PCIT Vs Nalwa Steel & Power Limited (Delhi High Court)
Managerial Remuneration Addition Rejected Because ITAT Findings Were Based on Facts; Allocation of Common Expenses Upheld Because Revenue Found No Defect in Assessee’s Method; Bank Guarantee Commission Relief Sustained Because AO Had to Follow DRP Directions.
The appeal was filed by the Principal Commissioner of Income Tax challenging the order of the Income Tax Appellate Tribunal (ITAT) dated 31 December 2018. The Revenue proposed questions relating to the computation of deduction under Section 80-IA, managerial remuneration, allocation of common expenses between eligible and non-eligible units, and allowability of bank guarantee commission under Section 40(a)(ia).
Issue relating to market value of electricity under Section 80-IA(8): The High Court observed that the issue regarding computation of deduction under Section 80-IA(8) was already concluded by its earlier judgment and by the decision of the Supreme Court. The Court noted that the market value of electricity supplied by captive power plants should be determined with reference to the rate charged by the State Electricity Board to industrial consumers, and not by comparing it with the rate at which electricity is sold by the assessee to the State Electricity Board. Since the issue stood settled, the Court held that no substantial question of law arose on this aspect.
