Indian Kanoon - Search engine for Indian Law

15. In appeal, the ld. CIT(A) allowed the claim of the assessee by observing as under :-

"7. I have carefully gone through the assessment order and submissions of the appellant. It is seen that the appellant set up the Captive Power Plants for meeting the requirement of electricity of steel and other division (being non-eligible units). The electricity generated by the Captive Power Plant is, therefore, a substitute for the electricity which the Steel Division would have procured from the CSPDCL (State Electricity Company). Thus, looked at from the stand point of Steel Division it can be said that the Steel Division receives electricity at the same price as it pays to the CSPDCL to achieve its business plans. Therefore, the price that the Steel Division would otherwise have paid to the CSPDCL, would be the price that it would be willing to pay to the captive power plant and the same should be considered as the transfer price from the eligible unit to the Steel Division. The above contextual interpretation is further reinforced if one considers the fact that when the captive power generators such as the appellant supply surplus electricity to the CSPDCL, it cannot be ignored that CSPDCL purchases such power as trader / distributor of electricity. It is imperative to appreciate the different capacity and role played by CSPDCL while buying and selling electricity, for the purposes of giving a correct contextual meaning to the term "market value" appearing in section 80- IA of the Act.