The ACIT, Circle -3(2), Hyderabad V. M/s. Sri Indra Power Energies Ltd, Hyderabad

ITA 1148/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59106 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 15-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: A V RAGHURAM

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER. ITA NO.1148/HYD/2011 (ASSESSMENT YEAR 2005-06) ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 3(2), HYDERABAD V/S. M/S. SRI INDRA POWER EN ER GIES LTD., HYDERABAD (PAN-AAFCS 6524 H ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V. SRINIVAS RESPONDENT BY : SHRI A.V.RAGHURAM DATE OF HEARING 10. 1.2012 DATE OF PRONOUNCEMENT 10.1.2012 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-VI. HYDERABAD D ATED 31.3.2011, FOR THE ASSESSMENT YEAR 2005-06. 2. EFFECTIVE GROUNDS OF THE REVENUE IN THIS APPEAL READ AS FOLLOWS- 1. THE CIT(A) ERRED ON FACTS AND IN LAW. 2. THE LEARNED CIT(A) OUGHT TO HAVE CONFIRMED THE A DDITION MADE ON THE DIFFERENCE OF RATE PER UNIT OF SALE OF POWER TO KPTCL. 3. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N MADE AS THE INCOM E ACCRUED OR ARISED SHOULD BE BROUGHT TO TAX UNDER ME RCANTILE SYSTEM OF ACCOUNTING. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E, A COMPANY ENGAGED IN THE BUSINESS OF GENERATION AND SALE OF P OWER, HAD SOLD POWER OF 1,29,90,959 UNITS TO KARNATAKA POWER TRANSMISSION C ORPORATION LTD. (KPTCL) RAISING BILLS (INVOICES) @ 2.80 PAISE PER U NIT. THE ASSESSING OFFICER ITA NO.278/HYD/2007 M/S. SRI INDRA POWER ENERGIES LTD., HYDERABAD 2 NOTICED FROM THE COPIES OF THE BILLS AND ALSO THE P OWER PURCHASE AGREEMENT(PPA), THAT THE ASSESSEE HAD ENTERED INT O POWER PURCHASE AGREEMENT IN THE YEAR 2001, AND THE PRICE FOR THE P URCHASE OF POWER HAD BEEN FIXED AT RS.2.25 PAISE PER UNIT, TAKING 1994-9 5 AS THE BASE YEAR, WITH ESCALATION OF 5% EVERY YEAR ON THE PREVIOUS YEARS PRICE, WHICH WAS EQUIVALENT TO RS.3.84 PAISE PER UNIT FOR THE PREVIO US YEAR UNDER CONSIDERATION. WHEN THIS WAS POINTED OUT, THE ASSE SSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE KPTCL DID NOT ADHERE TO THE PPA AND THEREFORE, THE ASSESSEE BEFORE COMMENCING THE GENER ATION OF POWER, HAD APPROACHED THE COURT AND THE MATTER WAS YET TO BE D ECIDED. IN THIS VIEW OF THE MATTER, DESPITE CLAIMING HIGHER PRICE OF RS.3.8 4 PER UNIT, THE ASSESSEE DECIDED TO SUPPLY THE POWER AT THE RATE OF RS.2.80 PER UNIT FOR THE TIME BEING AND THE BILLS WERE RAISED AND ACCOUNTED FOR A T THE SAID RATE ONLY. IT WAS ALSO CONTENDED THAT IN VIEW OF THE ACCOUNTING S TANDARD-9, THERE IS NO CERTAINTY OF THE SALE PRICE OF RS.3.84 PER UNIT AND HENCE THERE IS NO SCOPE TO RECOGNIZE THE SALE PRICE AT THE SAID RATE. THE ASS ESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE, AND CONSEQUENTLY, ADOPTING THE RATE OF RS.3.84 PER UNIT, IN RELATION TO THE PO WER SUPPLIED BY THE ASSESSEE, MADE AN ADDITION OF RS.1,33,96,980. ON A PPEAL, THE CIT(A) DELETED THE SAID ADDITION MADE BY THE ASSESSING OFF ICER, RELYING ON THE DECISIONS OF THE APEX COURT IN THE CASE OF CIT V/S. HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD. (161 ITR 524) AND CIT V S. NANDALAL MOHANLAL (196 TAXMAN 152); AND OF THE ALLAHABAD HIGH COURT I N CIT V/S. GOVIND PRASAD(171 ITR 417); OF THE SUPREME COURT IN THE CA SE OF E.D.SASOON & CO. V/S. CIT (26 ITR 27) AND OF THE DELHI HIGH COURT IN CIT V/S. SARVANTRA ROAD RUNNERS P. LTD.(301 ITR 443). HENCE, REVENUE IS I N APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT WHIL E THE ISSUE INVOLVED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE DECISIONS OF THIS TRIBUNAL DATED 25.10.2011 IN ACIT V/S. M/S. SARO POWER & INFRASTR UCTURE LTD. HYDERABAD ITA NO.278/HYD/2007 M/S. SRI INDRA POWER ENERGIES LTD., HYDERABAD 3 (ITA NO.695/HYD/2011 FOR ASSESSMENT YEAR 2007-08); AND DATED 31.1.2011 IN DY. CIT V/S. M/S. SRI BALAJI BIO MASS POWER P. LTD. (ITA 1748/HYD/2008 FOR ASSESSMENT YEAR 2005-06). CONSI STENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN SIMILAR MATTERS ON THIS VE RY ISSUE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) IN DELETING TH E ADDITION MADE BY THE ASSESSING OFFICER APPLYING THE RATE OF RS.3.84 PER UNIT OF POWER SUPPLIED TO KPTCL. WE, HOWEVER, HOLD THAT ANY DIFFERENTIAL AMO UNT THAT THE ASSESSEE MAY RECEIVE IN FUTURE, IN RELATION TO THE POWER SUP PLIED DURING THE YEAR UNDER CONSIDERATION, SHALL BE BROUGHT TO TAX ON REC EIPT BASIS, IN THE RELEVANT YEAR. WE ACCORDINGLY FIND NO MERIT IN THE GROUNDS OF THE REVENUE IN THIS APPEAL, WHICH ARE ACCORDINGLY REJECTED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 10 TH JANUARY, 2012 SD/- SD/- (ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DATED 10 TH JANUARY, 2012 COPY FORWARDED TO: 1. M/S. SRI INDRA POWER ENERGIES LTD., G - 1, VIJAYA RESIDENCY, ROAD NO.14, BANJARA HILLS, HYDERABAD 2. ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 3(2), HYDERABAD 3. CIT (A) - VI , HYDERABAD. 4. COMMISSIONER OF INCOME - TAX V, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. B.V.S