We find it convenient to dispose of these cross appeals by Revenue and assessee by this common order, as these emanate from same order of CIT(A), Rohtak dt. 16th May, 2005 relating to asst. yr. 2001-02. We shall first deal with appeal of Revenue wherein solitary ground reads as follows: "On facts and in circumstances of case, learned CIT(A) has erred in deleting addition of Rs. 4,06,000 representing difference of deposits shown to have been received from S/Shri M.R. Kulkarni, Kanti Parshad, Smt. Padma and Smt. Lila Khanna ignoring letters of confirmations received from these persons showing deposits of Rs. 35,000, Rs. 25,000 and Rs. 3,00,000 as against Rs. 65,000, Rs. 86,000, Rs. 50,000 and Rs. 6,00,000 shown by assessee in its books of account." assessee is public limited company incorporated under provisions of Companies Act, 1956 and is engaged in business of generation of electric power, manufacture of sponge iron, M.S. Ingots etc. AO in case of assessment proceedings for assessment year under consideration i.e. 2001-02 carried out verification exercise of deposits received by assessee from public. AO found that in case of four persons, there was variation in amount of deposits shown by assessee and amount shown by concerned depositor. difference amounting to Rs. 4,06,000 in relation to four parties was held assessable as income in terms of s. 68 of IT Act, 1961 (in short, Act ). said addition has since been deleted by CIT(A) against which Revenue is in appeal before us. Before us, learned Departmental Representative has relied upon o r d e r of AO in support of case of Revenue. learned Departmental Representative pointed out that addition has been made by AO on basis of verification exercise and, therefore, same deserves to be upheld. On other hand, learned counsel for assessee has relied upon order of CIT(A) on this issue. According to him, in instant case, assessee had received impugned deposits from public at large and that it was not case of cash credit simpliciter. According to learned counsel, public deposits have been received in terms of scheme formulated by assessee as per requirements of Companies Act, 1956. That, in any case, receipt of deposits and their repayments are made by way of account- payee cheques through normal banking channels. Thus, to hold that deposits in question carry any tag of assessee s income from undisclosed sources would b e unjustified, in any case, according to learned counsel, result of inquiries conducted by AO was never confronted to assessee and thus no addition is sustainable. We have carefully considered submissions of both parties and find that basis adopted by CIT(A) for deleting addition has not been assailed by Revenue before us. CIT(A) in para 18 of his order records finding that nature and result of purported inquiries conducted by AO was not confronted to assessee at any stage. There is no challenge to this aspect of addition, therefore, in light of decision of Supreme Court in case of Kishinchand Chellaram vs. CIT (1980) 19 CTR (SC) 360: (1980) 125 ITR 713 (SC), impugned addition is unsustainable for reason that same is based on material which has been collected at back of assessee and same has not been confronted to assessee for its rebuttal. In this manner, by adverting to aforesaid short reasoning, we hereby affirm decision of CIT(A) and Revenue fails in its appeal. In its appeal, assessee has preferred five Grounds of appeal which we shall deal with in seriatim In Ground No. 1, grievance of assessee is against action of CIT(A) in confirming allowance of deduction under s. 80-IA of Act at Rs. 48,11,72,000 as against deduction of Rs. 80,10,38,505 claimed by assessee. background of impugned dispute is as follows: assessee had claimed deduction under s. 80-IA in respect of two of its undertakings engaged in business of generation of electric power at Raigarh (Chhattisgarh). power generated by assessee was used by it for own consumption as well as for sale to State Electricity Board (in short, Board ). AO noted that assessee received Rs. 2.32 for each unit of electricity supplied to Board whereas for power supplied to its own units for captive consumption, assessee recorded it at Rs. 3.72 per unit, in other words, profits of undertaking engaged in generation of power was computed by taking sale price of power supplied to its own units at Rs. 3.72 per unit, whereas for power supplied to State Electricity Board price was recorded at Rs. 2.32 per unit. price recorded from State Electricity Board was actual price realized in terms of agreement. In this background, AO was of opinion that profits and gains of undertakings engaged in generation of power was not correctly computed by assessee. AO invoked provisions of s. 80-IA(8) of Act in this regard. According to AO, consideration recorded by Power Generation Units for transfer of power to other units of assessee did not correspond to market value and, therefore, profits and gains computed thereon was incorrect. According to AO, consideration recorded at Rs. 3.72 per unit was higher than market value. AO was of opinion that profits and gains of undertakings engaged in generation of power was to be computed by applying rate of Rs. 2.32 per unit even for power supplied to its own units. AO has justified adoption of Rs. 2.32 per unit as market price on basis of fact that State Electricity Board was buying power from assessee at such rate. Hence, scaling down of deduction claimed by assessee under s. 80-IA of Act. aforesaid action of AO has since been upheld by CIT(A) too. stand of assessee, on contrary, has been that consideration for power transferred to its own manufacturing units for captive consumption has been correctly recorded by assessee at Rs. 3.72 per unit, as same was market rate. market rate of Rs. 3.72 per unit has been attempted to be justified by assessee on basis that State Electricity Board supplied power to industrial consumers at said rate. It was submitted that price determined in terms of agreement with State Electricity Board of Rs. 2.32 per unit did not reflect market value since said agreement was determined by C State Electricity Board. We find that aforesaid pleas of assessee have not found favour with CIT(A). According to CIT(A), notwithstanding fact that State with CIT(A). According to CIT(A), notwithstanding fact that State Electricity Boards were only buyers of electricity, yet price offered by it can alone be liable to be treated as market value of goods in question. Against aforesaid stand, assessee is in appeal before us. Before us, learned counsel for assessee has assailed stand of Revenue by pointing out that price offered by State Electricity Board has been erroneously equated with market price of power. According to learned counsel, it is only surplus of electricity available with assessee after meeting captive consumption requirements that is sold to Board in terms of Power Purchase Agreement executed on 15th July, 1999 copy whereof is placed on record. learned counsel pointed out that in terms of mandate of Indian Electricity (Supply) Act, 1948, assessee could not sell its surplus power to third party and, therefore, it supplied power to Board at price determined by buyer. learned counsel pointed out that s. 80-IA(8) of Act only mandates that transfer price should correspond to market value and that such market value has to be determined having regard to free trade occurring between willing buyer and willing seller. According to him, in instant case, price at which power was bought by Board could not be construed as transaction between willing buyer and willing seller. learned counsel referred to provisions of Indian Electricity (Supply) Act, 1948, wherein there are restrictions on generation and distribution of power inasmuch as it stipulates that power generated can be either captively consumed or supplied to State at stipulated rates. Our attention was drawn to Paper Book wherein is placed relevant extracts of Indian Electricity (Supply) Act, 1948 as also Power Purchase Agreement between assessee and Board. learned counsel pointed out that in this case assessee itself was utilizing power supplied by Electricity Board in other units and fact was that assessee was paying Rs. 3.72 per unit for such supplies. Therefore, it is this price which is to be reckoned as market rate for purposes of s. 80-IA(8) of Act also. In support of propositions, learned counsel has referred to following decisions: (i) West Coast Paper Mills Ltd. vs. Jt. CIT (2006) 100 TTJ (Mumbai) 833 (ii) West Coast Paper Mills Ltd. vs. Asstt. CIT (2006) 105 TTJ (Mumbai) 344: (2006) 103 ITD 19 (Mumbai); (iii) Indian Aluminium Co. Ltd. vs. Dy. CIT (ITA Nos. 1221 & 1405/Kol/2006); (iv) Assam Carbon Products Ltd. vs. Asstt. CIT (2006) 100 TTJ (Kol) 224. On other hand, learned Departmental Representative has relied upon reasoning adopted by lower authorities in support of case of Revenue. learned Departmental Representative has argued that price recovered by assessee from outside party, namely, State Electricity Board, was best indicator in determining market value and that same rate should be adopted in computing eligible profits under s. 80-IA even in relation to power supplied by assessee to its own manufacturing units. We have carefully considered submissions of both parties on this aspect. crux of dispute before us relates to manner of computing profits of undertakings of assessee engaged in generation of power for purposes of relief under s. 80-IA of Act. difference between assessee and Revenue is with regard to determination of market value of power so as to record income accrued to assessee on supplies made to its own manufacturing units. As noted earlier, in this case, assessee has utilized power generated for its captive consumption by way of supplies to its other manufacturing units and also for sale to State Electricity Board. dispute essentially relates to mechanism of s. 80-IA(8) of Act. Sec. 80-IA(8) provides that where assessee, which is eligible for s. 80-IA benefits, transfers its goods or services to business other than eligible business, consideration, if any, recorded for such transfer in accounts of eligible business should correspond to market value of such goods or services. said section authorizes AO that where transfer as recorded in accounts of eligible business does not correspond to market value, profits declared of eligible business can be adjusted by AO on such basis so as to ensure that goods or services transferred to its own unit is done at market value of such goods or services. Ostensibly, in this case, AO was of opinion that consideration for transfer of power for captive consumption to other units has been recorded at consideration which does not correspond to its market value. According to AO, consideration has been recorded at price higher than market value, in other words, AO does not perceive Rs. 3.72 per unit as market value of power generated by assessee and instead adopts Rs. 2.32 per unit as market value, being price at which assessee sells power to Board. Before we proceed further, it is also relevant to understand implications of expression "market value" as appearing in s. 80-IA(8) of Act. In Explanation below s. 80-IA(8), it is provided that expression "market value" for purposes of sub-section means price that such goods or services would ordinarily fetch in open market. In above context, it therefore becomes important for us to consider as to whether price charged by assessee for power supplied to its own manufacturing units at rate of Rs. 3.72 per unit can be said to be constituting market value of its goods, namely, power. In Advanced Law Lexicon by P. Ramanatha Aiyar, 3rd Edn., 2005, market price or market value has been defined as below: "Market price or value. price fixed by buyer and seller in open market in usual and ordinary course of lawful trade and competition; price or value of article established or shown by sales, public or private, in ordinary way of business; fair value of property as between one who desires to purchase and one who desires to sell; current price." Similarly, in case of Orchard vs. Simpson (1857) 2 CBNS 299, phrase "market value" in contract for sale of goods has been understood to mean price in market to ordinary consumer, irrespective of particular contract. Similarly, in Law Lexicon by P. Ramanatha Aiyar, with reference to U.S. vs. Certain: Property in Borough of Manhattan, City County and State of New York, CANY, 403 F.2d800, 802, it has been explained that market value of article or piece of property is price which it might be expected to bring if offered for sale in fair market; not price which might be obtained on sale at public auction or sale forced by necessities of owner, but such price as would be fixed by negotiation and mutual agreement, after ample time to find purchaser, as between vendor who is will (but not compelled) to sell and purchaser who desires to buy but is not compelled to take particular article or piece of property. Therefore, from aforesaid, it can be deduced that market value is expression which denotes price arrived at between buyer and seller in open market wherein transactions take place in normal course of trading and competition in contrast to situation where price is fixed between buyer and seller in negotiation done under shadow of legislatively mandated compulsion. In case of former, price fixed between buyer and seller can be understood as denoting market price since elements of trading and competition exist. Whereas in case of latter situation, price fixed between buyer and seller cannot be understood as denoting market price since elements of trade and competition are conspicuous by their absence. To understand contrasting situations, let us analyze situation on hand. In this case, assessee received consent under s. 44A of Electricity (Supply) Act, 1948 to establish and operate captive power plant in terms of Power Purchase-cum-Wheeling of Power Agreement dt. 15th July, 1999 entered between State Electricity Board and assessee. copy of said agreement has been placed in paper book. Now, in terms of Electricity (Supply) Act, 1948, legislature has put restrictions on establishment of power generating units and their functioning. power generating units are allowed to use power for captive consumption and surplus available, if any, is to be sold transferred to State Electricity Boards. Sec. 43 of Electricity (Supply) Act, 1948 only authorizes State Electricity Board to enter into arrangements for purchase and sale of electricity under certain conditions. Sec. 43A of Electricity (Supply) Act, 1948 also lays down rules and conditions for determining tariff for sale of electricity by generating company to State Electricity Boards. perusal of same reveals that tariff is determined on basis of various parameters contained therein. From aforesaid, it is evident that on one hand it is only upon granting of specific consent that evident that on one hand it is only upon granting of specific consent that private person can set up power generating unit having restrictions on use of power generated and at same time tariff at which power generating unit can supply power to Electricity Board is also liable to be determined in accordance with statutory requirements. In this context it can be safely deduced that determination of tariff between assessee and Board can be said to be exercise between buyer and seller neither in competitive environment and nor in ordinary course of trade and business. It is environment where one of players has compulsive legislative mandate not only in realm of enforcing buying but also to set buying tariff in terms of preset statutory guidelines. Therefore, price determined in such scenario cannot be equated with situation where price is determined in normal course of trade and competition. Therefore, price determined as per Power Purchase Agreement cannot be equated with market value as understood in common parlance. We see no reason for not holding so for purposes of s. 80-IA(8) also. In this background, we may make gainful reference to decision of Hon ble Calcutta High Court in case of Commr. of Agril. IT vs. Manmatha Nath Mukherjee (1958) 34 ITR 567 (Cal), which has been relied on by assessee before us. issue before Hon ble Calcutta High Court was in context of Bengal Agrl. IT Act, 1944. Shorn of other details, question considered by Hon ble High Court, relevant for present, was whether procurement rate of paddy offered by State could be considered to be market value of paddy. In this background, following observations of Hon ble High Court are worthy of notice: "A market connotes freedom of bargain. There may be market, completely circumscribed as regards rates by price control, but within limit set by relevant rule or order, area of operation would still be commercially free area. Even where control price is fixed, it is generally ceiling which is fixed and not invariable price. Be that as it may, to say that when agents of State seize paddy grown by subjects under authority of some law or regulation and pay for it at some rate fixed by themselves and much below rate in open market, they create regulated or any kind of market at all, is if I may be permitted to use k expression, misuse of language. Tribunal even speak of persons whose paddy is seized as "operating" in regulated market. How any person who is seized by neck and compelled to deliver his paddy and then dismissed with trivial sum as its price can be said to operate in market is beyond my comprehension." From aforesaid, analogy that can be safely deduced is that market value cannot be result of transaction which has been entered into between buyer and seller in situation where one of parties is carrying t h e compulsive mandate of legislature. situation before us is such wherein aforesaid analogy can be usefully applied. As we have seen earlier, t h e price at which power is supplied by assessee to Board is determined entirely by Board in terms of statutory regulations. Such price cannot be equated with market value as understood for purposes of s. 80-IA(8) of Act. stand of Revenue to aforesaid effect cannot be approved. Having held so, natural corollary is to ascertain whether price recorded by assessee at Rs. 3.72 pet unit can be considered to be market value for purposes of s. 80-IA(8) of Act. answer, to our mind, is in affirmative. This is for reason that assessee as industrial consumer is also buying power from Board and Board supplies such power at rate of Rs. 3.72 per unit to its consumers. This is price at which consumers are able to procure power. We may consider hypothetical situation as well. Had assessee not been saddled with restrictions of supplying surplus power to State Electricity Board, it would have supplied power to ultimate consumers at rates similar to those of Board or such other competitive rates, meaning thereby that price received by assessee would be in vicinity of Rs. 3.72 per unit i.e. charged by Board from its industrial consumers/users. Thus, under given circumstances, it would be in fitness of things to hold that consideration recorded by assessee s undertaking generating electric power for transfer of power for captive consumption at rate of Rs. 3.72 per unit corresponds to market value of power. Therefore, on this aspect, we uphold stand of assessee and set aside order of CIT(A) and direct AO to allow relief to assessee under aside order of CIT(A) and direct AO to allow relief to assessee under s. 80-IA as claimed. Assessee succeeds on this ground. In second ground, grievance of assessee is against sustenance of addition of Rs. 15,68,171 out of expenditure on aircraft. assessee had two aircrafts which it claimed to have used for purposes of business. Out of total expenditure, AO was of view that sum of Rs. 15,78,171 relatable to journeys performed for non-business purposes was disallowable. addition has also since been sustained by CIT(A) against which assessee is in appeal before us. Before us, plea of assessee is that journeys in question cannot be said to be unrelated to business purposes. In this connection, details of journey as well as purpose for same have been tabulated in following manner: Details of flying of B-200 Particulars Hrs. Purpose Delhi-Pune To visit Kirloskar Electric & Kirloskar Bros., Pune, seller of plane to discuss matters relating to plane. Delhi-Tirupati Delhi-Allahabad * To meet prospective customers at that place. Delhi-Ludhiana To meet customers namely Aarti Steels Limited, Vardhman Special Steels Limited and others. Total Details of flying of C-90 disallowed Particulars Hrs. Purpose Bhuj aircraft was mainly used for relief work after earthquake at Bhuj and there were certain visits to unit of Saw Pipes Limited for supplies. relief work was undertaken as part of social responsibility. Nagpur To meet customers namely Sunvijay Rolling and Engineering Limited, Metalfab Hitech (P) Ltd. and others. Lucknow Visit to Research Design and Standard Organization (RDSO) in connection with meeting for proposed setting up of Rail & Universal Beam mill project. Guna Bokaro To visit Steel Authority unit Banaras To meet prospective customers namely Hindalco, NTPC Power Plants (Captive & IPPS) (nearest airport) Shimla To meet prospective customers namely Suraj Fabrics Industries Ltd. Agra To take company guest to Taj Mahal. Bhavnagar Gwalior To meet prospective customers namely SRF Limited and JK Industries Ltd. Allahabad To meet prospective customers namely Savitri Construction. Chandigarh To meet Haryana Electricity Board for discussion in respect of power sale. On basis of aforesaid, it was contended that entire expenditure was allowable while computing income of assessee. learned counsel for assessee specifically pointed out that that visits to Bhuj and Bhavnagar were undertaken to facilitate relief work on aftermath of earthquake. expenditure is to be seen as incurred by assessee as cost of social obligation. In support, reliance was placed on following decisions: (i) CIT vs. Madras Refineries Ltd. (2004) 266 ITR 170 (Mad); (ii) Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. vs. CIT (1988) 72 CTR (MP) 57: (1988) 171 ITR 131 (MP); (iii) Hindustan Petroleum Corpn. Ltd. vs. Dy. CIT (2005) 92 TTJ (Mumbai) 168: (2005) 96 ITD 186 (Mumbai). On other hand, learned Departmental Representative has defended orders of lower authorities by placing reliance on same. We have carefully considered submissions of both parties. After perusing details and purpose for which expenditure has been incurred, in our opinion, case of assessee cannot be shut out in entirety. In relation to trips to Delhi-Tirupati and Guna, no purpose has been stated by assessee even in details filed before us. Therefore, disallowance to that extent is justified. As regards other trips, except to Bhuj and Bhavnagar, we see no reason to disallow same as purposes mentioned are such so as to qualify tests laid down under s. 37(1) of Act. Regarding trips to Bhuj and Bhavnagar, justification is that consequent to earthquake, expenditure was incurred for undertaking relief work, taken up as social cause though not directly connected with business of assessee. In this context, going by parity of reasoning weighing with Hon ble Madras High Court in cases of Madras Refineries Ltd. (supra) and Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. (supra), expenditure is allowable as deduction. We therefore, set aside order of CIT(A) and direct AO to rework disallowance in aforesaid manner. assessee partly succeeds on this ground. In Ground No. 3, issue is with regard to premium payable to mutual fund which has been treated as income under s. 28(iv) of Act. said ground has not been pressed on behalf of assessee in course of hearing. Accordingly, same is dismissed as not pressed. Ground No. 4 is in relation to denial of depreciation on hydraulic excavator amounting to Rs. 27,71,704. On this aspect, AO noted that assessee had purchased two excavators as under: (i) Tata Hitachi EX-600 V Hydraulic Excavator for Rs. 1,10,74,752 vide bill dt. 27th Feb., 2001. (ii) Hyderabad Excavator H-55 for Rs. 1,10,98,880 vide bill dt. 30th March, 2001. Depreciation was claimed at half of normal depreciation allowable on such assets since they were put to use for period of less than 180 days. A O disallowed depreciation on ground that assessee failed to substantiate that asset was put to use for purposes of business during previous year itself. CIT(A) has also sustained stand of AO. plea of assessee is that excavators are heavy vehicles used in grinding operations for purposes of excavation and do not require any installation and are put to use for purposes of business as soon as vehicle is bought and put on road. It was explained that first excavator was purchased on 17th Feb., 2001 and entered premises of assessee on 16th March, 2001 and second excavator was, purchased on 30th March, 2001 and entered premises of assessee on same day. These facts were borne out from store receipts/reports which are placed in paper book. learned counsel for assessee submitted that assessee had also submitted certificate in this regard before lower authorities. On other hand, learned Departmental Representative has relied upon order of lower authorities in support of case of Revenue. After considering rival pleas on this issue and material on record. We find that issue in question is squarely covered by decision of Special Bench on of Tribunal in case of K.C.P. Ltd. vs. ITO (1991) 40 TTJ (Hyd) 528: (1991) 38 ITD 15 (Hyd) wherein under similar situation depreciation was held as allowable. Tribunal specifically noted that excavator is machine ready to be put to use just like car is ready to be driven. Further, even in cases where asset is kept ready for use, as passive user, depreciation in terms of s. 32 has been held to be allowable. In this regard, reference can be made to decision of Hon ble Delhi High Court in case of Capital Bus Service (P.) Ltd. vs. CIT (1980) 17 CTR (Del) 155: (1980) 123 ITR 404 (Del). Following aforesaid discussion, in our view, claim of assessee is in accordance with law and is thus allowable. We set aside order of CIT(A) and direct AO to allow claim of assessee for depreciation amounting to Rs. 27,71,704. assessee succeeds on this ground. In ground No. 5, grievance of assessee is against order of CIT(A) in confirming action of AO whereby depreciation has been allowed on turbines to extent of Rs. 1,59,10,047 as against Rs. 2,85,37,634 claimed by assessee. variation in depreciation has resulted for reason that AO held that assessee is entitled to depreciation on straight line method and not on written down value basis as claimed by assessee. In this context, it was common ground between parties that issue in question is covered by decision of Tribunal in assessee s own case for asst. yr. 2000-01, order dt. 31st March, 2006 in. ITA No. 3663/Del/2005,[reported as Jindal Steel & Power Ltd. vs. Addl. CIT (2007) 106 TTJ (Del) 943 Ed.] in favour of assessee. In view of aforesaid decision of Tribunal, assessee succeeds on this ground. In result, whereas appeal of Revenue is dismissed, appeal of assessee is partly allowed. *** ADDITIONAL COMMISSIONER OF INCOME TAX v. JINDAL STEEL & POWER LTD.