DCIT Vs Shyam Sel And Power Limited (ITAT Kolkata)
The Income Tax Appellate Tribunal (ITAT), Kolkata, dismissed the Revenue’s appeals relating to Assessment Years 2020-21 and 2021-22 in the cases of Shyam Sel & Power Ltd. and Shyam Metalics & Energy Ltd. The principal issues concerned transfer pricing adjustments to the transfer value of electricity supplied by captive power plants to manufacturing units for computing deduction under Section 80-IA of the Income-tax Act, and the allocation of common head office expenses to eligible units.
For Shyam Sel & Power Ltd. (AY 2020-21), the assessee operated captive power plants at Mangalpur and Jamuria and claimed deduction under Section 80-IA. The assessee revised its deduction claim after benchmarking the transfer value of power using the tariffs charged by the respective State Electricity Boards (SEBs). While the Transfer Pricing Officer (TPO) accepted the revised transfer price for the Jamuria units, he benchmarked the transfer price for the Mangalpur unit at a lower rate, resulting in a downward transfer pricing adjustment of Rs. 39.79 crore, including a reduction of Rs. 26.03 crore in the Section 80-IA deduction for the Mangalpur unit.
The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the adjustment relating to the Mangalpur unit, holding that the assessee had correctly benchmarked the transfer value of electricity based on the average annual landed cost at which its manufacturing units purchased electricity from the electricity distribution company. Before the Tribunal, the assessee submitted that the issue had already been decided in its favour in earlier assessment years and was also covered by the Supreme Court’s decision in CIT v. Jindal Steel & Power Ltd. and the Calcutta High Court’s decision in Pr. CIT v. Rungta Mines Ltd.
