IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “H” BENCH: NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER &

SHRI MANISH AGARWAL, ACCOUNTANT MEMBER [Assessment Year : 2021-22]

Shahi Exports Pvt.Ltd., vs ACIT, F-88, Okhla Industrial Area, Central Circle-8, Phase-I, New Delhi-110020. Delhi PAN-AAJCS1175L APPELLANT RESPONDENT Appellant by Shri Shivam Malik, Adv. Respondent by Shri S.K.Jhadav, CIT DR Date of Hearing 01.04.2025 Date of Pronouncement 27.06.2025 ORDER PER MANISH AGARWAL, AM :

The present appeal is filed by the assessee against the assessment order dated 25.10.2024 passed u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (the Act) pertaining to assessment year 2021-22 arising out of the order of ld. Dispute Resolution Panel-2, Delhi (ld. DRP, in short) dt. 19.09.2024 passed u/s 144C(5) of the Act.

2. The only effective ground of appeal No. 1 taken by the assessee is with regard to the transfer pricing adjustment of INR 33,59,64,275/- made by TPO/AO by reducing the deduction u/s 80IA of the Act with this amount on transfer of electricity from eligible unit to non-eligible unit.

3. Brief facts of the case are that the assessee is a company, engaged in the business of manufacturing and export of readymade garments. The assessee had also entered into specified domestic transaction of transfer of steam generated from boilers at eligible units running in the State of Haryana, Karnataka, Tamil Nadu and Andhra Pradesh to own eligible units. The price for such transfer of steam is determined on the basis of electricity generated and sold by the State Electric Boards to consumers. The return of income for the year under appeal was filed on 15.03.2022, declaring total income at INR 2,89,33,64,450/- and the book profit u/s 115JB of the Act was declared at INR 4,45,44,28,246/-. The return of income was revised on 30.03.2022 at an income of INR 2,85,37,78,680/- and book profit remained at INR 4,45,44,28,246/-. Since the assessee has entered into the specified domestic transactions with its Associate Enterprises (“AEs”), a reference was made to the TPO u/s 92CA of the Act on 05.09.2022. The TPO vide its order dated 31.10.2023 u/s 92CA(3) of the Act, proposed the reduction in the claim of deduction u/s 80IA at INR 33,59,64,275/- by holding that the inter unit transfer of power and steam at the value declared by the assessee is not correct and accordingly, had made the adjustment on this account. The AO based on the order of the TPO, passed the draft assessment order dated 29.12.2023 u/s 144C(1) of the Act wherein the adjustment as proposed by the TPO of reduction in deduction claimed section 80IA of the Act at INR 33,59w,64,275/- was made and accordingly, total income of the assessee was proposed at INR 3,18,97,42,955/-. Against draft assessment order, the assessee filed objections before Ld.DRP who vide order dated 19.09.2024 followed its own direction given in assessee’s own case for AY 2020-21 and accordingly, dismissed the objections filed by the assessee.

4. The AO thereafter, passed the final assessment order u/s 143(3) r.w.s 144C(3) of the Act dated 25.10.2024 wherein total income of the assessee is assessed at INR 3,18,97,42,955/- by making adjustment towards reduction in assessee’s claim of deduction u/s 80IA of the Act as per TPO’s order.

5. Against such order, the present appeal filed by the assessee before Tribunal.

6. In Ground No.1, the assessee has challenged the action of AO/TPO/DRP in reduction the claim of deduction of INR

33,59,64,275/-.

7. Brief facts of the case are leading to this issue are that the assessee has entered into specified domestic transaction of inter unit transfer of steam generated from boiler by the eligible unit to non-eligible unit where the assessee has benchmarked the transaction by applying CUP method. The assessee calculated the electricity generated from steam and by considering the price charged by the electric distribution company / state electric boards from its consumers worked out the ALP