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2008 (2) TMI 571 - HC - Income TaxBusiness Expenditure- The Assessing Officer made adjustments and issued an intimation under section 143(1) (a) of the Act in relation to various items disallowable under section 43B of the Act, one of them being Rs. 41,65,12,181, being the amount of electricity duty payable to the State Government by the assessee on sale of electric power. The assessee moved an application under section 154 of the Act on September 30, 1992, relying on a letter issued by the Under Secretary to the Government of India, Energy and Petrochemicals Department to contend that the electricity duty payable had been adjusted against other amounts receivable from the Government and, hence, the adjustment made under section 143(1)(a) of the Act and the levy of additional tax under section143(1A) of the Act was not warranted. The assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals) but did not succeed. Tribunal passed the order in favour of assessee. Held that- On the basis of the decision of Ahmedabad Electricity Company Ltd. v ITO where in it is held that electricity duty on sale of electricity has to be considered as an inadmissible item under section 43B of the Act, thus it is in favour of revenue and against the assessee.
Issues Involved:
Interpretation of section 43B of the Income-tax Act regarding liabilities on electricity duty tax payable to the Government on sale of electricity. Detailed Analysis: 1. Issue: Interpretation of section 43B of the Income-tax Act. - The Income-tax Appellate Tribunal referred a question regarding the admissibility of liabilities on electricity duty tax under section 43B of the Act. - The Assessing Officer disallowed Rs. 41,65,12,181 as electricity duty payable by the assessee on the sale of electric power. - The assessee claimed the duty had been adjusted against other amounts receivable from the Government, supported by a letter from the Under Secretary to the Government of India. - The Assessing Officer rejected the claim, leading to appeals by the assessee. 2. Issue: Application of previous Tribunal order. - The assessee relied on a previous Tribunal order in a similar case where the Tribunal held that the electricity duty amount cannot be considered inadmissible and directed the Assessing Officer to delete the adjusted amount. - The Revenue argued that a subsequent High Court decision reversed the Tribunal's decision, applying section 43B to duty payable to the Government. 3. Issue: Applicability of section 143(1)(a) of the Act. - The assessee cited a Supreme Court decision to argue that the additional tax levied was in the nature of a penalty and should not be applicable in this case. - The Revenue contended that the Supreme Court's decision was based on a retrospective amendment, not applicable in this scenario. 4. Issue: Tribunal's finding and interpretation. - The Tribunal did not provide an independent opinion on the applicability of section 43B to electricity duty payable. - The Tribunal's decision did not address the debatability of the adjustment issue raised by the assessee. - The High Court upheld the Revenue's stance based on its previous decision regarding the inadmissibility of electricity duty under section 43B. 5. Conclusion: - The High Court ruled in favor of the Revenue, holding that electricity duty on the sale of electricity is an inadmissible item under section 43B of the Act. - The Court left open the opportunity for parties to raise remaining contentions before the Tribunal. - The reference was disposed of with no order as to costs.
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