There was transfer of power from its captive power plants (eligible business for deduction under section 80-IA) to other non-eligible businesses.  TPO adopted Indian Energy Exchange (IEX) rates for purpose of benchmarking transaction of sale of power by Kota eligible unit to non-eligible unit.  Claim of assessee was that price at which assessee had purchased power from SEB was internal CUP and, therefore, those prices were to be preferred over any external CUP price i.e. average price of IEX and price at which it had purchased power in Rajasthan. Tribunal held that since rates of SEB compared with rates of IEX clearly showed that there was a wide disparity between two rates and SEB in Rajasthan was supplying power to majority of consumers using electricity, much sanctity was attached to rates adopted by SEBs and IEX rates could not be said to be an external CUP available for invoking provisions of first proviso to section 92C(2).   Therefore, transaction of transfer of power in Rajasthan from eligible unit to non-eligible unit should be benchmarked at purchase price of power from SEB.

Held that steam has a cost and arm’s length price of steam cannot be determined at nil. Value of steam can be expressed in terms of equivalent units of electricity that would have been generated and such value is usually higher than cost of steam. (AY. 2014-15)