Case Law Details
CIT Vs Jindal Steel & Power Limited (Supreme Court of India)
The Supreme Court in this case was dealing with bunch of matters where identical issue regarding the transfer price of power was subject matter and three other issues.
RECOMPUTATION OF DEDUCTION UNDER SECTION 80 IA OF THE INCOME TAX ACT, 1961.
The assessee in this case charged its sister unit @ Rs 3.72 per unit which was the price at which the said sister unit would have paid the price if it would had purchased the power from SEB. However, in respect of surplus power which the assessee generated , it had to sell the same to SEB @ Rs 2.32 per unit in view of the provisions of Electricity Act 2003 where there were restrictions on sale of surplus power. The AO did not approve this method and added the difference of Rs 1.40 per unit by recomputing the eligible profit u/s 80IA of the Income-tax Act,1961.
On these facts, the Ld Judges examined the entire law on the subject including the meaning of Open market and market value and also distinguished the decision of Calcutta High Court in the case of ITC Ltd by dismissing the SLP of the department as there was hardly any dispute that the price of Rs 3.72 per unit was the market price which was determined based on market forces and not Rs 2.32 per unit which was in view of the restrictions as per the Electricity Act.
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