आयकर अपीलीय अिधकरण, ’डी’ (cid:1)यायपीठ, चे(cid:9)ई।

IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI (cid:1)ी एबी टी. वक(cid:10), (cid:11)ाियक सद(cid:17) एव ं

(cid:1)ी अिमताभ शु(cid:24)ा, लेखा सद(cid:9) के सम(cid:27)

BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1048/Chny/2025 िनधा(cid:14)रण वष(cid:14)/Assessment Year: 2017-18 The ACIT, v. Sri Shanmugavel –

Circle-1, Mills Pvt. Ltd., Tirupur-641 602. 207/86, Mangalam Road, Karuvampalayam, Tirupur-641 604.

[PAN: AADCS 8200 N (अपीलाथ(cid:22)/Appellant) ((cid:23)(cid:24)यथ(cid:22)/Respondent)

Department by : Mr.Saddik Ahmed, Sr.AR Assessee by : Mr.Suraj Nahar, CA सुनवाईक(cid:28)तारीख/Date of Hearing : 18.09.2025 घोषणाक(cid:28)तारीख /Date of Pronouncement : 24.10.2025 आदशे / O R D E R PER ABY T. VARKEY, JM:

This is an appeal preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals), (hereinafter referred to as “the Ld.CIT(A)”), Chennai-16, dated 10.02.2025 for the Assessment Year (hereinafter referred to as "AY”) 2017-18.

2. The main grievance of the Revenue is in respect of determination of quantum deduction u/s.80IA of the Income Tax Act, 1961 (hereinafter referred to as "the Act”).

3. The brief facts are that the assessee company is engaged in the business of manufacturing and selling of yarn and also engaged in the business of generation & distribution of power through wind electric generators and filed its ITR on 30.10.2017 admitting total income at ₹ NIL. Later, the ITR was selected for scrutiny and matter was referred to the Transfer Pricing Officer (hereinafter referred to as ‘TPO’) by the AO in terms of Sec.92CA(1) of the Act The TPO in accordance with Sec.80IA(8)

.

of the Act was required to determine the price at which electricity should be taken as transferred from the Wind Mill Unit to the Textile Unit of the assessee. In this regard, the assessee brought to TPO’s notice that it has a Wind Mill Unit as well as a Textile Unit; and the entire electricity generated by the Wind Mill Unit was captively consumed by the Textile Unit. And the assessee submitted that for computing the income arising from the sale of generated electricity from its Wind Mill Unit undertaking for captive consumption, the assessee has considered the price at which the Tamil Nadu Electricity Board (TNEB) supplies electricity to its High Tension Industrial Customers [i.e. its end consumer’s]. In other words, assessee adopted the rate of ₹6.35/- per unit which is the price at which TNEB supplies electricity to its end consumers and asserted thus that the transfer of electricity from the captive windmills to the textile division of the assessee company has been at arm’s length. However, the TPO carried out FAR analysis of the assessee & the TNEB, and rejected the method of ALP adopted by the assessee by bench marking done by the assessee company by adopting the tariff rate charged by TNEB and proposed to apply the ALP @ ₹2.75 & ₹3.39 per unit [i.e. the tariff fixed for Wind Energy Generators by Tamil Nadu Electricity Regulatory Commission (TNERC)] and accordingly proposed the downward adjustment of ₹10,22,03,420/-. The assessee objecting to such proposal and brought to his notice that in its agreement with TANGEDCO was in the nature of energy wheeling agreement permitting the power generation for captive consumption of power generated by owned windmills and that TANGEDCO purchases electricity @ ₹3.39/- per unit of electricity from electricity generating companies, whereas it sells electricity to its end consumers @ ₹6.35 per unit. Hence, it was asserted that the rate of ₹6.35/- per unit of energy is ALP of inter unit transfer of power. However, the TPO didn’t agree and vide order u/s.92CA(3) of the Act proposed downward adjustment of ₹10,22,03,420/- to the transaction of inter unit transfer of power instead of ALP of ₹19,62,69,902/- as computed by the assessee and thereafter, the assessment was completed u/s