IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “G”, MUMBAI Before Justice (Retd.) C V Bhadang, Hon’ble President &

Ms. Padmavathy S, Hon’ble Accountant Member ITA No. 2421/Mum/2025 (Assessment Year : 2017-18)

Gandhi Special Tubes Limited, Asst. CIT Circle 5(1)(1), 201-204, 2^nd Floor Plaza 55, Mumbai.

Vs.

Hughes Road, Next to Dharam Palace, Mumbai 400 007. PAN AAACG1261C (Appellant) (Respondent)

Appellant By : S/Shri Chaitanya D Joshi & Saurav Surana Respondent By : Shri Swapnil Choudhary-Sr AR Date of Hearing : 18.09.2025 Date of Pronouncement: 10.10.2025 O R D E R Per Justice (Retd.) C V Bhadang, President:

By this appeal the appellant-assessee is challenging the order dated

14.02.2025 passed by the National Faceless Appeal Centre [CIT(A) for short], which arises out of the order dated 16.12.2019 passed by the Assessing Officer.

The appeal relates to assessment year 2017-18.

2. The brief facts are that the appellant is engaged in the business of manufacturing of wielded and seamless tubes, cold forged nuts and also generation of wind power.

3. The assessee has set up a wind power generation plant at Kutch, Gujarat as permitted by GEDA of 1.25 MW. The assessee has entered into an agreement with Madhya Gujarat Vij Company Ltd. (MGVC) which is a distribution company (DISCOM) on 14.05.2008 and another agreement with Gujarat Energy Transmission Corporation Limited (GETCO) on 06.05.2008. The assessee has opted to wheel the energy generated at its captive unit to its other establishment M/s. Gandhi Special Tubes at Village Nurpura, Taluka Halol, Dist. Panchamahal through the DISCOM power grid. It appears that it is essentially a net metering arrangement. According to the assessee, normally the power generated at its wind farm is less than the monthly consumption at the manufacturing unit except during the monsoon season where, on account of the windy situation, the power generated at the wind farm exceeds the consumption at the Halol Plant. It is contended that DISCOM does not permit carry forward set off against subsequent months consumption of manufacturing unit. The excess power generated over its monthly consumption during such period is treated as sales by DISCOM for which the DISCOM pays Rs.2.86 per unit to the assessee. During the rest of the months when the consumption is more than the energy generated at the wind farm, the DISCOM charges/bills such energy after set off towards unit generated at the wind farm.

4. The assessee had filed its Return of Income (RoI) for the relevant assessment year on 07.10.2017 declaring total income of Rs.27,89,75,810/-. The return was processed under Section 143(1) of the Income Tax Act, 1961 (‘Act’ for short) without variation in the income returned. The case was subsequently picked up for complete scrutiny inter alia on the ground of excessive deduction claimed under Section 80I/80IA/80IB/80IC as compared to the turnover. The Assessing Officer issued notice under Section 142(1) of the Act on 11.02.2019 and 16.09.2019 alongwith questionnaire and calling for certain details/documents which were furnished by the assessee. The Assessing Officer has found that the rate for captive consumption was charged at Rs.7.49 per unit by Madhya Gujarat Veej Company Ltd. (DISCOM) and the rate for wind energy sold to DISCOM was charged at Rs.2.86 per unit. The Assessing Officer has observed that the sale price of the assessee to MGVC (DISCOM) i.e. Rs.2.86 should have been the market price for captive consumption as it represents the market value of the goods and the same should have been adopted for the purpose of deduction under Section 80IA of the Act. In that view, the Assessing Officer has reduced the deduction under Section 80IA of the Act by Rs.58,15,960/-, which order has been confirmed in appeal.

5. We have heard parties. Perused record.

6. The learned AR has submitted that the authorities below were in error in reducing the permitted eligible quantum of deduction under Section 80IA of the Act. In the submis