Deduction under Section 80IA for captive power generation is determined by consumer pricing, not supplier pricing; judicial precedents affirm this principle.

ORDER

PER AMITABH SHUKLA, A.M :

The below mentioned appeals have been filed by the appellant Revenue for AY-2017 and 2018 contesting the order of Ld. First Appellate Authority indicated Column-E, herein below:-

2.0 At the outset, the Ld.DR for the Revenue confirmed that the facts of both the appeals are common. Accordingly, as both the appeals are centering around a common issue and hence for the purposes of convenience were heard and are being adjudicated together by this common order. For the purposes of this adjudication the facts and figures for AY-2017-18 have been taken. The decision for AY-2017-18 shall apply mutatis mutandis for appeal AYs-2018-19 also.

3.0 The Ld.DR submitted that for AY-2017-18 and 2018-19 the Revenue is contesting the action of Ld.CIT(A) in giving relief to the assessee by relying upon the decision of Hon’ble Apex Court in the case of Jindal Steel and Power Limited. It was argued that the decision in the impugned case is distinguished on account of difference in contemporaneous statutory prescription. The Ld. DR took us through the brief factual matrix of this case. It was submitted that in this case the Ld.AO had, based upon recommendation of the Ld.TPO, made an downward adjustment of Rs.18,17,90,215/- to the assessee’s claim of deduction u/s 80IA of the Act. The assessee was having two units being Wind Energy Unit and a Textile unit. The main issue at hand was determination of price at which Wind Energy power was to be transferred to the Textile unit of the assessee. Whereas the assessee had taken the price at which Tamil Nadu Government Electricity Department supplied power to its customers, the Ld.AO / TPO held the view that it should adopt the price at which the Government Department purchases its power. The Ld.CIT(A) held the view that the facts of assessee’s case were identical to those pronounced in the case of Jindal Steel by Hon’ble Apex Court and also to the decision of this tribunal in the case of Eveready Spilling Mills Private Limited IT(TP)/No.2/Chny/2022 dated 30.03.2023.

4.0 Per contra, the Ld.DR relied upon the order of the Ld.AO. He vehemently argued against the decision of Ld.CIT(A) submitting that the cited decisions were distinguished. It was urged that the decision of Hon’ble Hyderabad tribunal as at IT(TP)A No.104 / Hyd / 2022 in the case of Sanghi Industries Limited supports Revenue’s case that the decision in the case of Jindal Steel by Hon’ble Apex Court is not applicable in such cases.

5.0 The Ld.Counsel for the assessee forcefully argued in favour of the order of the Ld.CIT(A). Written Submissions were also filed. It was argued that the decision of Ld.CIT(A) is based upon correct understanding of facts and analysis of available judicial pronouncements by the Hon’ble Supreme Court as well as this tribunal. It was stated that the decisions of this tribunal in India Cements IT(TP)A No.66 / Chny / 2022, Eveready Spinning Mills IT(TP)A No.2/Chny/2022, and of Reliance Industries 421 ITR 686, of Hon’ble Delhi Court in the case of DCM Sriram Limited etc fully support its case. It was urged that to the extent it is a covered matter. As regards Revenue’s reliance upon the decision of Hyderabad tribunal in Sanghi Industries, the Ld.Counsel argued that the decisions of Hon’ble Delhi tribunal, Delhi High Court and Mumbai tribunal have succeeded Sanghi Industries and therefore the impugned decision cannot be relied upon.

6.0 We have heard the rival submissions in the light of material available on records. We have noted that the issue at hand of determining the price of the power produced is no more res integra and is settled decision. We have noted that this tribunal in the case of Prabhu Spinning Mills in ITA No. 433 & 435 / Chny / 2025 have ruled as under:- “……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 th