2015 (8) TMI 752 - AT - Income Tax

Disallowance under section 43B - electricity duty payable under section 3(1) of the Electricity Duty Act, 1963 and supply surcharge payable to the Government - CIT(A) deleted the addition - Held that - This issue was decided by the jurisdictional High Court in the assessee s own case reported in Kerala State Electricity Board v. Dy. CIT 2010 (11) TMI 127 - Kerala High Court the provisions of section 43B is applicable to the electricity duty payable to the Government. Accordingly, the disallowance made by the Assessing Officer is justified to the extent towards electricity duty payable to the Government and to that extent the order of the Commissioner of Income-tax (Appeals) is reversed and that of the Assessing Officer restores. With regard to electricity surcharge collected from the consumers, the same is levied in terms of Kerala State Electricity Surcharge (Levy and Collection) Act, 1989, which provides for levy and collection of surcharge on high tension and extra high tension supplies of energy by the Kerala State Electricity Board. The surcharge is collected from the special category of consumers in terms of section 3 of the above Act and stands on the same footing as under section 4(1) of the Kerala State Electricity Duty Act, 1963. Therefore, the provisions of section 43B is not applicable to the assessee s case in terms of the order of the jurisdictional High Court cited supra. Being so, in our opinion, the disallowance of electricity supply surcharge is not warranted and accordingly, the order of the CIT(Appeals) on the issue of deletion of electricity surcharge is confirmed. - Decided partly in favour of assessee. Application of section 115JB so as to tax book profit - Held that - The Electricity Board or bodies similar to it, which are totally owned by the Government, either State or Central, have no share holders. Profit, if at all, made would be for the benefit of the entire body politic of the State. Therefore, the enquiry as to the mischief sought to be remedied by the amendment becomes irrelevant. There fore, the fiction fixed under section 115JB cannot be pressed into service against the Electricity Board while making the assessment of the tax payable under the Income-tax Act - Decided against revenue.

Summary

Issues:
1. Deletion of disallowance under section 43B of the Income-tax Act for electricity duty and supply surcharge.
2. Applicability of section 115JB of the Income Tax Act to tax book profit.

Analysis:

Issue 1: Deletion of disallowance under section 43B
The appeal concerned the deletion of disallowance made by the Assessing Officer under section 43B of the Income-tax Act for electricity duty and supply surcharge. The Assessing Officer disallowed amounts payable to the Government as the assessee had not remitted them within the stipulated time. The Commissioner of Income-tax (Appeals) allowed the claim, citing a judgment that section 43B could not be invoked for electricity duty collected by the Electricity Board. The tribunal held that section 43B applied to electricity duty payable to the Government, justifying the disallowance of &8377; 77,53,80,000. However, the disallowance of &8377; 8,67,22,264 for electricity supply surcharge was not warranted based on the High Court's decision.

Issue 2: Applicability of section 115JB
The second issue revolved around the application of section 115JB of the Income Tax Act to tax book profit. The Assessing Officer noted that the provisions of section 115JB did not exempt companies engaged in electricity generation or distribution. However, the Commissioner of Income-tax (Appeals) found section 115JB not applicable to the assessee's case. The tribunal referred to a High Court judgment that bodies like the Electricity Board were excluded from the operation of section 115JA, and this understanding was binding on the Department. Consequently, the tribunal upheld the Commissioner's order on this issue.

In conclusion, the tribunal partly allowed the appeal filed by the Revenue, upholding the disallowance of electricity duty under section 43B while confirming the deletion of electricity supply surcharge. Additionally, it upheld the decision that section 115JB did not apply to the assessee's case based on the High Court's interpretation.