DCIT, Circle-3(2), Hyd, Hyderabad V. Southern Power Distribution Co. of Telangana Ltd., Hyd, Hyderabad

ITA 1060/HYD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98645 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 13-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAN SINGH SINGHANIA
• Assessee Lawyers: M CHANDRAMOLESWARA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P.MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1060/HYD/2015 (ASSESSMENT YEAR 2006-07 DY. COMMISSIONER OF INCOME - TAX, CIRCLE 3(2), HYDERABAD V/S SOUTHERN POWER DISTRIBUTION CO. OF TELANGANA LTD., HYDERABAD (FORMERLY CENTRAL POWER DISTRIBUTION CO. OF AP LTD.), HYDERABAD (PAN - AACCC 0125 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MOHAN SINGH SINGHANIA CIT - DR RESPONDENT BY : SHRI M.CHANDRAMOLESWARA RAO DATE OF HEARING 29.10.2015 DATE OF PRONOUNCEMENT 04.11.2015 O R D E R PER SMT. P. MADHAVI DEVI, JUDICIAL MEMBER : THIS IS REVENUES APPEAL FOR ASSESSMENT YEAR 2006 -07. IN THIS APPEAL, REVENUE IS AGGRIEVED BY THE ORDER OF T HE CIT(A) IN DELETING THE ADDITION OF RS.70 LAKHS MADE BY THE AS SESSING OFFICER TOWARDS UNDERSTATEMENT OF REVENUE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY, WHICH IS ENGAGED IN THE DISTRIBUTION OF POWER, FILE D ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 30.11.2006 DECLA RING INCOME AT NIL. DURING THE ASSESSMENT PROCEEDINGS UNDER S.143 (3) OF THE INCOME TAX ACT, 1961, THE ASSESSING OFFICER OBSERVE D FROM THE C & AG REPORT APPEARING AT PAGE 79 OF THE ANNUAL REPOR T FOR FINANCIAL YEAR 2005-06 THAT THERE IS UNDERSTATEMENT OF REVENU E FROM SALE OF POWER AT RS.70 LAKHS. HE OBSERVED THAT ACCORDING T O C & AG, AS PER THE DIRECTION OF ANDHRA PRADESH ELECTRICITY REGULAT ORY ITA NO.1060/HYD/2015 SOUTHERN POWER DISTRIBUTION CO. OF TELANGANA LTD., (FORMERLY CENTRAL POWER DISTRIBUTION CO. OF AP LTD.), HYDERABAD 2 COMMISSION(APERC), THE SANJAY RURAL ELECTRICITY SUP PLY CO-OPERATIVE SOCIETY LTD.(RESCO), WAS ELIGIBLE FOR SUBSIDIZED T ARIFF OF RS.0.40 PER UNIT UPTO THE QUOTA OF ENERGY FIXED (224.14 MU FOR THE FINANCIAL YEAR 2005-06) AND THEN, ANY EXCESS DRAWAL OF ENERGY OVER AND ABOVE THIS QUOTA SHALL BE CHARGED AT THE EXCESS DRAWAL RATE OF POWER PURCHASE (BULK SUPPLY TARIFF) APPLICABLE TO THE COMPANY FOR THIS YEAR. HE OBSERVED THAT DURING THE FINANCIAL YEAR, THE OPERAT IONS OF RESCO HAVE BEEN TAKEN OVER BY THE ASSESSEE HEREIN WITH EFFECT FROM 1.12.2005 AND DURING THE BILLING MONTHS FROM APRIL 2005 TO NO VEMBER, 2005, THE ASSESSEE HAD SUPPLIED 153.47 MU OF ENERGY TO RESCO. HE FURTHER OBSERVED THAT AS PER THE QUOTA, RESCO WAS ELIGIBLE FOR SUBSIDIZED TARIFF UPTO 149.43 MU FOR EIGHT MONTHS. THEREFORE, THE ASS ESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE COMPANY HA S SOLD EXCESS ENERGY OF 4.04 MU AT SUBSIDIZED RATE INSTEAD OF EX CESS DRAWAL RATE WHICH HAS RESULTED IN THE UNDERSTATEMENT OF INCOME TO THE TUNE OF RS.70 LAKHS. HE ACCORDINGLY BROUGHT IT TO TAX. 3. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A), WHO ALLOWED THE SAME, AND HENCE, AGGRIEVED BY THE R ELIEF GIVEN BY THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 4. WHILE THE LEARNED DEPARTMENTAL REPRESENTATIVE S UPPORTED THE ORDER OF THE ASSESSING OFFICER, THE LEARNED COU NSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). LEARNED COUNSEL FURTHER DREW OUR ATTENTION TO THE ORDER OF THE APERC DATED 21.9.2005 IN OP NO.15 OF 2005, WHICH HAS DIRECTED THE RESCO TO PURCHASE POWE R FROM THE ASSESSEE AT 40 PAISE PER UNIT FOR AND UPTO THE QUA NTITY OF 224.14 MU DURING THE YEAR 2005-06 AND ANY EXCESS DRAWAL OF Q UANTITY OVER AND ABOVE THE SAID 224.14 MU SHALL HAVE TO BE PAID FOR BY THE RESCO AT THE EXCESS DRAWAL RATE OF POWER PURCHASED, AND THE ASSESSEE WAS ALSO ITA NO.1060/HYD/2015 SOUTHERN POWER DISTRIBUTION CO. OF TELANGANA LTD., (FORMERLY CENTRAL POWER DISTRIBUTION CO. OF AP LTD.), HYDERABAD 3 DIRECTED TO ADJUST THE MONTHLY BILLS RAISED ON RESC O FOR ENERGY SUPPLIED BY IT WITH THE AMOUNT OF THE SUBSIDY AWAR DED TO RESCO BY THE GOVERNMENT OF AP. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE CIT(A) HAS TA KEN INTO CONSIDERATION, THE ORDER OF APERC FIXING THE QUANTI TY FOR WHICH SUBSIDIZED RATE OF TARIFF IS APPLICABLE. IN PARA 4 OF THE IMPUGNED APPEAL ORDER, THE CIT(A) HAS GIVEN HER FINDING, WHI CH READS AS UNDER- 4. DURING THE COURSE OF APPEAL PROCEEDINGS, IT WAS SUBMITTED BY THE AR THAT THE QUOTA FOR RESCO DURING T HE FY 2005-06 WAS 224.14 MEGA UNITS (MU), AND WHAT WAS CONSUMED BY RESCO 153.47 MU WAS MUCH LESS THAN THE QUOTA ALLOWED AT SUBSIDIZED RATE. THE APPELLANT ALSO ENCLOSED COPIES OF AP REGULATORY ORDER DT. 21.09.20 05 FIXING THE QUOTA AT 224.14 MU AT TARIFF OF 45 PAISE /UNIT. ANY CONSUMPTION BEYOND 224.14 MU HAS TO BE BILLED @ BULK SUPPLY TARIFF WITHOUT ANY SUBSIDY. SINCE THE RES CO WAS TAKEN OVER BY SOUTHERN POWER DISTRIBUTION CO. F ROM 01-12-2005, THE AO NOTIONALLY COMPUTED THE PROPORTIONATE ALLOCATION FOR THE PERIOD APRIL TO NO V. 2005 @ 149.143 MU. THE QUOTA ALLOWED BY CENTRAL POWER DISTRIBUTION CO. OF AP LTD. AT 224.14 MU IS FOR THE ENTIRE YEAR 2005-06. THERE IS NO MONTH WISE ALLOCATION AS PER APARC ORDER. THERE IS NO BASIS OR REASON TO PRESUME THAT THE QUOTA ALLOWED BY THE APARC HAS TO BE PROPORTIONA TELY ALLOCATED FOR THE PERIOD FIST 8 MONTHS APRIL TO NOV , 2005. THEREFORE, I CONSIDER THERE IS NO MERIT IN MAKING N OTIONAL ADDITION OF RS.70 LAKHS TOWARDS EXCESS ENERGY CONSUM ED BY RESCO AGAINST ACTUAL POSITION THAT THE CONSUMPTIO N OF ENERGY BY RESCO WAS WITHIN THE QUOTA ALLOTTED. AS RIGHTLY HELD BY THE CIT(A), THE QUOTA HAS BEEN F IXED FOR AN YEAR, AND NOT PROPORTIONATELY FROM MONTH TO MONTH. THE AL LOCATION OF SUBSIDIZED QUOTA BY THE ASSESSING OFFICER FOR THE E IGHT MONTHS IS THEREFORE, WITHOUT ANY BASIS. AS THE ASSESSEE HAS N OT CROSSED THE QUOTA FIXED FOR THE ENTIRE YEAR OF 2005-06, WE DO N OT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ITA NO.1060/HYD/2015 SOUTHERN POWER DISTRIBUTION CO. OF TELANGANA LTD., (FORMERLY CENTRAL POWER DISTRIBUTION CO. OF AP LTD.), HYDERABAD 4 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE COURT ON 4 TH NOVEMBER, 2015 SD/- SD/- (S.RIFAUR RAHAMAN) (P.MADHAVI DEVI) ACCOUNTANT MEMBER. JUDICIAL MEMBER DT/- 4 TH NOVEMBER, 2015 COPY FORWARDED TO: 1. SOUTHERN POWER DISTRIBUTION CO. OF TELANGANA LTD., (FORMERLY CENTRAL POWER DISTRIBUTION CO. OF AP LTD.), 11-4-66 0 SINGARENI BHAVAN, RED HILLS, HYDERABAD 2. DY. COMMISSIONER OF INCOME - TAX CIRCLE 3(2), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) I, HYDERABAD 4. COMMISSIONER OF INCOME - TAX I, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.