DCIT Vs Gopani Iron and Power (India) Pvt. Ltd. (ITAT Nagpur)
In this case, the Revenue filed four appeals before the Income Tax Appellate Tribunal (ITAT), Nagpur, against separate orders of the Commissioner of Income Tax (Appeals) [CIT(A)] for Assessment Years 2017–18, 2018–19, 2020–21, and 2021–22. Since the facts and issues were identical across all years, the Tribunal treated AY 2017–18 as the lead case.
The assessee was engaged in manufacturing and trading in power, steel, and energy, and operated a captive power plant (CPP) supplying electricity to its own industrial units. For AY 2017–18, the assessee claimed deduction under Section 80-IA on profits of the CPP and reported specified domestic transactions (SDT) in Form 3CEB for inter-unit transfer of electricity.
For benchmarking the arm’s length price (ALP), the assessee adopted the Comparable Uncontrolled Price (CUP) method, using the tariff charged by Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) to industrial consumers, ranging from Rs. 7.07 to Rs. 7.21 per unit. The Transfer Pricing Officer (TPO), however, rejected this approach and instead adopted the rate at which MSEDCL purchased electricity from independent generators (Rs. 3.79 per unit). The TPO reasoned that the industrial tariff included a distribution margin and therefore was not comparable to a power generation activity. Based on this, a downward adjustment of Rs. 28.22 crore was proposed, which was accepted by the Assessing Officer.
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