MSEB chairman Ashok Basak said that owing to an inadequate power distribution system, MSEB could not provide continuous power, especially to the industry. The MSEB has now taken a decision to provide uninterrupted power to all industries in the Maharashtra Industrial Development Corporation (MIDC)-run industrial estates.

The MSEB has made a fresh appeal to the Central Board of Direct Taxes (CBDT) for concessions under the amended Section 10 (23G) of the Income-tax Act, 1961 and rule 2E of the Income Tax Rule, 1962 for the proposed bond issue. Basak told The Financial Express that CBDT should consider MSEB as an enterprise wholly engaged in the business of developing, maintaining and operating an infrastructure facility. MSEB has expressed its inability to create a specialpurpose vehicle (SPV) for seeking exemption under section 10 (23G).

MSEB had recently floated a SPV to raise about Rs 750 crore to pick up 30 per cent equity in the Dabhol power project.

The CBDT has in its communication, however, denied MSEB's plea and said that an enterprise seeking approval should have a separate identity, goal, organisation and financing arrangements. "As MSEB has been in existence since 1948 and has been engaging in the power generation business, the organisation as such may not qualify as an infrastructure facility in terms of section 10 (23G). Hence, prima facie it appears that MSEB may not be entitled for approval for such a section."

Basak feels that it will not be practical and feasible for MSEB or for that matter any state electricity board to float a SPV for seeking exemption under section 10 (23G). This is because MSEB at any point of time takes up several projects, all of which qualify for the benefits of section 10 (23G), he added.

"If for each one of these projects,MSEB should create a SPV first for separate identify, goal, organisation and financial arrangements, this will not only lead to multiplicity of organisation complexities, it is also likely to cause precious loss of time," he said.

Moreover, when MSEB has been incorporated primarily to develop, maintain and operate projects for generation, transmission and distribution of power, all its projects related to generation and distribution of power on or after April 1, 1993, should be entitled for exemption under section 10 (23G). It has pleaded that though these projects were being commissioned by the MSEB itself and not as a SPV having legal status, they should be entitled for exemption under section 10 (23G).

MSEB has appealed to the CBDT to devise a mechanism to ensure proper utilisation of funds raised with benefits of section 10 (23G). It has asked the CBDT not to deny it exemption under section 10 (23G) on the whole and restrict it in any way from raising funds at low cost.