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2024 (9) TMI 1106 - AT - Income TaxDisallowance of unpaid Electricity Duty u/s 43B - assessee explained that the provisions of section 43B were not applicable to the liability of Electricity Duty and Tax thereon, as it did not fall within the definition of Statutory Liability. - HELD THAT - In our considered opinion the Ld.CIT(A) has erred in concluding that the Hon ble Supreme Court has yet to decide and only admitted the SLP filed by the assessee against the judgement of Hon ble Gujarat High Court passed for AY 1990-91. 2003 (1) TMI 43 - GUJARAT HIGH COURT Adjustment of Electricity Duty by the Government against the subsidy sanctioned by the Government amounts to valid payment for the purposes of section 43B of the IT Act, vide its order dated 12-09-2012 and deduction should be allowed on a payment basis in the year the payment is made. Assessee has demonstrated that the Hon'ble Supreme Court's order 2012 (9) TMI 1251 - SC ORDER addressed the issue of unpaid electricity duty, requiring a certificate from a Chartered Accountant. AO's failure to consider the Supreme Court's directive and the Tribunal s instructions has resulted in an improper assessment. CIT(A) has failed to take into consideration the judgement of the Hon ble Supreme Court relating to AY 1990-91 and decide the case on merits for the year under consideration. We decide as follows - The order passed by the CIT(A) confirming the AO's decision is set aside. - The matter is restored to the AO for fresh adjudication in light of the Supreme Court s order and after considering the facts and evidence presented by the assessee, particularly the Chartered Accountant's certificate as mandated. - The AO is directed to provide the assessee with a fair opportunity to present its case and to re-evaluate the issue based on the Supreme Court's directive and the Tribunal s instructions.
Issues:
- Disallowance of unpaid Electricity Duty under section 43B of the Income Tax Act, 1961 for Assessment Year 1996-97. - Interpretation of the applicability of section 43B to Electricity Duty. - Consideration of Hon'ble Supreme Court's judgment on the issue. Detailed Analysis: Issue 1: Disallowance of unpaid Electricity Duty under section 43B The appeal pertains to the disallowance of unpaid Electricity Duty under section 43B of the Income Tax Act, 1961 for the Assessment Year 1996-97. The Assessing Officer (AO) had disallowed the claim of the assessee regarding the non-applicability of section 43B to Electricity Duty. The Commissioner of Income Tax (Appeals) (CIT(A)) initially allowed the matter and deleted the additions. However, the Tribunal, in a subsequent order, confirmed the additions, citing the Hon'ble Gujarat High Court judgment in the case of Ahmedabad Electricity Co. The AO then added the unpaid Electricity Duty and Lease Rent amounts, leading to the current appeal. Issue 2: Interpretation of the applicability of section 43B to Electricity Duty The key contention was whether Electricity Duty falls within the purview of section 43B of the IT Act. The assessee argued that the Electricity Duty was adjusted before the end of the relevant year and should be allowed on a payment basis. The Counsel for the assessee highlighted that the Electricity Duty and Tax on the sale of electricity were adjusted against Government subsidy, as evidenced by official correspondence. The Tribunal noted the assessee's compliance with the Supreme Court's directive to produce a Chartered Accountant's certificate, which validated the adjustment of Electricity Duty against the subsidy as a valid payment under section 43B. Issue 3: Consideration of Hon'ble Supreme Court's judgment The Tribunal observed that the Hon'ble Supreme Court, in a judgment related to the Assessment Year 1990-91, had held that the assessee is entitled to the benefit of section 43B of the Act. The Supreme Court's order dated 12-09-2012 addressed the issue of unpaid electricity duty and emphasized the requirement for a Chartered Accountant's certificate. The Tribunal found that the AO and the CIT(A) failed to consider the Supreme Court's directive and the Tribunal's instructions, leading to an improper assessment. Consequently, the Tribunal set aside the CIT(A)'s decision, restoring the matter to the AO for fresh adjudication in light of the Supreme Court's order and the evidence presented by the assessee. In conclusion, the Tribunal allowed the appeal for statistical purposes, directing the AO to provide a fair opportunity for the assessee to present its case and re-evaluate the issue based on the Supreme Court's directive and the Tribunal's instructions.
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