Dismissed

Commissioner of Income Tax v. M/S Opg Metals P Ltd.

Madras HC16 Sept 2013TCA/332/2013

Case brief

AI extract

What is this about?

The Madras High Court dismissed the Commissioner of Income Tax's appeal against the Income Tax Appellate Tribunal's order. The court held that the Tribunal correctly ruled that buying at a rate lower than the official tariff indicated commercial reasonability, finding no substantial question of law.

What did the court decide?

The Tax Case (Appeal) stands dismissed with no costs.

Commissioner of Income Tax Vs M/S Opg Metals P Ltd. — Income Tax | Madras HC (2013)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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Dated : 16.09.2013

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Coram

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The Honourable Mrs.Justice CHITRA VENKATARAMAN

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and

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The Honourable Mr.Justice T.S.SIVAGNANAM

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Tax Case (Appeal) No.332 of 2013

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Commissioner of Income Tax Chennai ... Appellant

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-vs-

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M/s.OPG Metals P Ltd

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26, Mooker Nalla Muthu Street 2^nd Floor, Chennai-600 001 ... Respondent

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Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Chennai 'C' Bench dated 22.11.2012 in ITA.BNo.1095/Mds/2012. Against the proceedings of the Income Tax Appellate Tribunal 'C' Bench, Chennai in I.T.A.No.1095/Mds/2012 for the assessment year 2008-2009 dated 22.11.2012, against the order of the Commissioner of Income Tax (Appeals) in I.T.A.No.143/2010-11 for the assessment year 2008-2009 order dated 23.2.12 against the order of Deputy Commissioner of Income Tax, Company Circle V(1), Chennai 34 dated 13.12.2010 passed in PAN.No: AACCS 9725 P.

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For appellant : Mr.N.V.Balaji Standing Counsel for Income Tax Dept.

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(The Judgment of the Court was made by CHITRA VENKATARAMAN, J.)

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Following questions of law are raised by the Revenue in seeking admission of the above Tax Case (Appeal) filed for the assessment year 2008-09.

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"1. Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal is right in holding that price paid by the assessee for purchase of electricity from its group company M/s.OPG Energy Private Limited is not excessive and no disallowance

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https://hcservices.ecourts.gov.in/hcservices/

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could be made under Section 40A ?

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Is the finding of the Tribunal that single isolated instance of sale by M/s.OPG Energy Private Limited to M/s Meridian an unrelated party at a price of Rs.3.0417 per unit cannot be a basis for arriving reasonability of the price paid by the assessee not perverse, especially when the said M/s.Meridian had purchased more than 50% of the power sold by M/s.OPG Energy Private Limited ?"

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The Assessing Officer disallowed a sum of Rs.96,18,175/- as excess payment on purchase of power from M/s.OPG Energy P.Ltd, a group company, under Section 40 A of the Income Tax Act, 1961, after considering the excess arrived at in the assessment of the income in the case of M/s.OPG Energy P Ltd.

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On appeal before the First Appellate Authority, on a consideration of the material, the Commissioner of Income Tax (Appeals) came to the conclusion that price paid by the assessee to sister concern was not excessive, thus, the appeal was allowed.

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Aggrieved by this, Revenue went on appeal before the Income Tax Appellate Tribunal. On a study of the materials furnished before the Income Tax Appellate Tribunal, as regards the rate at which the sister concern sold the electricity to various parties, the Income Tax Appellate Tribunal came to the conclusion that out of total ten instances, excluding the assessee, only in two cases, the rates were lower; the average rate at which electricity was supplied by the said company to unrelated parties came to Rs.3.266 per unit. The Income Tax Appellate Tribunal further pointed out that the average rate of sale to unrelated parties had been pulled down to Rs.3.266 per unit even if one has taken out the case of M/s.Meridian Industries Limited, the rate was at Rs.3.041 per unit. Thus, the Income Tax Appellate Tribunal viewed that such an isolated instance could not be a basis for making a meaningful comparison. On facts, thus, the Income Tax Appellate Tribunal held that the supplier had reasons for charging different rates. The Income Tax Appellate Tribunal further pointed out that the rate at which, the assessee purchased electricity from M/s OPG Energy Pvt. Ltd., was lower than the tariff fixed by the Tamil Nadu Electricity Board. Taking note of the overall picture, the Income Tax Appellate Tribunal held that the question as to what was the commercial consideration which permitted the assessee to purchase electricity at that rate could not be taken as a good ground for considering the question in favour of the Revenue. Consequently, the Income Tax Appellate Tribunal rejected the Revenue's appeal.

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Considering the pure findings of fact, we do not find any

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https://hcservices.ecourts.gov.in/hcservices/

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substantial question of law for admitting the Tax Case. Accordingly, the Tax Case (Appeal) stands dismissed. No costs.

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Sd/-
Assistant Registrar
/True Copy/
Sub Assistant Registrar
nvsri
To
1. The Commissioner of Income Tax, Chennai.
2. The Commissioner of Income Tax (Appeals-V), Nungambakkam,
Chennai-34
3. The Income Tax Appellate Tribunal, Chennai Bench 'C'.
+ One CC to M/s.N.V.Balaji, Advocate, Sr.No.48513
Tax Case (Appeal) No.332 of 2013
RK(CO)
DRL : 07/10/2013

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https://hcservices.ecourts.gov.in/hcservices/

Commissioner of Income Tax v. M/S Opg Metals P Ltd.

Case brief

What is this about?

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Commissioner of Income Tax v. M/S Opg Metals P Ltd.

Case brief

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