Aditya BirlaNuvo Ltd. Vs DCIT (ITAT Mumbai)
ITAT Mumbai Follows Third Member Majority & Holds SEB Purchase Rate as Valid Internal CUP; 80IA Deduction Allowed Without Downward Adjustment
These cross-appeals concerned only one surviving dispute-Ground No 7 relating to determination of market value / ALP for captive transfer of electricity by the assessee’s Captive Power Plant (CPP) to its Rayon manufacturing unit for computing deduction u/s 80IA. Earlier, the Accountant Member (AM) & Judicial Member (JM) delivered differing views, triggering a reference to the Hon’ble Third Member u/s 255(4).
The AM held that the matter should be remanded to recompute fair market value using GUVNL industrial tariff with adjustments, while the JM held that the price paid by the Rayon unit to GUVNL (₹6.62/unit) constituted a reliable Internal CUP, requiring no reduction in 80IA profits.
The Third Member undertook a detailed analysis of Section 80IA(8), Section 80A(6), Section 92F(ii), Rule 10B, & the Electricity Act framework. He observed that captive power plants are not comparable to large generating companies selling to SEBs under regulated tariffs, & that the assessee’s CPP-to-unit transfer is a B2C transaction, comparable only to the rate at which the manufacturing unit actually purchases power from the distribution licensee. He held that SEB consumer tariff is the correct benchmark, following the Supreme Court ruling in Jindal Steel & Power Ltd & Delhi High Court in DCM Shriram (2025).
