ORDER

% 19.01.2024

1. Having heard learned counsels for parties and on perusal of the record, we find that the appellants sought the admission of the instant appeal on the following two questions: -

(a) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal ["ITAT"] was justified in law in deleting the addition of Rs.4,82,99,004/- made on account of disallowance of deduction under Section 80IA(8) of the Income Tax Act,1961? (b) Whether on the facts and in the circumstances of the case, the ITAT was justified in law in directing to deduct the cost of reject coal and iron ore fine dust for determining the disallowance to be made under section 80IB of the Income Tax Act, 1961?

2. In so far as the issues raised in question (a) are concerned, our attention was drawn to the following conclusions as rendered by the Supreme Court in Commissioner of Income Tax v. M/s. Jindal Steel & Power Ltd. [2023 SCCOnLine SC 1632] "73. 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 80IA of the Act.

xxxx xxxx xxxx 75. 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.

76. 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.

xxxx xxxx xxxx 78. Before parting with this issue, we may mention that reliance placed by Mr. Rupesh Kumar, learned counsel for the revenue on the definition of the expression “market value” as defined in the explanation below sub-section (6) of Section 80 A of the Act is totally misplaced inasmuch as sub-section (6) was inserted in the statute with effect from 01.04.2009 whereas in the present case we are dealing with the assessment year 2001-2002 when this provision was note even borne."

3. We are apprised that when an identical question was raised in ITA 208/2019 inter partes, the Court had on a perusal of the view taken by the ITAT found that no justification existed for the question in that respect being framed or considered. We, in this regard take note of the order dated 06.03.2019 passed in ITA 208/2019 and consequently observe that proposed question (a) would not give rise to any substantial question of law.

4. That only leaves us to consider whether to admit the appeal on question (b). In so far as the question on reject coal and iron ore is concerned, the ITAT has on a due consideration of the rival