Assessee’s Contentions

Revenue’s Contentions

Tribunal’s Judgment

The assessee contended that the AVVNL rate of ₹7.35 per unit was the most reliable internal CUP, as the same cement unit purchased electricity from AVVNL during the year. It relied on its own case for AY 2020-21 and the Supreme Court ruling in Jindal Steel & Power Ltd.

The Revenue argued that AVVNL was a distribution entity and was functionally different from the captive power plants, as its tariff included transmission and distribution costs and losses.

The ITAT held that the comparison was between two purchases by the same cement unit—from captive power plants and AVVNL—and therefore the AVVNL rate constituted a reliable internal CUP. The functional differences between the suppliers did not affect the comparison of the two purchase transactions.

It submitted that the rates of electricity supplied by independent power producers to State utilities were regulated and therefore could not be regarded as transactions undertaken in uncontrolled conditions for Rule 10B purposes.

It     It contended that the transaction under consideration was the sale of electricity by the captive power plants, and therefore rates of independent power producers supplying electricity to State utilities were appropriate comparables.

The ITAT held that transactions between independent power producers and State utilities were regulated transactions and could not be treated as uncontrolled comparables. Following earlier orders, it accepted ₹7.35 per unit, deleted the ₹26.30 crore TP adjustment and allowed the deduction under section 80-IA.