2012 (5) TMI 672 - AT - Income Tax

Summary

Issues Involved:
1. Addition of Rs. 102,36,11,915 for the assessment year 2001-02.
2. Addition of Rs. 31,88,79,138 for the assessment year 2003-04.
3. Addition of Rs. 5,87,99,000 for the assessment year 2003-04.
4. Reopening of assessment and short deduction of TDS for the assessment year 2003-04.
5. Additions on account of the difference in receipt vis-à-vis APTRANSCO for the assessment years 2004-05 and 2005-06.
6. Additions on account of taxes reimbursed by APTRANSCO for the assessment years 2004-05 to 2006-07.

Summary:

1. Addition of Rs. 102,36,11,915 for the assessment year 2001-02:
The main issue was the addition of Rs. 102,36,11,915 made by the assessing officer, treating the entire amount of bills raised by the assessee in terms of the Power Purchase Agreement with APTRANSCO as income, despite disputes and non-receipt of the full amount. The Tribunal noted that the assessee recognized revenue only for amounts admitted by APTRANSCO, citing Accounting Standard 9. The Tribunal held that income does not accrue if there is uncertainty regarding its receipt and deleted the addition of Rs. 84,06,80,727 confirmed by the CIT(A), but clarified that the amount would be taxable in the year it is actually received.

2. Addition of Rs. 31,88,79,138 for the assessment year 2003-04:
The assessing officer added Rs. 31,88,79,138 due to a discrepancy between the units billed and amounts paid by APTRANSCO. The Tribunal found that the assessing officer did not reconcile these amounts with the assessee's books and remanded the issue back to the assessing officer to verify if the amount was already accounted for and offered to tax in the relevant year.

3. Addition of Rs. 5,87,99,000 for the assessment year 2003-04:
The Tribunal deleted the addition of Rs. 5,87,99,000 for reimbursement of taxes by APTRANSCO, noting that the reimbursement was disputed and the matter was pending arbitration. The Tribunal held that income does not accrue until the dispute is resolved.

4. Reopening of assessment and short deduction of TDS for the assessment year 2003-04:
The Tribunal upheld the CIT(A)'s decision that reopening the assessment for short deduction of TDS was incorrect. The Tribunal noted that the correct rate of 5% was applied as per the DTAA with Mauritius, and the provisions of S.147 were not applicable as there was no escapement of income.

5. Additions on account of the difference in receipt vis-à-vis APTRANSCO for the assessment years 2004-05 and 2005-06:
The Tribunal deleted the additions of Rs. 2,55,60,283 and Rs. 2,75,15,430 for the assessment years 2004-05 and 2005-06, respectively, noting that the amounts billed were not admitted by APTRANSCO and there was no certainty of receipt.

6. Additions on account of taxes reimbursed by APTRANSCO for the assessment years 2004-05 to 2006-07:
The Tribunal deleted the additions of Rs. 5,90,71,000, Rs. 4,58,04,400, and Rs. 5,06,40,000 for the assessment years 2004-05, 2005-06, and 2006-07, respectively, on the grounds that the reimbursement was disputed and pending arbitration, thus income did not accrue.

Conclusion:
- Assessee's appeals for the assessment years 2001-02 and 2004-05 to 2006-07 were allowed.
- Assessee's appeal for the assessment year 2003-04 was partly allowed.
- Revenue's appeals for the assessment years 2001-02 and 2003-04 were dismissed.

Order pronounced in the court on 18th May, 2012.