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2021 (4) TMI 1015 - AT - Income TaxAddition as additional income of the Appellant under the normal provision of the income Tax Act and also under section 115JB - interest receivable on delayed payment - whether no addition could have been made u/s 115JB when the accounts have been audited and approved in the AGM? - HELD THAT - Interest on delayed payment payable by HPL to HPLCL has been offered to tax under the head other income . This amount is reflected in the annual accounts of the assessee under the head miscellaneous income . CIT(A) has, in our opinion, committed a mistake on fact by not considering the fact that the assessee had already offered the said interest income to tax under the head other income . In this case an amount of ₹ 19.71 crores was interest receivable on delayed payment by HPL and an amount of ₹ 4.20 crores was interest payable to HPL on excess corporate tax collected and both were not part of facilitation charges. The reconciliation statement was for the facilitation charges. Interest does not form part of facilitation charge. The interest transactions were duly accounted for by the assessee. As per the audited accounts of HPLCL, income from facilitation charges was disclosed as ₹ 137,86,20,277/-. ₹ 4,11,39,797/- was an amount of debit notes on fuel savings which was not considered by HPL, while deducted TDS. Further, HPLCL had to pay HPL corporate tax to the tune of ₹ 38.67 crores. This was considered by HPL in the next phase of 2009. Thus these factors are taken into consideration by the ld. CIT(A). Enhancing the income of the assessee by an amount of ₹ 11.40 crores both are normal provisions as well as u/s 115JB of the Act is without proper analysis of the facts and figures is wrong. Hence, we delete this addition to the extent confirmed by the ld. CIT(A). Disallowance of prior period expenses - Addition on reimbursement of expenses paid to Nuovo Pignone on the ground that the invoices do not pertain to March, 2006 and they are prior period expenses - HELD THAT - We find that certain invoices were raised on the assessee during 06.03.2006 and 16.03.2006. The issue is whether these are prior period expenditure. The assessee is a public sector undertaking. Its accounts are audited by the Comptroller and Auditor General (hereinafter C AG ). Prior period expenditure is normally classified as Prior Period by both the statutory debtor and the C AG. The assessee submits that these expenditures crystallized during the current assessment year. This fact has been accepted by both the statutory auditor and the C AG. Keeping the view taken by the statutory auditor and C AG we hold that this expenditure cannot be classified as prior period expenditure. The bills of March 2006 were received and approved in the next financial year. Thus the disallowance as confirmed by the ld. CIT(A) is hereby deleted and this ground is allowed. Considering the interest income as income from business and profession instead of income from other sources - HELD THAT - CIT(A) has followed the decision of his predecessor for the AY 2006-07 on identical facts and held that the income in question is assessable under the head income from business and not under the head income from other sources . On a query from the Bench the ld. Counsel for the assessee submitted that, this decision of the ld. CIT(A) on this issue for the AY 2006-07 was accepted by the Revenue and no further appeal was filed before the Tribunal. The ld. D/R could not controvert these submissions of the assessee. Disallowance u/s 40(a)(i) - HELD THAT - The undisputed fact is that the payment in question is reimbursement of expenditure. The ld. CIT(A) followed the propositions of law laid down by the jurisdictional High Court on this issue and held that no tax needed to be deducted at source, when it is a reimbursement of expenditure. Hence, we find no infirmity in the same. Estimation of income - income from trading - CIT(A) has followed the order of his predecessor for the AY 2006-07 on identical facts and held that the action of the AO in estimating the profit as earning from credit activity is factually incorrect - HELD THAT - CIT(A) has verified the copies of the electric bills raised by West Bengal State Electricity Board and factually came to a conclusion that these bills were raised only on HPL. These factual findings could not be controverted by the ld. D/R. It is also submitted before us that the Revenue had accepted this particular finding of the ld. CIT(A) for the AY 2006-07 and has not preferred an appeal before the ITAT. Under these circumstances that finding of fact has become final. The ld. CIT(A) has in the impugned order followed the order and propositions laid down by his predecessor for the AY 2006-07. We find no infirmity in the same. Hence, we uphold the order of the ld. CIT(A) and dismiss ground no. 4 of the Revenue.
Issues Involved:
1. Addition of ?11,40,60,203/- as additional income under normal provisions and section 115JB. 2. Disallowance of ?23,57,810/- as prior period expenses. 3. Classification of interest income as "income from business and profession" versus "income from other sources." 4. Allowance of ?23,15,00,000/- towards difference in facilitation charges. 5. Allowance of ?13,05,038/- out of ?36,62,848/- under section 40(a)(i). 6. Allowance of ?1,54,61,748/- by considering income did not arise from trading of power. Detailed Analysis: 1. Addition of ?11,40,60,203/- as Additional Income: The CIT(A) upheld the addition of ?11,40,60,203/- out of ?34,55,60,203/- as additional income under both normal provisions and section 115JB. The assessee declared facilitation charges of ?1,37,86,20,277/- from HPL, while TDS certificates indicated ?1,72,41,80,480/-, showing a difference of ?34,55,60,203/-. The CIT(A) noted the reconciliation submitted by the assessee but found discrepancies in the reconciliation statement and the actual figures, leading to the partial addition. The Tribunal found that the CIT(A) erred in not considering that the interest on delayed payments was already offered to tax under "other income." Therefore, the Tribunal deleted the addition of ?11,40,60,203/- confirmed by the CIT(A). 2. Disallowance of ?23,57,810/- as Prior Period Expenses: The CIT(A) confirmed the disallowance of ?23,57,810/- paid to Nuovo Pignone, considering it as prior period expenses. The Tribunal noted that the assessee's liability for these expenses crystallized during AY 2007-08, and the invoices were received and approved in the next financial year. Given that the statutory auditor and CAG accepted these expenditures as current year expenses, the Tribunal deleted the disallowance, allowing the expenses for AY 2007-08. 3. Classification of Interest Income: The CIT(A) classified the interest income of ?3,60,90,793/- as "income from business and profession" instead of "income from other sources," following the decision for AY 2006-07, which was accepted by the Revenue. The Tribunal upheld this classification, as the Revenue did not appeal against this finding for the previous year. 4. Allowance of ?23,15,00,000/- towards Facilitation Charges: The CIT(A) allowed ?23,15,00,000/- out of ?34,55,60,203/- towards the difference in facilitation charges shown in the income tax return and TDS certificate. The Tribunal, consistent with its decision on the addition of ?11,40,60,203/-, dismissed the Revenue's ground on this issue, upholding the CIT(A)'s allowance. 5. Allowance of ?13,05,038/- under Section 40(a)(i): The CIT(A) deleted the disallowance of ?13,05,038/- under section 40(a)(i), as the payment was a reimbursement of expenses, which does not require TDS deduction. The Tribunal found no infirmity in this decision, dismissing the Revenue's ground. 6. Allowance of ?1,54,61,748/- Considering Income Not from Trading of Power: The CIT(A) held that the income of ?1,54,61,748/- did not arise from trading of power, following the order for AY 2006-07. The Tribunal upheld this finding, noting that the Revenue accepted the CIT(A)'s decision for the previous year and did not appeal further. Conclusion: The Tribunal allowed the assessee's appeal in part, deleting the additions and disallowances confirmed by the CIT(A), and dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on classification of income and allowances.
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