Paschim Gujarat Vij Co. Ltd., Baroda V. The ACIT, Circle-2(1)(2), Baroda

ITA 1343/AHD/2018

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 6108 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-10-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 23-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Additional depreciation; Period of limitation; Set aside
• Section: 148; 263; 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Paschim Gujarat Vij Company Ltd., Sardar Patel Vidyut Bhavan, Race Course Circle, Baroda-390007 PAN: AADCP1453C (Appellant) Vs The ACIT, Circle-2(1)(2), Baroda (Respondent) Assessee Represented: Shri M.K. Patel, A.R. Revenue Represented: Shri Kamlesh Makwana, CIT-DR Date of hearing : 19-10-2023 Date of pronouncement : 27-10-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the Revision order dated 23.03.2018 passed by the Principal Commissioner of Income Tax-2, arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2013-14. ITA No. 1343/Ahd/2018 Assessment Year 2013-14 I.T.A No. 1343/Ahd/2018 A.Y. 2013-14 Page No Paschim Gujarat Vij Co. Ltd. vs. ACIT 2 2. The brief facts of the case is that the assessee is a Company promoted by Govt. of Gujarat to carry out at distribution of electricity. For the Assessment Year 2013-14, the assessee filed its e-return on 29.09.2013 declaring total loss of Rs. 143,63,67521/- under the normal provisions, and book profit u/s. 115JB of Rs. (-) 45,13,365/-. The return was selected for scrutiny and regular assessment u/s. 143(3) for finalized on 09-03-2016 determining the income under the normal provisions at (-) 63,68,37,771/- by making various additions including addition on account of grant, subsidy and consumers’ contribution amounting to Rs. 76,83,01,750/-. 2.1. On verification of the above assessment order by Ld. PCIT, it was found that the A.O. has not considered the addition on account of grant, subsidy and consumers’ contribution while computing the book profit u/s. 115JB of the Act. Thus the assessment order passed by the Assessing Officer is found to be erroneous and prejudicial to the interest of Revenue. Therefore a show cause notice dated 07-03-2018 was issued to the assessee asking the assessee to show cause why order u/s. 263 be not passed and make aforesaid addition to book profit u/s. 115JB to the assessee’s income. 2.2. In reply, the assessee submitted that there was no similar addition made by the Assessing Officer in the earlier assessment year. For the first time, for the assessment year 2014-15 was made by the Assessing Officer, which was deleted by the Ld. CIT(A). Therefore there is no error in the assessment order passed by the I.T.A No. 1343/Ahd/2018 A.Y. 2013-14 Page No Paschim Gujarat Vij Co. Ltd. vs. ACIT 3 A.O. and there is no prejudicial to the interest of Revenue and the Revision proceedings is liable to be dropped. 2.3. The Ld. PCIT considered the above submissions and however set aside the issue to the file of Assessing Officer with a direction to conduct necessary enquiries and verification for making addition towards grant, subsidy and consumers’ contribution to the book profit u/s. 115JB of the Act, by giving adequate opportunity to the assessee to represent its case. 3. Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal: 1.0 The learned Commissioner of Income Tax-2. Baroda has erred in law and on facts in holding that the assessment order dated 09-03-2016 passed under section 143(3) of the Income Tax Act, 1961 is erroneous and prejudicial to the interest of revenue and thereby erred in invoking the provisions of section 263 of the IT Act. 2.0 The learned Commissioner of Income Tax-2, Baroda has erred in law and on facts in holding that the additions of 276,83,01,750/- made to the total income under normal provisions on account of Capital Grants, Subsidies and Consumers' Contribution were also required to be made to the Book Profits computed under section 115JB of the IT Act as made in other years. The learned Commissioner of Income Tax-2, Baroda has thereby directed the Assessing Officer to make such additions to the Book Profits. 2.1 The learned Commissioner of Income Tax-2, Baroda ought to have appreciated that the additions to the Book Profits were made for the first time in the Asst. Year 2014-15. For the Asst. Years 2010-11 and 2012-13, notices under section 148 of the Act were issued for re-opening of the assessment to make such additions. However, the Hon'ble Gujarat High Court has quashed the proceedings vide its Order dated 7-03-2018. 2.2 The learned Commissioner of Income Tax-2, Baroda further ought to have appreciated that the additions made in the Asst. Year 2014-15 to the Book Profits have also been deleted by the appellate authorities. 2.3 The appellant had brought the fact to the learned Commissioner's notice vide its letter dated 20-03-2018 which has also been reproduced in the impugned order. I.T.A No. 1343/Ahd/2018 A.Y. 2013-14 Page No Paschim Gujarat Vij Co. Ltd. vs. ACIT 4 3.0 The learned Commissioner of Income Tax-2, Baroda erred in law and on facts has set aside the assessment order passed on 09-03-2016 under section 143(3) of the IT Act. 4.0 The above grounds of appeal are without prejudice to each other. 4. At the outset, Ld. Counsel Shri M.K. Patel appearing for the assessee submitted on the very same issue of Revision u/s. 263 of the Act. Ld. PCIT-2 set aside the assessment to the A.O. to recompute the book profit including the capital grant, subsidy and consumers’ contribution u/s. 115JB of the Act, in the case of Madhya Gujarat Vij Company Ltd. for relating to the Assessment Year 2008-09. The very same Bench of this Tribunal after considering the elaborately quashed the said Revision order. Similarly, following the same ratio, the present Revision order is liable to be quashed, as identical facts are involved in the present case also. 5. Per contra, the Ld. CIT-DR, Shri Kamlesh Makwana appearing for the Revenue supported the order passed by the Ld. PCIT and therefore requested to uphold the same. 6. We have given our thoughtful consideration and perused the materials available on record. As rightly said by the Ld. Counsel for the assessee, identical issue was dealt by the very same Bench in the case of Madhya Gujarat Vij Company Ltd. in ITA No. 1038/Ahd/2018 dated 13.04.2022 observing as follows: “....10. We have given our thoughtful consideration and we would like to address additional grounds raised by the assessee as the same goes to the maintainability of the impugned revision order passed u/s.263. The assessee filed its return of income for the Asst.Year 2008-09 on 30.9.2008 declaring NIL income and claiming current year’s loss of Rs.12,85,67,801/-. Regular assessment under section 143(3) was made I.T.A No. 1343/Ahd/2018 A.Y. 2013-14 Page No Paschim Gujarat Vij Co. Ltd. vs. ACIT 5 on 10.12.2010 reducing the loss at Rs.5,06,04,324/- under normal provision and book profit under section 115JB was determined at Rs.2,77,73,370/- by disallowing the additional depreciation claimed in the return of income. It is, thereafter 148-notice was issued for the excess claim of “prior period expenditure” of Rs.16,02,98,000/-. Reassessment resulted in a taxable income of Rs.10,96,93,680/- by order dated 30.12.2015. Now present impugned show cause notice dated 13.3.2018 was issued by Pr.CIT on the ground that book profit under section 115JB towards grants, subsidies and consumer contributions were not being properly calculated by the AO in the original assessment proceedings. No doubt the excess claim of depreciation on grants, subsidies and consumer contributions were subject matter of proceedings only in the original assessment passed under section 143(3) which is dated 30.12.2010. In the reassessment proceedings the issue is related to “prior period expenses” claimed by the assessee which was in the re-assessment order dated 30.12.2015. Therefore the present impugned order dated 22.03.2018 passed under section 263 is clearly time barred as per section 263(2) of the Act. This issue has been settled by Hon’ble Supreme Court in the case of CIT Vs. Alagendran Finance Ltd., (2007) 162 taxman 465 (SC) wherein it has held as under: “15. We, therefore, are clearly of the opinion that keeping in view the facts and circumstances of this case and, in particular, having regard to the fact that the Commissioner of Income-tax exercising its revisional jurisdiction reopened the order of assessment only in relation to lease equalization fund which being not the subject of the reassessment proceedings, the period of limitation provided for under sub-section (2) of section 263 of the Act would begin to run from the date of the order of assessment and not from the order of reassessment. The revisional jurisdiction having, thus, been invoked by the Commissioner of Income-tax beyond the period of limitation, it was wholly without jurisdiction rendering the entire proceeding a nullity. 16. The Tribunal and the High Court, therefore, in our opinion, were correct in passing the impugned judgment. The appeal, therefore, being devoid of any merit is dismissed with costs. Counsel's fee assessed at Rs. 25,000.” 11. Further, jurisdictional High Court in the case of CIT Vs. Gujarat Forging P.Ltd., in Tax Reference No.42 of 1996 dated 2.7.2008 following Supreme Court judgment in the case of Alagendran Finance Ltd. (supra) held that revision proceedings initiated under section 263 is beyond period of limitation and quashed the same. In view of the above binding judgment, we have no hesitation in holding that Revision proceedings initiated under section 263 by the Pr.CIT is beyond period of limitation, since the issue of computation of book profit under section 115JB towards grants, subsidies, consumer contributions are not subject matter of re-assessment proceedings and but arising from original assessment proceedings vide order dated 3.12.2010 which is clearly is time barred. Thus, the additional ground raised by the assessee are allowed I.T.A No. 1343/Ahd/2018 A.Y. 2013-14 Page No Paschim Gujarat Vij Co. Ltd. vs. ACIT 6 12. Further, the ld.counsel for the assessee, Mr.M.K.Patel also brought to our notice that the proposed additions to be made in MAT computation by the Pr.CIT is already covered in favour of the assessee by orders passed by CIT(A)-2, Vadodara relating to the Asst.Years 2013-14 in the case of Uttar Gujarat Vij Company Ltd. wherein it is held as follows: “4.2.1. The second part of Ground No. 2 pertains to addition of Rs.39,84,10,100/- as mentioned above to the book profit u/s. 1153B. In this regard, the Ld. Authorized Representative has relied upon the decision of Hon'ble ITAT, Ahmedabad in the case of ACIT Vs. Gujarat State Energy Generation Ltd. contained in ITA No. 1777/Ahd/2009 (A.Y. 2006-07) which x had been followed by the CIT(A)-1, Vadodara in the case of Gujarat Urja Vikas Ltd. for A.Y. 2012-13 contained in Appeal No. CAB- 1/290/14-15 wherein he has held that the addition made on account of capital grants cannot be made to the book profit as it is not covered by any items which are specifically mentioned in Explanation to section 115JB. Accordingly, relying upon the decision of CU(A)-1, Vadodara as also of Hon'ble jurisdictional ITAT, I hold that addition on account of contribution to the capital grants/subsidies etc. cannot be made to the book profit and hence the Assessing Officer is directed to delete the same from book profit, Thus, appellant succeeds on this account.” For the Asst.Year 2014-15 in the case of Uttar Gujarat Vij Company Ltd. as follows: “4.1.1 The other part of this ground pertains to the addition of Rs.81,36,52,500/- being 5% of grants and subsidies added to Book Profit u/s.115JB. In this regard, the ld.Authorized Representative has relied upon the decision of CIT(A) in its own case in A.Y.2012-13 wherein it has been held that addition made under normal provisions on account of capital grant/subsidies cannot be made to be Book profit u/s.115JB. Accordingly, the Assessing Officer is directed to delete the same.” 13. Thus, the additions proposed by Pr.CIT is held to be not correct by Appellate authorities and confirmed by Co-ordinate Bench of ITAT. Thus, the order passed by the AO neither an erroneous nor prejudicial to the interest of Revenue and therefore the initiation of 263-proceeings itself is unwarranted in the above case. On this count also, the impugned Revision order dated 22.3.2018 passed by the ld.Pr.CIT is liable to be quashed. 14. In the result, appeal of the assessee is allowed.” 7. The Ld. CIT-DR appearing for the Revenue could not place any contra decision in support of the Revenue. The Ld. D.R. further could not place on record any judgment from the Jurisdictional I.T.A No. 1343/Ahd/2018 A.Y. 2013-14 Page No Paschim Gujarat Vij Co. Ltd. vs. ACIT 7 High Court of Gujarat reversing or staying the order passed by the Tribunal in the above cases. 8. Therefore respectfully following the Co-ordinate Bench decision in the case of Madhya Gujarat Vij Company Ltd., we hereby quash the Revision order passed by the Ld. PCIT. 9. In the result, the appeal filed by the Assessee is allowed. Order pronounced in the open court on 27 -10-2023 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 27/10/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद