2020 (11) TMI 113 - AT - Income Tax

Disallowance u/s 43B - electricity duty was adjusted from the subsidy and the balance amount was not paid by the assessee before filing the return of income - As submitted assessee collects the duty from the customer and pays to the U. P. Government and the amount of electricity duty is deducted by the U. P. Government from the subsidy given by it - HELD THAT - It is a settled legal position that the rule of consistency is required to be followed by the Income-tax authorities and that in the absence of any difference in the facts and circumstances of the case for the assessment year under consideration, the Assessing Officer is not justified in disallowing the claim. Further, Revenue has also not placed any material on record to demonstrate that the order of the Co-ordinate Bench of Tribunal passed in the case of assessee for A.Y. 2015-16 has been stayed/ set aside or overruled by higher judicial forum. In such a situation, following the rule of consistency and following the order of the Tribunal in the assessee s own case for A.Y. 2015-16 and for similar reasons hold that AO was not justified in disallowing the expenditure by invoking the provisions u/s 43B. We therefore, setaside the order of CIT(A) and thus the ground of appeal of the assessee is allowed. Disallowance u/s 40(a)(ia) - wheeling/transmission charges - Addition deleted by CIT(A) - HELD THAT - We find that CIT(A) after relying on the various decisions, that were cited by it before CIT(A) and which has been referred to by CIT(A) in his order, has given a finding that provisions of TDS are not applicable to wheeling/transmission charges and therefore, no disallowance can be made u/s 40(a)(ia) of the Act. Before us no fallacy in the findings of CIT(A) has been pointed out by the Revenue. In such a situation we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue are dismissed.

Summary

Issues:
1. Disallowance of Electricity Duty under Section 43B of the Income Tax Act.
2. Disallowance of expenses on account of failure to deduct TDS on wheeling/transmission charges under Section 40(a)(ia) of the Income Tax Act.

Issue 1: Disallowance of Electricity Duty under Section 43B:
The case involved an appeal against the order of the Commissioner of Income Tax (A), Meerut for Assessment Year 2014-15. The Assessee, a subsidiary of U. P. Power Corporation Ltd., declared a loss in its return of income. The Assessing Officer disallowed an amount of ?2,08,76,00,000 as electricity duty unpaid before filing the return. The Assessee contended that electricity duty is collected on behalf of the government and is not covered under Section 43B. The CIT(A) upheld the AO's order. The Assessee relied on a Kerala High Court decision and a previous ITAT ruling in its favor for A.Y. 2015-16. The ITAT observed that the Assessee collected the duty as an agent of the government and allowed the appeal, citing the principle laid down in the Kerala High Court decision. The Tribunal emphasized the rule of consistency and set aside the CIT(A)'s order, allowing the Assessee's appeal.

Issue 2: Disallowance of TDS on Wheeling/Transmission Charges under Section 40(a)(ia):
The AO disallowed expenses of ?9,86,28,93,000 for failure to deduct TDS on wheeling/transmission charges under Section 40(a)(ia). The CIT(A) deleted the addition, stating that TDS provisions do not apply to these charges. The Revenue appealed against the CIT(A)'s decision. The Tribunal noted that the CIT(A) had correctly interpreted that TDS provisions are not applicable to wheeling/transmission charges. The Revenue failed to point out any error in the CIT(A)'s findings. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the disallowance.

In conclusion, the ITAT Delhi allowed the Assessee's appeal regarding the disallowance of electricity duty under Section 43B and dismissed the Revenue's appeal concerning the disallowance of TDS on wheeling/transmission charges under Section 40(a)(ia) for Assessment Year 2014-15.