deduction u/s.80-IA of the Act. 33. At this stage, it may also be noted that at Para 22 of the said judgment of the Hon’ble Supreme Court, it was held as under: “22. Reverting back to sub-section (8) of Section 80-IA, it is seen that if the assessing officer disputes the consideration for supply of any goods by the assessee as recorded in the accounts of the eligible business on the ground that it does not correspond to the market value of such goods as on the date of the transfer, then for the purpose of deduction under section 80-IA, the profits and gains of such eligible business shall be computed by adopting arm's length pricing. In other words, if the assessing officer rejects the price as not corresponding to the market value of such good, then he has to compute the sale price of the good at the market value as per his determination. The Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 11 -: explanation below the proviso defines market value in relation to any goods to mean the price that such goods would ordinarily fetch on sale in the open market. Thus, as per this definition, the market value of any goods would mean the price that such goods would ordinarily fetch on sale in the open market.” 34. On the basis of the above observation of the Hon’ble Supreme Court, one may note that as contended by the Ld.AR, the terms “Market Value” and “Arm’s Length Price” have been used interchangeably. As far as the argument of the Ld.DR in this regard to state that since the said judgement relates to A.Y.2001-02, the term ALP used therein was not in the context of section 92F of the Act is concerned, we are not in agreement of the same because the definition of the term “Arm’s Length Price” that existed before and post the amendment of explanation to section 80-IA(8) is exactly the same except for the fact the amendment of explanation to section 80-IA(8) now brings within its ambit specified domestic transactions. 35. In other words, but for the mere inclusion of applicability of Arm’s Length Price mechanism for determining market value for specified domestic transactions for determining the deduction u/s.80-IA, to say that the usage of the said term in the judgement of the Hon’ble Supreme Court is not in context of section 92F of the Act would be incorrect. Having said so, we are of the view that the usage of the terms Market Value and Arm’s Length Price interchangeably in its decision and thereafter arriving at the conclusion that the rate at which State Electricity Board supplied electricity to industrial consumers would have to be taken as market value for computing deduction u/s.80-IA of the Act would be appropriate for determination of quantum of deduction u/s.80- IA in the instant case. 36. Further, at this stage, we find it necessary to refer to the decision of the Mumbai Bench of the Tribunal in the case of Tata Chemicals Ltd. relied upon by the Ld.AR wherein in effect it was held that since clauses (i) or (ii) of explanation to section 80-IA(8) are separated by an “or”, an interpretation that only clause (ii) of explanation to section 80-IA(8) has to be used for determination of specified domestic transaction would render clause (i) of explanation to section 80-IA(8) otiose and redundant which is not a permissible rule of interpretation. It would be relevant to point out that the Tribunal therefore concluded that so long as both clauses exist, one has to see if market value is discernible from the price for such goods which it would ordinarily fetch in the open market and only in a case where such price is not available, the market value has to be determined as per ALP. In doing so, the Mumbai Bench of the Tribunal followed the decision of the Hon’ble Supreme Court in Jindal Steel & Power Ltd referred to supra as also the decision of the Hon’ble Gujarat High Court in the case of PCIT Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 12 -: v Gujarat Fluorochemicals Ltd. and the Hon’ble Bombay High Court in CIT v Reliance Industries Ltd. to hold that the selling price of the State Electricity Board to high tension industrial consumers can be taken as market value in accordance with section 80-IA(8) of the Act. Thus, even on this count, we do not find favour with the argument of the Ld.DR that the market value in respect of specified domestic transactions with respect to computation of deduction u/s.80-IA(8) would have to be compulsorily determined by clause (ii) of explanation to section 80-IA(8), i.e., the Arm’s Length Price. 37. We further state that the decision relied upon by the Ld.DR in the case of Sanghi Industries Ltd. decided by the Hyderabad Bench of the Tribunal is not applicable in the facts of the instant case for the reason that the assessee herein in the instant case has not undertaken any third- party sale of power as was the facts of that case and that the entire quantum of electricity generated by the windmill units is captively consumed by the assessee’s own manufacturing divisions. 38. We also note that the decisions of the Hon’ble Calcutta High Court relied upon by the Ld.AR in the case of Star Paper Mills Ltd. which has been followed in the case of Birla Corporation Ltd. and also Rungta Mines Ltd. are all binding on us since all of these decisions have been rendered by higher courts and have considered the issue in hand, i.e., the determination of quantum of deduction in respect of inter-unit transfer of electricity, after taking into consideration the decision of the Hon’ble Supreme Court in Jindal Steel & Power Ltd., the relevant provisions of the Electricity Act and also the amendment in explanation to section 80-IA(8) of the Act. 39. We may particularly draw reference to the decision of the Hon’ble Calcutta High Court in the case of PCIT v Rungta Mines Ltd. [TS-402-HC-202(CAL)-TP] wherein it was held as under: “14. It is not in dispute that the main business of the assessee is not generating power to sell the same to distribution companies/SEBs. It is also not in dispute that the Captive Power Plants (CPPs) were established by the assessee for its own need, i.e. for supply of uninterrupted power to its manufacturing units as well as to save the cost of power purchased from SEBs. If such be the factual position the Arm’s Length Price cannot be determined by taking the average market rates of power supply units to distribution companies as the assessee is not in the business of selling power to distribution companies. Therefore, the Arm’s Length Price has to be determined bearing in mind the reason behind establishment of the CPPs namely to ensure uninterrupted power and to save on cost of electricity which otherwise has to be paid to the State Electricity Board.” Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 13 -: 40. From the above, it is quite clear that the Hon’ble Calcutta High Court has clearly observed that in case of an assessee who is not in the business of selling power to distribution companies or State Electricity Board, the Arm’s Length Price cannot be determined by taking the average market rates of power supply units to distribution companies but by bearing in mind the reason behind establishment of the captive power plants (CPPs) namely to ensure uninterrupted power and to save on cost of electricity which otherwise has to be paid to the State Electricity Board. 41. It is in this background that the Hon’ble Calcutta High Court after analysing the provisions of the Electricity Act, 2003, the decision in Star Paper Mills Ltd. and the decision of the Hon’ble Supreme Court in Jindal Steel & Power Ltd. concluded as under: “21. The Hon’ble Supreme Court after taking note of the relevant provisions of the Income Tax Act, and in particular Section 80IA held that the market value of the power supplied by State Electricity Board to the Industrial consumers should be construed to be the market value of electricity and it should not be compared with the rate of power sold to or supply to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. It was further held that the State Electricity Boards rate when it supplies power to the consumer have to be taken as market value for computing the deduction under Section 80IA of the Act. Thus, applying the decision of the Hon’ble Supreme Court in Jindal Steel and Power and in the light of the reasoning given in the preceding paragraphs, we hold that the learned tribunal rightly dismissed the appeals filed by the revenue.” 42. Thus, in our considered view, we hold that the decision of the Hon’ble Supreme Court in Jindal Steel & Power Ltd. referred to supra would apply even after the amendment made to Explanation to section 80-IA(8) of the Act. Also, the decision of the Hon’ble Calcutta High Court in Rungta Mines Limited and Star Paper Mills Ltd. referred to supra rendered after considering the decision of the Hon’ble Supreme Court in Jindal Steel & Power Ltd. referred to supra and after taking into account the amendment made to Explanation to section 80-IA(8) of the Act would apply to the facts and circumstances of the instant case. The ALP in the instant case would thus have to be the price at which electricity is supplied by the State Electricity Board (TANGEDCO in the instant case) to end consumers in open market. Therefore, we direct the AO to recompute the ALP considering the rate adopted by the assessee as per the market price.” Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 14 -: 8. We notice that in the above decision the coordinate bench has considered the ratio laid down by the Hon'ble Supreme Court and also decision of the Hon'ble Bombay High Court. In assessee's case it is an undisputed fact that the excess power generated by the eligible unit is sold to TANGEDCO/AVVNL/SPDCTL and not to any third party and therefore the facts in the case of Sanghi Industries Ltd (supra) as relied on by the ld DR as has been held in the above case by the coordinate bench. Considering the facts and circumstances of the case and the judicial precedence as enumerated herein above, we hold that the TP adjustment by the TPO is not correct. Accordingly we direct the AO to delete the same. 9. The next issue is with respect to the direction given by the CIT(A) regarding provision made towards Gratuity and Superannuation Fund which is claimed as deduction by the assessee. The CIT(A) has directed the A.O. to examine whether the payments are made on or before the due dates specified under the Act. The assessee's contention is that the deduction is to be allowed if the payments are made on or before the due date for filing the return of income u/s.139(1) of the Act. The proviso section 43B provides that that nothing contained section 43B shall apply in relation to any sum which is actually paid by the assessee on or before the due date as applicable to the assessee for furnishing the return of income under section 139(1) in respect of the previous year in which the liability to pay such sum was incurred and the evidence of such payment is furnished by the assessee along with the return. The exception to the said provisions is with respect to \"any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948 (34 of 1948), or any other fund for the Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 15 -: welfare of such employees\" as per section 2(24)(x) of the Act. Section 36(1)(va) provides that any sum received by the assessee from any of his employees to which the provisions of section 2(24)(x) apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date as specified under the relevant Act. A combined perusal of the above provisions of the Act make it clear that the exception that the deduction is allowable only if payments are made on or before the due date specified under the relevant Act is applicable only to the employees' contribution if any to the PF or superannuation fund or any other fund. In the present case we therefore modify the directions of the CIT(A) and direct the AO to allow claim to the extent of employers' contribution to the impugned funds if the payments are made on or before the due date for filing the return of income u/s.139(1) of the Act and if there are any employees' contribution to the said funds the same shall be allowed only if the payments have been made on or before the due date specified under the relevant Act. Needless to say that the assessee be given a reasonable opportunity of being heard. It is ordered accordingly. 10. In result the appeal of the assessee is allowed. Order pronounced on 13th day of January, 2026 at Chennai. Sd/- Sd/- (जॉजज जॉजज क े) (George George K) उपाध्यक्ष / Vice President (पदमावती यस) (Padmavathy.S) लेखा सदस्य /Accountant Member चेन्नई/Chennai, ददनाांक/Dated: 13th January, 2026. EDN, Sr. P.S Printed from counselvise.com ITA No.2663/Chny/2025 The India Cements Ltd. :- 16 -: आदेश की प्रतिललपप अग्रेपिि/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai/Madurai/Coimbatore/Salem 4. विभागीय प्रविविवि/DR 5. गार्ड फाईल/GF Printed from counselvise.com "