Rayalaseema Hi Strength Hypo Limited Vs DCIT (ITAT Hyderabad)
The Hyderabad Bench of the Income Tax Appellate Tribunal disposed of two appeals filed by Sree Rayalaseema Hi Strength Hypo Limited for Assessment Years 2017-18 and 2018-19 against assessment orders passed by the National Faceless Assessment Centre and the Assistant Commissioner of Income Tax, Circle-1, Kurnool, respectively. Since the facts and grounds in both appeals were identical, the Tribunal disposed of them through a common order with reference to the facts of Assessment Year 2017-18.
The assessee was engaged in manufacturing and sale of industrial chemicals, trading in coal and generation of power. It operated a captive thermal power plant of 10 MW capacity with an 11 KV distribution system and claimed deduction under section 80-IA of the Income-tax Act, 1961.
For AY 2017-18, the assessee had entered into specified domestic transactions with its Associated Enterprises in respect of sale of power. It benchmarked the transfer of electricity at Rs. 8.74 per unit by comparing it with rates charged by the State Electricity Board/APSPDCL to comparable consumers. The comparables reflected rates of Rs. 8.82, Rs. 8.98 and Rs. 10.71 per unit. The assessee contended before the DRP that its internal Comparable Uncontrolled Price, namely the rate at which electricity was procured by the non-eligible unit and other AEs from an unrelated entity, APSPDCL, constituted the appropriate basis for determining the Arm’s Length Price.
