BANNARI AMMAN SUGARS LIMITED,COIMBATORE V. ACIT CENTRAL CIRCLE 3(2), CHENNAI

ITA 3309/CHNY/2024

AI Insights

The case involves M/s Bannari Amman Sugars Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)-20, Chennai, concerning the disallowance of self-generation tax on electricity under Section 43B for the Assessment Year 2017-18. The tax in question was imposed by the Tamil Nadu State Electricity Board (TNEB) under the Tamil Nadu Tax on Consumption or Sale of Electricity Act, 2005. The primary contention was whether the self-generation tax, which remained unpaid at the year-end, should be disallowed under Section 43B, which pertains to the disallowance of certain unpaid taxes, duties, cesses, or fees. The Tribunal upheld the lower authorities' decision that the tax was statutory and thus disallowable under Section 43B, but allowed the deduction when the tax is paid.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314503 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, Tamil Nadu Tax on consumption or sale of Electricity Act, 2005, Constitution of India
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS LD
• Assessee Lawyers: R. VIJAYARAGHAVAN LD
• Section: 143(3); 43B

Judgement Text

" आयकर अपीलीय अिधकरण “बी” ा यपीठ चे\u0012ई म\u0015। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHENNAI मा ननीय \u0018ी एबी टी. वक , ा ियक सद एवं मा ननीय \u0018ी मनोज क ुमा र अ$वा ल ,लेखा सद क े सम&। BEFORE HON’BLE SHRI ABY T. VARKEY, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं ./ ITA No.3309/Chny/2024 (िनधा 'रण वष' / Assessment Year: 2017-18) M/s Bannari Amman Sugars Ltd. 1212, Trichy Road Coimbatore – 641 018 बना म/ Vs. ACIT-Circle 3(2) Chennai \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No. AAACB-8933-G (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ की ओर से/ Appellant by : Shri R. Vijayaraghavan (Advocate) – Ld. AR थ की ओर से/Respondent by : Shri Shiva Srinivas (CIT) – Ld. DR सुनवाई की तारीख/Date of Hearing : 07-05-2025 घोषणा की तारीख /Date of Pronouncement : 07-05-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of the order of learned Commissioner of Income Tax (Appeals)-20, Chennai [CIT(A)] dated 30.10.2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 29.06.2021. The sole grievance of the assessee is disallowance of electricity tax on self-generation of power u/s 43B since the same remained unpaid at year-end. The Ld. AR advanced arguments and supported the case of the assessee whereas Ld. CIT-DR supported the 2 orders of lower authorities. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. 2. The assessee, inter-alia, is engaged in distribution of electric power through bagasse-based cogeneration units. The power is captively consumed by the assessee. For doing so, the assessee was required to pay an amount of Rs.175.65 Lacs towards self-generation tax to Tamil Nadu State Electricity Board (TNEB). The same was in the nature of self- generation tax on electricity consumed from captive power generating plant. The same remain unpaid and accordingly, Ld. AO proceeded to disallow the same u/s 43B. The assessee contended that the same being in the nature of energy charges would not be covered u/s 43B which would apply only for payment which are in the nature of tax, duty, cess or fees. However, Ld. AO observed that self-generation tax was collected by TNEB as per the provisions of Tamil Nadu Tax on consumption or sale of Electricity Act, 2005. As per Article 265 of the Constitution of India, no tax could be levied except by the authority of law. Thus, each tax levied or collected was to be backed up by accompanying law, passed either by the Parliament or the State Legislature. Each state regulates power generation and distribution within the state and the same is backed by state laws, Therefore, the charge being in the nature of tax would be disallowable u/s 43B. Accordingly, the impugned amount was disallowed u/s 43B. The Ld. CIT(A), taking similar view as in first appeal for AY 2016-17, confirmed the action of Ld. AO against which the assessee is in further appeal before us. 3. The Ld. AR vehemently argued that the tax would be in the nature of energy charges and therefore, it is not in the nature of statutory duty, tax or cess defined u/s 43B of the Act. However, upon perusal of Sec. 3 3(1)(b) of Tamil Nadu Tax on consumption or sale of Electricity Act, 2005, it could be seen that every licensee and every person other than licensee shall pay every month to the Government in the prescribed manner, a tax on the electricity sold or consumed during the previous month at the specified rates. The rates for captive generating plants have been specified in clause (b) of sub-section (1) of Sec.3. The Explanation to Sec. 6(1) provide that electricity tax so recoverable shall not be deemed to the part of the consumption charges. This being so, the adjudication of lower authority could not be faulted with. The impugned payment being in the nature of statutory tax would be hit by the provisions of Sec. 43B. The alternative contention of Ld. AR that the same be allowed to the assessee on payment basis find our concurrence. The deduction of the same would be allowable in accordance with law whenever the same is paid by the assessee. The appeal is allowed to that extent only. 4. The appeal stands partly allowed to the extent as indicated in the order. Order pronounced on 07th May, 2025. Sd/- Sd/- (ABY T. VARKEY) (MANOJ KUMAR AGGARWAL) ा ियक सद /JUDICIAL MEMBER लेखा सद / ACCOUNTANT MEMBER चे2ई Chennai; िदनांक Dated : 07-05-2025 DS आदेश की Fितिलिप अ$ेिषत / Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. थ /Respondent 3. आयकरआयु;/CIT Madurai/Chennai/Coimbatore 4. िवभागीय ितिनिध/DR 5. गाड@फाईल/GF "