1 / 11 2026:CGHC:25834-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR TAXC No. 168 of 2023 Deputy Commissioner Of Income Tax National Informatics Centre, Delhi ... Appellant (s) versus Godawari Power And Ispat Ltd. Godawari Power And Ispat, Lt Siltara, PMlot No. 428/2, Phase-1, Sankara, Raipur- 493221, PAN- AAAC17189K ... Respondent(s) For Appellant : Mr. Ajay Kumrani Advocate For Respondent : Mr. Ashish Mittal, Advocate D.B. : Hon'ble Shri Justice Parth Prateem Sahu & Ho n'ble Shri Justice Sachin Singh Rajput Judgment on Board 23/06/2026 Per Parth Prateem Sahu, J. 1. Appellant – Department has filed this appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as the “Act of 1961”) Digitally signed by PRAVEEN KUMAR SINHA Date: 2026.06.30 11:10:35 +0530 2 / 11 questioning the legality and sustainability of the order dated 24.04.2023 passed by the Income Tax Appellate Tribunal, Raipur (hereinafter referred to as “ITAT”) in Income Tax Appeal (ITA) No.42/RPR/2022. 2. This appeal was admitted for hearing on following substantial question of law: “Whether the ITAT was justified in dismissing the appeal relying upon the decision rendered by this Court in TAXC Case No.31/2012 without considering the appeal on merits, by recording a finding which is perverse to the record ?” 3. Learned counsel for the appellant would submit that respondent – assessee is engaged in business of mining of iron ore, manufacturing of iron ore pellets, sponge iron, other iron and steel products and generation of electricity. Assessee has filed its return of income for assessment year 2017-18 electronically on 30.11.2017 disclosing total income at Rs. (-)149,90,51,848/-. Subsequently, the return was revised by the assessee on 17.12.2018 disclosing total income at Rs.51,000/- (income from other sources) with losses to be carried forward at Rs.149,70,60,412/-. He further submits that in the assessment proceedings, Assessing Officer (A.O.) noted that during the year under consideration, the assessee has undertaken specified domestic transactions with its associated enterprises and the total transactions has been shown at Rs.123,31,49,341/- as also reported in Form 3-CEB and the transaction being transfer of electricity produced by the eligible unit of assessee company to the non-eligible steel producing unit. Eligible unit taking benefit of deduction under Section 80 -IA of the Act of 1961 and non-eligible unit claimed the expense on account of 3 / 11 purchase of the electricity. Reference was made under Section 92- CA of the Act of 1961 to the Transfer Pricing Officer (TPO) for determining the arm’s length price of domestic transactions unit by the assessee with the associated enterprises. TPO passed an order under Section 92-CA (3) of the Act of 1961 on 30.01.2021 wherein the amount towards adjustment was determined as Rs.49,52,68,006/- to the value of specified domestic transactions (SDT). Upon comparison, it revealed that assessee deposited the rate at Rs.4.63 to Rs.5.48 per unit and accordingly value towards the electricity transferred was valued at Rs.123,31,49,341/- and total downward adjustment amount is of Rs. 49,52,68,006/- based upon which draft order dated 30.01.2021 under Section 143 (3) read with Section 144 C (1) of the Act of 1961 proposing assessment of total income of Rs. (-)100,17,92,406/- was issued by the Assessing Officer. He contended that TPO in its letter stated that assessee has transferred the power from Unit-2 at Rs.61,72,090,010/- and downward adjustment amounting to Rs.24,94,76,749/- is made to the income of eligible units of the assessee company. Assessing Officer vide letter dated 25.01.2022 modified the draft order dated 31.03.2021 to that extent and added back an amount of Rs.24,94,76,749/- to the income of assessee. Against the order of Commissioner of Income Tax (Dispute Resolution Panel) [ CIT – DRP] assessee has preferred an appeal before the ITAT which was allowed by impugned order. It is contended that order passed by ITAT is bad in law. He further contended that Chhattisgarh State Power Distribution Company Ltd. (for short “CSPDCL”) is a power distribution company which purchases the power from power generation companies and distributes it to end users. The rate of 4 / 11 electricity charges by CSPDCL from the end users includes the cost of generation, transmission and distribution. Electricity to be charged by CSPDCL is fixed and approved by Chhattisgarh Electricity Regulatory Commission (CERC) and therefore the rate at which eligible unit (Bio mass power unit) of assessee as sold power to non-eligible unit is not comparable to the rate of power charged by CSPDCL from its customers/consumers. He contended that ITAT without analyzing transfer pricing documentation of Functions performed, Assets employed, Risks assumed (FAR) allowed the assessee’s appeal mechanically relying upon the judgment of High Court of Chhattisgarh in case of Commissioner of Income Tax, Raipur Vs. Godawari Power & Ispat Ltd. reported in [2014] 42 Taxmann.com 551. ITAT erred in mechanically extending the ratio of Section 80-IA decision to transfer pricing matters without analyzing statutory differences, rendering its finding perverse and contrary to law. He also contended that ITAT ignored Chapter-X procedures; failed to examine FAR; comparables and benchmarking; and relied upon a precedent concerning a completely different legal regime. In support of his contention he relied upon decision in case of SAP Labs India (P) Ltd Vs. Income-tax Officer (and other appeals) reported in (2023) 454 ITR 121. 4. On the other hand, learned counsel for respondent- assessee vehemently opposes submission of learned counsel for the appellant. He contended that respondent is engaged in business of manufacturing and sale of iron ore pellets, steel billets, ferro alloys, wire rod HB wire etc. Respondent also set up power plant for captive 5 / 11 consumption and the power generated from such plants are utilized by the respondent in its manufacturing operations. Three Units from which power is generated being Unit No.1 which is thermal power unit, Unit No.-2 which is waste heat recovery and Unit No.3 which is Bio mass power. From aforementioned three Units, Unit No.2 & 3 are eligible for deduction under Section 80 -IA of the Act of 1961. He contended that respondent in its revised return filed on 17.12.2018 reported loss of Rs.149,70,60,412/- and therefore it is apparent that respondent has not claimed deduction under Section 80-IA of the Act of 1961. Gross income of the respondent was Nil on account of losses incurred in the overall business. He also contended that since the respondent has not availed the benefit of Section 80-IA of the Act of 1961 and has not taken any deduction, there is no need to compute the arm’s length price. He next contended that market value of goods is defined as the price that such goods or services would ordinarily fetch in the open market or the arm’s length price as defined in Clause (ii) of Section 92-F, where the transfer of such goods or services is a specified domestic transaction. The market value taken by the respondent was doubted by the revenue authorities and appellant referred the case of respondent to Transfer Pricing Officer (TPO) to calculate arm’s length price of the power supplied by respondent from its power plant to its manufacturing units. He contended that order of Dispute Resolution Panel (DRP) was challenged before the ITAT on the ground that the market value was computed wrongly of the power transferred by respondent from its power plants to manufacturing unit. He submits that power transfer is to be computed at the market value and market value is to be considered at a rate which was being 6 / 11 charged by CSPDCL . The issue as to what would be the market value was considered and decided by a Coordinate Bench of this Court in case of Commissioner of Income- Tax, Raipur Vs. M/s Godawari Power & Ispat Ltd. in TAX Case No.31 of 2012 with connected matters, wherein it was concluded that market value of power supplied should be computed, considering the rate of power to a consumer in open market. As the aforesaid decision of Coordinate Bench in case of Godawari Power & Ispat Ltd. (supra) was affirmed by Hon’ble Supreme Court and it is held that rate at which power was supplied to a supplier, could not be the market rate of electricity purchased by consumer in open market. Rate at which such electricity Board supplied power to industrial consumers has to be taken as market value for computing deduction under Section 80-IA of the Act of 1961 and therefore ITAT has passed the reasoned order relying upon the decision in case of Godawari Power & Ispat Ltd. (supra). 5. In this appeal, question with regard to manner and procedure based upon which market value for supply of electricity by the respondent to its own steel manufacturing unit is raised by learned counsel for appellant-department. 6. It is not in dispute that respondent has transferred the power from its power plant to its own manufacturing unit and computed the market value of power at the price at which CSPDCL sales to its consumers in open market. The Transfer Pricing Officer (TPO) computed arm’s length price at the rate of power when it is sold to the supplier (Electricity Board). 7 / 11 7. Sub-section (8) of Section 80- IA of the Act of 1961 provides as under: [80-IA. Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development etc- x x x x x x x x x (8) Where any goods [goods or services] held for the purposes of the eligible business are transferred to any other business carried on by the assessee, or where any goods [goods or services] held for the purposes of any other business carried on by the assessee are transferred to the eligible business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the eligible business does not correspond to the market value of such goods [goods or services] as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of such eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods [goods or services] as on that date : Provided that where, in the opinion of the Assessing Officer, the computation of the profits and gains of the eligible business in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such profits and gains on such reasonable basis as he may deem fit. [Explanation. - For the purposes of this sub-section, "market value", in relation to any goods or services, means- 8 / 11 (i) the price that such goods or services would ordinarily fetch in the open market. Or (ii) the arm’s length price as defined in clause (ii) of section 92 F, where the transfer of such goods or services is a specified domestic transaction referred to in section 92 BA]” 8. Explanation appended to sub-Section (8) of Section 80-IA explains “market value” in relation to any goods or services and clearly provides that the price of such goods and services ordinarily fetch in the open market. 9. In case of Godawari Power & Ispat Ltd. (supra) wherein also there was dispute of rate of supply of electricity and what would be its market value was considered and it was observed thus : “31. The market value of the power supplied to the Steel- Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel-Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market. 32. In our opinion, the AO committed an illegality in computing the market value by taking into account the rate charged to a supplier: it should have been compared with the market value of power supplied to a consumer. 33. It is admitted by the Department that in Chhattisgarh the power was supplied to the industrial consumers at the rate of Rs. 3.20/- per unit for the AY 2004-05 and Rs. 3.75/- per unit for the AYs 2005-06 and 2006-07. It was this rate that was to be considered while computing the market value of the power.” 9 / 11 10. Hon’ble Supreme Court in case of Commissioner of Income Tax Vs. M/s Jindal Steel & Power Ltd. through its Managing Director (Civil Appeal No.13771 of 2015 and connected matters, decided on 06.12.2023) as considered the market value of supply of electricity and observed thus : “28. Thus, market value of the power supplied by the assessee to its industrial units should be computed by considering the rate at which the State Electricity Board supplied power to the consumers in the open market and not comparing it with the rate of power when sold to a supplier i.e., sold by the assessee to the State Electricity Board as this was not the rate at which an industrial consumer could have purchased power in the open market. It is clear that the rate at which power was supplied to a supplier could not be the market rate of electricity purchased by a consumer in the open market. On the contrary, the rate at which the State Electricity Board supplied power to the industrial consumers has to be taken as the market value for computing deduction under Section 80 IA of the Act. x x x 30. Thus on a careful consideration, we are of the view that the market value of the power supplied by the State Electricity Board to the industrial consumers should be construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board’s rate when it supplies power to the consumers have to be taken as 10 / 11 the market value for computing the deduction under Section 80-IA of the Act. 31. That being the position, we hold that the Tribunal had rightly computed the market value of electricity supplied by the captive power plants of the assessee to its industrial units after comparing it with the rate of power available in the open market i.e., the price charged by the State Electricity Board while supplying electricity to the industrial consumers. Therefore, the High Court was fully justified in deciding the appeal against the revenue.” 11. ITAT has decided the appeal taking into consideration the decision in case of M/s. Mahendra Sponge & Power Pvt. Ltd passed in ITA No.197/RPR/2017 dated 29.07.2022 wherein the decision in case of Godawari Power & Ispat Ltd. (supra) was considered, and allowed the appeal of assessee observing thus : “8. Respectfully following the judgment of the Hon'ble Jurisdictional High Court in assessee's own case, referred to supra, which has been followed by the different coordinate benches of the Tribunal in the cases cited above including this Bench of the Tribunal, we are of the view that binding decision laid down by the Hon'ble Jurisdictional High Court shall be followed in the present case. Admittedly, the aforesaid judgment of the Hon'ble Jurisdictional High Court in assessee's own case has been challenged by the department by filing an SLP before the Hon'ble Supreme Court and the same is yet to be decided, therefore, the order of the Hon'ble High Court still holds the ground and have binding precedence for us. In terms of our observations, respectfully following the judicial precedence, we are persuaded to accept the contention 11 / 11 of the assessee regarding the method adopted by the assessee as upheld by the Hon'ble Jurisdictional High Court, for transfer of captive power from eligible units to non-eligible units. Thus, ground Nos. 1 to 6 in the present appeal of the assessee are allowed. 9. Ground No.7 relates to levy of penalty u/s.270A of the Act. Since we have allowed the issues raised in ground no 1 to 6 of this appeal by the assessee on quantum addition, therefore, the penalty levied u/s.270A of the Act which is consequential holds no ground to stand and thus deleted. Consequently, ground 7 of the appeal of assessee is also allowed.” 12. For the foregoing discussions and decision of Hon’ble Supreme Court in case of M/s. Jindal Steel & Power Ltd. (supra), we are of the considered view that there is no error or infirmity in the impugned order passed by ITAT. Accordingly, the substantial question of law is answered against Revenue. Consequently, the appeal stands dismissed. S Sd/-/- Sd/- S- (Parth Prateem Sahu) (Sachin Singh Rajput) Judge Judge Praveen