Short Overview: Where assessee provided electricity generated by its captive power generating plant to its another unit, then while computing deduction under section 80-IA, the value of electricity provided to another unit was to be at the rate for which electricity distribution companies were allowed to supply electricity to consumers.

Assessee had set up a captive power generating unit and provided electricity to its another unit and claimed deduction under section 80-IA in respect of profits arising out of such activity. Assessee claimed that valuation of electricity provided to another unit should be at rate at which electricity distribution companies were allowed to supply electricity to consumers. Whereas, AO alleged that the appropriate rate should be the rate at which the electricity was purchased by the distribution companies from the electricity generating companies.

It is held that Following Godawari Power & Ispat Ltd.(2014) and Gujarat Alkalies & Chemicals Ltd.(2017) 395 ITR 247 (Guj), it was held that valuation of electricity provided to another unit should be at rate at which electricity distribution companies were allowed to supply electricity to consumers.

Decision: In assessee’s favour.