IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 1908/MUM/2018 Assessment Year: 2013-14 Assistant Commissioner of Bhandar Power Ltd.

Income Tax, 14th Floor, Essar House, Circle 6(1)(2), 11, K. K. Marg, Mahalaxmi, Vs.

Mumbai Mumbai - 400034 (PAN: AAACB6693B)

(Appellant) (Respondent)

Present for:

Assessee : Shri Vijay Mehta, FCA and Shri Tarang Mehta, Advocate Revenue : Shri Satyaprakash R. Singh, CIT DR Date of Hearing : 29.07.2025 Date of Pronouncement : 13.10.2025

O R D E R

PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

This appeal filed by the Revenue is against the order of Ld. CIT(A), Delhi, vide order dated 25.01.2018 passed against the assessment order by ITO 6(1)(4), Mumbai, u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 20.12.2016, for Assessment Year 2013-14.

2. Grounds taken by the Revenue are reproduced as under:

1. On the facts and in the circumstances of the case and in law, the CIT(A) is not justified in deleting the disallowance of deduction u/s 80IA of the Income Tax Act of Rs. 203,13,43,740/-without considering the fact that the provisions of section 801A(10) is clearly attracted in this case hence the assessee is not eligible for claiming deduction u/s 801A of the Income Tax Act.

2. On the facts and circumstances of the case and in law, the Ld. CIT (A) is not justified in deleting the disallowance of deduction u/s 801A of the Income Tax Act, without considering the fact that every assessment year is different.

3. The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.

4. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary.

3. By way of the above stated two grounds of appeal, the only issue raised by the Revenue is in respect of disallowance of deduction u/s. 80IA(4) by the application of sub-section (10) of section 80IA, by which ld. Assessing Officer can determine the reasonable profit when it appears to him that owing to close connection between the assessee carrying on eligible business and any other person, the arrangement so made in the course of business is such that assessee earns more than ordinary profits.

4. Brief facts of the case are that assessee is engaged in the business of generation of electricity. It has set up a power plant of 500 MW capacity at Hazira near Surat in the state of Gujarat. Power plant consists of 3 units, namely Phase I for 155 MW, Phase II for 200 MW and Phase III for 145 MW. Phase I commenced generation of electricity on 15.01.2006. Phase II and III commenced generation of power on 18.12.2007. All the units are eligible for deduction u/s.80IA for 10 Assessment Years, out of first 15 years of their operation. Assessee claimed deduction u/s. 80IA in respect of Phase I, starting from Assessment Year 2007-08. In respect of phase II and III, it claimed deduction u/s.80IA for the first time in the year under consideration, i.e., Assessment Year 2013-14 even though generation of power had commenced on 18.12.2007, by taking into account window of 15 years available to it.

4.1. Assessee filed its return of income on 29.11.2013, reporting total income at Rs.4,57,220/- after claiming deduction u/s.80IA of Rs.110,30,57,821/- for Phase I and of Rs.92,82,85,919/- for Phase II and III, total claim of deduction amounting to Rs.203,13,43,700/-. Assessee had entered into a long time Power Purchase Agreement (PPA) with the companies of the Essar Group vide agreement dated 08.03.2010. This agreement was entered by the assessee with Essar Steel India Ltd. (ESTL), Essar Projects (I) Ltd. (EPL), Essar Bulk Terminals Ltd. (EBTL), Essar Heavy Engineering Services (EHESL) which is a division of Essar Projects (India) Ltd., Essar Steel Hazira Ltd. (ESHL), Hazira Pipemill Ltd. (HPML) and Hazira Plate Ltd. (HPL). Out of the above three companies, namely ESHL, HPML and