9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (10) TMI 693 - AT - Income TaxAccrual of income - income of the assessee company towards de-recognition of income pertaining to consumer s portion over achievement of minimum target or efficiency gain - HELD THAT - The assessee is in business of electricity which was transferred to the company in terms of agreement dated 31.05.2002 as per the policy direction issued by GNCTD (Govt. of National Capital Territory) governing the transfer of business of erstwhile Delhi Vidyut Board (DVB) to the company, the company is entitled to an assured return of 14% plus a supply margin up to 2% p.a. on DERC approved Equity subject to achievement of Aggregate Transmission and Commercial (AT C) loss reduction targets. In the event of over-achievement of AT C loss reduction targets, the Company is entitled to retain a portion of such additional revenue realised which is in addition to the assured return of 16% p.a. on DERC approved Equity. The balance additional profits from overachievement, after adjustments for any amounts recoverable by the Company through future tariffs are required to be transferred to the contingency reserve account or as directed by DERC for utilization in future tariff determinations. This issue is covered in favour of the assessee by the decision in assessee s own case 2020 (3) TMI 719 - DELHI HIGH COURT . MAT Computation - Addition being interest liability on additional consumer security deposits under the normal provisions of the Act as well as in the computation of book profit u/s 115JB - HELD THAT - As seen that the interest is payable by the assessee as a discharge of its statutory obligation. Further, the Hon'ble Delhi High Court pursuant to the Writ had passed an interim order by directing the petitioner (i.e. assessee ) to continue to refund the security deposit and pay interest to consumer in accordance with law. The assessee herein had merely discharge its statutory obligation in consonance with the provisions of section 47 of the Electricity Act, 2003 and in consonance with the directions of the Hon'ble Delhi High Court. This certainly would become an expenditure incurred wholly and exclusively for the purpose of business of the assessee and hence, allowable as deduction. Accordingly, ground raised by the assessee are allowed. Late payment of surcharge as offered to tax consistently on receipt basis by the assessee but subjected to tax by revenue on accrual basis - HELD THAT - Under these circumstances, the assessee company thought it fit as a measure of prudence to recognize revenue on account of late payment of surcharge on receipt basis which was in consonance with revenue recognition prescribed in accounting standard 9 issued by ICAI. AR also submitted that this contention of the assessee was accepted by the AO for all the earlier years and also for the subsequent years. Only for the year under consideration i.e. AY 2011-12 AO had taken a divergent stand. In any event, we find that the similar issue was adjudicated by the coordinate bench of Delhi Tribunal in the case of Dakhin Haryana Bijli Vitran Nigam Ltd 2012 (7) TMI 340 - ITAT, DELHI wherein, this tribunal by placing reliance on the order passed for AY 2006-07 and 2008-09 had held that there is nothing wrong in this revenue getting recognized in the books of account on receipt basis as the realization of it is doubtful in nature especially in state, charges are waived off pursuant to the recognition and the pursuant to the orders of the Courts. Enhancement of claim of deduction u/s 80IA on additions made to the income of the eligible unit towards commission, maintenance charges and miscellaneous income - HELD THAT - As in view of the decision of the Hon'ble Delhi High Court in assessee s own case. 2020 (3) TMI 719 - DELHI HIGH COURT . and also by the CBDT Circular No. 37/2016 dated 02.11.2016 wherein, it had been categorically stated that any disallowance and additions to the total income of an eligible unit would only give rise to enhancement of profit of the eligible unit and hence consequentially would be eligible for deduction u/s 80IA of the Act. Thus we direct the ld AO to grant enhanced deduction u/s 80IA. Grant of deduction u/s 80IA on account of late payment of surcharge collected - We find that that the said late payment of surcharge collected by the assessee pertains to the eligible unit of the assessee. We have already narrated the purpose behind the collection of late payment of surcharge by the assessee. The only purpose of making this recovery is to ensure collection of electricity dues in time and hence this receipt is also having possible nexus with the profit derived by the eligible unit and consequentially eligible for deduction u/s 80IA. Deduction u/s 80IA for late payment of surcharge collected and rebate on power purchase - Both these receipts, as their names suggest, are having first degree nexus with the profits by the eligible unit and accordingly would be eligible for deduction u/s 80IA - CIT(A) had rightly granted relief in this regard, which, in our considered opinion, does not call for any interference. Accordingly, ground raised by the revenue is dismissed.
Issues Involved:
1. Legality of the CIT(A) order. 2. Addition of Rs. 33,94,62,000/- as income for over-achievement of AT&C Losses. 3. Addition of Rs. 1,92,07,000/- as interest liability on additional consumer security deposits. 4. Addition of Rs. 7,66,51,000/- for late payment surcharge (LPSC). 5. Denial of deduction u/s 80IA for specific income items. 6. Additional ground regarding book profits under Section 115JB. 7. Short credit of TDS. 8. Chargeability of interest u/s 234B and 234C. Summary: Issue 1: Legality of the CIT(A) Order The assessee challenged the CIT(A) order as bad in law. The Tribunal did not specifically address this issue as it was general in nature. Issue 2: Addition of Rs. 33,94,62,000/- for AT&C Losses The assessee argued that the addition was erroneous as the amount was to be returned to consumers through tariff adjustments. The Tribunal, following the jurisdictional High Court's decision in the assessee's own case, allowed the appeal, holding that the amount did not form part of the assessee's real profit. Issue 3: Addition of Rs. 1,92,07,000/- as Interest Liability The assessee contended that the interest on additional consumer security deposits was a statutory obligation under the Electricity Act. The Tribunal agreed, citing the statutory requirement and the Delhi High Court's interim order, and allowed the deduction both under normal provisions and Section 115JB. Issue 4: Addition of Rs. 7,66,51,000/- for LPSC The assessee recognized LPSC on a receipt basis due to uncertainty in collection. The Tribunal upheld this practice, referencing Accounting Standard 9 and previous Tribunal decisions, and allowed the appeal. Issue 5: Denial of Deduction u/s 80IA The assessee sought deduction u/s 80IA for various income items totaling Rs. 2499.84 lakhs. The Tribunal, referencing the Delhi High Court's decision and CBDT Circular No. 37/2016, directed the AO to grant the enhanced deduction. Issue 6: Additional Ground on Book Profits under Section 115JB The assessee raised an additional ground challenging the applicability of Section 115JB. The Tribunal admitted the ground, citing the Supreme Court's decision in NTPC Ltd, and ruled in favor of the assessee based on the Kerala High Court's decision, which was affirmed by the Supreme Court. Issue 7: Short Credit of TDS The Tribunal directed the AO to verify and grant the correct TDS credit as per law. Issue 8: Chargeability of Interest u/s 234B and 234C The Tribunal held that interest u/s 234C should be charged only on the returned income, making this issue consequential. Revenue's Appeal: Deduction u/s 80IA on LPSC The Revenue challenged the deduction u/s 80IA for LPSC collected. The Tribunal dismissed the appeal, affirming that LPSC is directly related to the profit of the eligible unit. AY 2012-13 Issues The issues and decisions for AY 2012-13 were identical to those of AY 2011-12, with the Tribunal applying the same rulings mutatis mutandis. Conclusion Both appeals of the assessee were partly allowed for statistical purposes, and both appeals of the revenue were dismissed. The order was pronounced on 05/10/2023.
|
