DCM Shriram Ltd. Vs ACIT (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal considered DCM Shriram Ltd.’s appeal for Assessment Year 2014-15 against the final assessment order passed under section 143(3) read with section 144C of the Income-tax Act, 1961. The dispute principally concerned specified domestic transactions involving transfer of power and low-pressure steam from eligible units to non-eligible units for purposes of section 80-IA, along with disallowance under section 14A, adjustment under section 115JB, addition under section 50C and an additional ground concerning education cess.
On transfer of power, the assessee had benchmarked the transfers using CUP rates based on transactions with State Electricity Boards/Discoms. The TPO obtained Indian Energy Exchange (IEX) rates under section 133(6), treated them as external CUP data and averaged them with applicable purchase/sale rates. The DRP directed use of internal CUP for the Uttar Pradesh units, where the assessee sold power to State Electricity Boards, but upheld the adjustment for the Kota, Rajasthan unit on the footing that the assessee purchased power from the SEB but did not sell power to an independent party there. The Tribunal agreed that the Kota purchase could not itself constitute an internal CUP because the assessee did not also sell power to the SEB. However, after examining section 92C(2), the comparability requirements and the evidence, the Tribunal found no infirmity in the assessee’s benchmarking of the Kota transfer at ₹6.30 per unit against the ₹8.35 per-unit rate at which it purchased power from Jaipur Vidyut Vitran Nigam Limited, using the external CUP for comparability. It accordingly allowed Ground No. 2 and deleted the transfer-pricing adjustment of ₹2,65,298,490.
