Neyveli Lignite Corporation Limited, Neyveli V. DCIT, CHENNAI

ITA 1707/CHNY/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8697 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 24-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HOMI RAJI VANSH
• Assessee Lawyers: BHARATHI KRISHNAPRASAD
• Keywords: Business income; Depreciation; Additional depreciation; Bad and doubtful debts
• Section: 195; 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , , % BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER ANDSHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 1707/CHNY/2015 / ASSESSMENT YEAR : 2011-12 M/S. NEYVELI LIGNITE CORPORATION LIMITED, CORPORATE OFFICE, P.O. NEYVELI, CUDDALORE DISTRICT 607 801. [PAN: AAACN 1121C] VS. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAXPAYER UNIT II, CHENNAI 600 101. ( / APPELLANT) ( &'( /RESPONDENT ) ASSESSEE BY : MS . BHARATHI KRISHNAPRASAD, CA REVENUE BY : SHRI HOMI RAJI VANSH, CIT 1 /DATE OF HEARING : 18.12.2018 1 /DATE OF PRONOUNCEMENT : 18.12.2018 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-17, CHENNAI IN ITA NO. 27/2013-14/LTU(A) DATED 30.03.2015 FOR ASSESSMENT Y EAR 2011-12. :-2-: ITA NO. 1707/CHNY/2015 2. M/S. NEYVELI LIGNITE CORPORATION LIMITED, THE AS SESSEE, IS A PUBLIC SECTOR COMPANY ENGAGED IN COAL MINING AND PO WER GENERATION. WHILE MAKING THE ASSESSMENT FOR AY 201 1-12, THE A O, INTER ALIA, FOUND THAT THE ASSESSEE HAS INCLUDED TH E INTEREST RECEIVED FROM EMPLOYEES, INTEREST RECEIVED FROM OTHERS, MISC ELLANEOUS INCOME AND HANDLING CHARGES AS ELIGIBLE PROFIT FOR DEDUCTION U/S 80IA. BUT, THE AO HAS HELD THAT THE ABOVE RECEIPTS ARE NOT ELIGIBLE FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IA AS A LL THE THESE RECEIPTS HAVE BEEN GROUPED UNDER OTHER INCOME. TH EY NEED TO BE EXCLUDED FROM THE PROFITS FOR COMPUTATION OF DEDUCT ION U/S 80IA, AS THEY DO NOT HAVE DIRECT NEXUS TO THE BUSINESS OF TH E UNIT. FURTHER, T HE ASSESSEE HAD CLAIMED ADDITIONAL DEPRECIATION O F RS.30,50,670/- ON THE ASSETS COMMISSIONED DURING THE FY 2009-10. THE AO HAS DISALLOWED IT ON THE GROUND THAT THE ASSETS ON WHIC H THE ADDITIONAL DEPRECIATION HAS BEEN CLAIMED WERE NOT PURCHASED AN D COMMISSIONED DURING THE CURRENT YEAR I.E. FROM 01.04.2010 TO 31. 03.2011. THE AO ALSO FOUND THAT DURING THE AY 2011-12, THE ASSESSEE S ACCOUNTS SHOWN A POWER SALE PRICE REDUCTION ADJUSTMENT ENTRY OF RS .340.72 CRORE (BEING ADJUSTMENT RELATING TO EARLIER YEARS) AND LI GNITE SALE PRICE REDUCTION ADJUSTMENT ENTRY OF RS.6.15 CRORES (BEING ADJUSTMENT RELATING TO EARLIER YEARS). THE AO HAS TREATED THE REDUCTION OF ABOVE AMOUNTS AS PRIOR PERIOD ADJUSTMENTS AND DISALLOWED THEM. AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), WHO GAVE PARTIAL RELIEF. :-3-: ITA NO. 1707/CHNY/2015 AGGRIEVED AGAINST THE ORDER OF THE CIT(A), THE AS SESSEE FILED THIS APPEAL. 3. ON THE DISALLOWANCE OF OTHER INCOME HELD AS NO T DERIVED OUT OF INDUSTRIAL ACTIVITY FOR THE DEDUCTION U/S 8OIA,T HE LD.AR SUBMITTED THAT THE ISSUE WAS DECIDED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN RESPECT OF THE HANDLI NG CHARGES, INTEREST RECEIVED FROM EMPLOYEES, AND MISCELLANEOUS INCOME AND HELD AGAINST THE ASSESSEE BY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S. LIBERTY INDIA LTD . VS. CIT IN ITA NOS.2140/MDS/2013 FOR THE AY 2010-11 DT 28.4.2017 A ND ITA NO 2200/MDS/2016 FOR AY 2012-13 DT 10.8.2017, ITA NOS 1983/MDS/2011 FOR AY 2008-09 & NO.2029, 855 & 2077/ MDS/2013 FOR THE AYS 2007-08, 2009-10 & 2010-11 VIDE ORDER D ATED 28.04.2017. HOWEVER, THE ASSESSEES ALTERNATE PRAY ER THAT THE EXPENDITURE RELATING TO THE EARNING OF THE OTHER IN COME WAS LIABLE TO BE EXCLUDED, HAD BEEN CONSIDERED BY THE HONBLE ITA T AND AN ESTIMATED 10% OF THE OTHER INCOME HAD BEEN ALLOWED AS AN EXPENDITURE AND HENCE PLEADED THAT THE SAME POSITIO N MAY CONSISTENTLY BE MAINTAINED. :-4-: ITA NO. 1707/CHNY/2015 3.1 WE HEARD THE RIVAL SUBMISSIONS . THE RELEVANT PORTION OF THE ORDER FROM ITA NO 2200/MDS/2016 FOR AY 2012-13 DT 1 0.8.2017 IS EXTRACTED AS UNDER : 6.1 IN REPLY, THE LD.DR SUBMITTED THAT IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S.LIBERT Y INDIA LTD. VS. CIT REPORTED IN 317 ITR 218, THE DISALLOWANCE WAS L IABLE TO BE CONFIRMED. IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NOS.1983 /MDS/2011 FOR THE AY 2008-09 & NO.2029, 855 & 2077/MDS/2013 FOR T HE AYS 2007-08, 2009-10 & 2010-11 VIDE ORDER DATED 28.04.2 017. 6.2 IT WAS SUBMITTED BY THE LD.AR THAT THE ISSUE WA S DECIDED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSES SEES OWN CASE IN RESPECT OF THE HANDLING CHARGES, INTEREST RECEIVED FROM EMPLOYEES, AND MISCELLANEOUS INCOME AND HELD AGAINST THE ASSES SEE BY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S.LIBERTY INDIA LTD. VS. CIT REFERRED TO SUPRA. I T WAS A SUBMISSION THAT THE ALTERNATE PRAYER OF THE ASSESSE E THAT THE EXPENDITURE RELATING TO THE EARNING OF THE OTHER IN COME WAS LIABLE TO BE EXCLUDED, HAD BEEN CONSIDERED AND ESTIMATED AT 1 0% OF THE OTHER INCOME HAD BEEN ALLOWED AS EXPENDITURE. 6.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ON P ERUSAL OF THE ASSESSMENT ORDER AND ALSO THE ORDER OF THE CO-O RDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE REFERRE D TO SUPRA CLEARLY SHOWS THAT THE ISSUES IN REGARD TO THE HANDLING CHA RGES, INTEREST RECEIVED FROM EMPLOYEES AND MISCELLANEOUS INCOME HA S BEEN HELD TO BE NOT INTERLINKED WITH INDUSTRIAL ACTIVITY OF P OWER GENERATION AND THEREFORE IN VIEW OF THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF M/S.LIBERTY INDIA LTD. VS. CIT REFERRED TO SUPRA, AS THE SAME DID NOT HAVE A DIRECT LINK WITH THE BUSINESS O F POWER GENERATION, THE DEDUCTION U/S.80IA OF THE ACT ON TH E SAID INCOMES WERE EXCLUDED. HOWEVER, IN PARA NO.10 OF THE ORDER THE CO- :-5-: ITA NO. 1707/CHNY/2015 ORDINATE BENCH HAS HELD THAT 10% OF THE SAID OTHER INCOME COULD BE ESTIMATED AS THE EXPENSES RELATABLE TO THE EARNING OF THE SAID INCOME AND DIRECTED THE AO TO EXCLUDE 10% OF THE OT HER INCOME AS EXPENSES WHILE COMPUTING THE DEDUCTION U/S.80IA OF THE ACT. IN THE YEAR UNDER APPEAL, THE OTHER INCOME INCLUDES IN TEREST ON ARREARS FROM ELECTRICITY BOARD AND INTEREST FROM OTHERS. AP PLYING THE RATIO OF THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBU NAL IN THE ASSESSEES OWN CASE FOR THE AYS 2007-08, 2008-09, 2 009-10 & 2010-11 REFERRED TO SUPRA, THE DISALLOWANCE AS MADE BY THE AO AND AS CONFIRMED BY THE LD.CIT(A) STANDS SUSTAINED. HO WEVER, CONSIDERING THE ALTERNATE PRAYER OF THE ASSESSEE AN D ALSO FOLLOWING DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL, THE EXPENSES IN RELATION TO THE EARNING OF THE OTHER INCOME IS ESTI MATED AT 10% AND THE AO IS DIRECTED TO EXCLUDE 10% OF THE OTHER INCO ME AS EXPENSES WHILE COMPUTING THE DEDUCTION U/S.80IA OF THE ACT. IN THE RESULT, GROUND NOS.1 & 2 ARE PARTLY ALLOWED. 3.2 FOLLOWING THE ABOVE ORDER, THE DISALLOWANCES AS MADE BY THE AO AND AS CONFIRMED BY THE LD.CIT(A) STANDS SUSTAIN ED. WE HAVE ALSO CONSIDERED THE ALTERNATE PRAYER THAT THE EXPEN SES IN RELATION TO THE EARNING OF THE OTHER INCOME MAY BE ESTIMATED AT 10%. FOLLOWING DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL, SUPRA, THE AO IS DIRECTED TO EXCLUDE 10% OF THE OTHER INCO ME AS EXPENSES WHILE COMPUTING THE DEDUCTION U/S.80IA OF THE ACT. THUS, ON THESE ISSUES, THE ASSESSEES CORRESPONDING APPEAL GROUNDS ARE PARTLY ALLOWED. :-6-: ITA NO. 1707/CHNY/2015 4. ON THE CLAIM OF ADDITIONAL DEPRECIATION ON THE A SSETS COMMISSIONED DURING THE FY 2009-10, THE AO HAS DISA LLOWED THE ADDITIONAL DEPRECIATION CLAIM OF RS.30,50,670/- ON THE GROUND THAT THE ASSETS ON WHICH THE ADDITIONAL DEPRECIATION HAS BEE N CLAIMED WERE NOT PURCHASED AND COMMISSIONED DURING THE CURRENT YEAR I.E. FROM 01.04.2010 TO 31.03.2011. IN THIS REGARD, THE LD A R HAS SUBMITTED THAT THE ASSESSEE HAS BEEN CONSISTENTLY CLAIMING T HE DEPRECIATION AND ADDITIONAL DEPRECIATION ONLY ON THE BASIS OF DATE O F COMMISSIONING OF THE ASSET. PER CONTRA, THE LD DR SUPPORTED THE ORDE RS OF LOWER AUTHORITIES. 4.1 WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH RELEVANT MATERIAL. THE LD. CIT(A) HAS HELD THAT THE ARGUMEN T OF THE ASSESSEE IS IN TOTAL VIOLATION OF THE PROVISIONS IN SECTION 32( 1)(IIA) ACCORDING TO WHICH ONLY NEW PLANT AND MACHINERY ACQUIRED AND INS TALLED DURING THE CURRENT YEAR I.E. FROM 01.04.2010 TO 31.03.2011 IS ELIGIBLE FOR ADDITIONAL DEPRECIATION. SINCE THE ASSETS OF THE AP PELLANT UNDER CONSIDERATION WERE COMMISSIONED DURING THE FY 2009- 10, THE APPELLANT IS PROHIBITED FROM CLAIMING ADDITIONAL DEPRECIATION . WE FIND NO REASON TO INTERFERE WITH HIS ORDER AND HENCE THE CORRESPON DING GROUNDS OF THE ASSESSEE ARE DISMISSED. :-7-: ITA NO. 1707/CHNY/2015 5. ON THE ISSUES OF DISALLOWANCE OF ADJUSTMENT OF S ALES PERTAINING TO THE EARLIER YEARS FROM THE SALE VALUE PERTAINING TO THIS YEAR, THE AO FOUND THAT DURING THE AY 2011-12, THE ASSESSEES AC COUNTS SHOWN A POWER SALE PRICE REDUCTION ADJUSTMENT ENTRY OF RS.3 40.72 CRORE (BEING ADJUSTMENT RELATING TO EARLIER YEARS) AND LIGNITE S ALE PRICE REDUCTION ADJUSTMENT ENTRY OF RS.6.15 CRORES (BEING ADJUSTMEN T RELATING TO EARLIER YEARS). THE AO HAS TREATED THE REDUCTION OF ABOVE A MOUNTS AS PRIOR PERIOD ADJUSTMENTS AND DISALLOWED, WHICH WAS UPHELD BY THE CIT (A). IN THIS REGARD, THE LD AR SUBMITTED THAT IN THE ASS ESSEES CASE, SIMILAR ISSUE CAME UP BEFORE THIS TRIBUNAL IN AY 2007-08, A ND THIS TRIBUNAL CONSIDERED AND ALLOWED THE APPEAL IN ITA 711, 712 & 713/2010 DT 11.04.2012. SINCE THE FACTS ARE SIMILAR, THE LD AR PLEADED THA T THIS CLAIM BE ALLOWED. 5.1 WE HEARD THE RIVAL SUBMISSIONS . THE RELEVANT P ORTION OF THE ORDER FROM THE ABOVE IS EXTRACTED AS UNDER : 17. COMING TO THE OTHER GROUND REGARDING DELETION OF ADDITION MADE FOR REVERSAL OF SALE FIGURES, FACTS APROPOS AR E THAT ASSESSEE HAD, DURING THE RELEVANT PREVIOUS YEAR, REDUCED FRO M ITS SALE A SUM OF RS.502,15,00,000/-. EXPLANATION WAS SOUGHT BY T HE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS . SUBMISSION OF THE ASSESSEE WAS THAT IN THE PRECEDING YEARS, BILLI NGS WERE MADE BASED ON POWER TARIFFS MENTIONED IN POWER PURCHASE AGREEMENT ENTERED WITH VARIOUS ELECTRICITY BOARDS. HOWEVER, THE AUTHORITY FOR FIXING POWER TARIFFS ULTIMATELY VESTED WITH CENTRAL ELECTRICITY REGULATORY COMMISSION (CERC). CERC HAD PASSED ORDE RS FIXING SUCH :-8-: ITA NO. 1707/CHNY/2015 TARIFFS DURING THE RELEVANT PREVIOUS YEAR FOR EARLI ER PERIODS AS WELL, AND ASSESSEE WAS BOUND BY SUCH ORDERS. THEREFORE, IT HAD TO MAKE ADJUSTMENTS FOR DIFFERENCES ARISING OUT OF SUCH POW ER TARIFF RELATING TO EARLIER YEARS. SUCH ADJUSTMENT WAS CARRIED OUT IN THE RELEVANT PREVIOUS YEAR SINCE THE ORDER FROM CERC WAS RECEIVE D ONLY IN THE SAID PREVIOUS YEAR. ASSESSEE ALSO FILED YEAR-WISE BREAK-UP OF ITS CLAIM. AS PER THE ASSESSEE, IN THE EARLIER YEARS, SALES WERE BOOKED BASED ON TARIFFS AS PER POWER PURCHASE AGREEMENT BU T, ORDERS OF CERC BEING BINDING ON IT, REVERSAL MADE TO SALES AC COUNT FOR GIVING EFFECT TO SUCH ORDERS COULD NOT BE DISALLOWED. HO WEVER, THE ASSESSING OFFICER DID NOT ACCEPT THIS EXPLANATION. ACCORDING TO HIM, DIFFERENCE IN TARIFF PERTAINED TO EARLIER YEARS AND NOT FOR THE RELEVANT PREVIOUS YEAR. PROFITS FOR THE YEAR UNDER CONSIDER ATION COULD NOT BE CORRECTLY DETERMINED IF ASSESSEE WAS ALLOWED TO ADJ UST DIFFERENCE ARISING IN EARLIER YEARS PROFITS, WITH THE PROFIT OF THE RELEVANT PREVIOUS YEAR. HE, THEREFORE, REJECTED THE CLAIM AND MADE A N ADDITION OF RS. 502,15,00,000/-. 18. IN ITS APPEAL BEFORE LD. CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT CERC WAS A STATUTORY AUTHORITY ES TABLISHED UNDER ELECTRICITY ACT AND THEREFORE, IT WAS OBLIGED TO GI VE EFFECT TO ITS ORDERS. ORDER BY CERC WAS BINDING AND POWER TARIFF S WERE DETERMINED STARTING FROM 2001-04 AND FOR THE FIVE Y EAR PERIOD STARTING FROM 2004-09. THE SUBMISSION OF THE ASSES SEE BEFORE LD. CIT(APPEALS) ARE SUMMARIZED HEREUNDER:- 1. THE APPELLANT HAS BEEN ENTERING INTO POWER PURC HASE AGREEMENT (PPA) WITH VARIOUS ELECTRICITY BOARDS. 2. THE POWER TARIFF THAT IS FIXED UNDER THE PPA WAS SUBJECT TO REVISION BY THE CENTRAL ELECTRICITY REGU LATORY COMMISSION (CERC) FORMED UNDER THE ELECTRICITY ACT 2003. THE POWER TARIFF IS FINALIZED BASED ON PETITIONS FI LED BEFORE THE CERC AND ARE SUBJECT TO REVISION IN REGARD TO PRIOR PERIODS AS WELL. 3. THE POWER TARIFF FOR NLC PROJECT WAS REVISED BY THE CERC AS FOLLOWS:- :-9-: ITA NO. 1707/CHNY/2015 PROJECT PERIOD DATE OF CERC ORDER TS-I 2004-09 26.09.2006 TPS - I EXPANSION 2004 - 2009 23.03.2007 TPS - II 2001 - 2004 23.03.2007 4. ACCORDING TO THE CERC ORDER A REDUCTION WAS MADE IN RESPECT OF POWER INCOME THAT HAS BEEN ALREADY BILLE D, ACCOUNTED AND ALSO TAXED IN PRIOR YEARS TO THE EXTE NT OF RS.502.15 CRORES. THE ORDER HAVING BEEN RECEIVED D URING THE PREVIOUS YEAR RELEVANT TO THE AY 2007-08, THE AMOUN T OF RS.502.15 CRORES WAS WRITTEN OFF IN THE BOOKS OF AC COUNTS BY ADJUSTMENT AGAINST SALES. THE LD. A.O. DISALLOWED THE SAME ON THE GROUND THAT THE REVERSAL RELATES TO PRIOR YE ARS. 5. THE APPELLANT SUBMITS THAT THE PROFITS AND GAINS OF THE BUSINESS WILL HAVE TO BE MEASURED IN ACCORDANCE WIT H THE NORMAL SYSTEM OF ACCOUNTING REGULARLY FOLLOWED. TH E STAND TAKEN BY THE A.O. WOULD TANTAMOUNT TO A REASONING T HAT WERE INCOMES ARE DETERMINED PURSUANT TO PPA, THE ENTIRE ACCOUNTS ARE TO BE KEPT OPEN TILL DISPOSAL BY CERC OF THE IS SUES RELATING TO THE FINAL DETERMINATION OR PURCHASE PRICE. THIS IS NOT THE LAW. ACCOUNTS ARE TO BE CLOSED EVERY YEAR AND PROF ITS ARE TAXED BASED ON THE ACCOUNTS FINALIZED. 6. IT IS NOT THE STAND OF THE A.O. THAT THE ASSESSE E WAS AWARE OF THE IMPENDING REDUCTION IN THE RESPECTIVE YEARS; NOT IT WAS A SITUATION THAT THE PRICES CHARGED IN THE E ARLIER YEARS WERE ERRONEOUS, IN THAT THERE WERE COMPUTATIONAL ER RORS. THE SALES ADJUSTMENT WAS ONLY PURSUANT TO DETERMINATION BY A STATUTORY AUTHORITY OF THE FINAL PURCHASE PRICE PUR SUANT TO APPLICATIONS FILED BEFORE THE SAME. 7. THE A.O. OUGHT TO HAVE NOTED THAT PRIOR ITEMS AR E COVERED BY ACCOUNTING STANDARD 2 NOTIFIED U/S 145(2 ) OF THE ACT, WHICH ONLY COVERS ERRORS AND OMISSIONS AND NOT CASES OF GENUINE REDETERMINATION OF FINAL PRICE BY A HIGHER STATUTORY AUTHORITY. :-10-: ITA NO. 1707/CHNY/2015 8. THE ORDER OF THE LD. A.O. IS THEREFORE PATENTLY AGAINST THE ACCOUNTING STANDARD 2 (AS 2) NOTIFIED BY THE BO ARD. 9. THE ACCOUNTING STANDARD (AS) 5 (E 10) NOTIFIED B Y THE CENTRAL GOVERNMENT U/S 209 OF THE COMPANIES ACT 195 6 ALSO IS TO IDENTICAL EFFECT. THERE IS NO SPECIFIC PROVI SION OF LAW DEALING WITH THE SITUATIONS LIKE THIS IN THE COMPUT ATION SCHEME ENACTED FOR BUSINESS INCOME. HENCE THE NORMAL METH OD OF ACCOUNTING GOVERNING THE ISSUE WILL HAVE TO BE APPL IED FOR DETERMINATION OF TAXABLE INCOME. 10. THE APPELLANT ACCORDINGLY SUBMITS THAT ITS CASE IS EXPLICITLY COVERED BY THE ACCOUNTING STANDARD NOTIF IED UNDER THE INCOME-TAX ACT. 19. THEREFORE, AS PER THE ASSESSEE, IT HAD TO BE EI THER ALLOWED AS BAD DEBTS SINCE AMOUNTS WERE IRRECOVERABLE OR AS BU SINESS LOSS. LD. CIT(APPEALS) WAS APPRECIATIVE OF THESE CONTENTIONS. HE HELD THAT ASSESSEE HAVING ALREADY ACCOUNTED AND OFFERED TO TA X THE AMOUNTS AS PER THE TARIFF IN THE POWER PURCHASE AGREEMENT, IT COULD CLAIM AS A BAD DEBT THE EXCESS BILLINGS WHICH IT CAME TO KNOW, ONLY ON DETERMINATION OF TARIFF BY CERC. 20. NOW BEFORE US, LEARNED D.R., STRONGLY ASSAILING THE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT THE PROFITS OF THE IMPUGNED ASSESSMENT YEAR WAS DISTURBED BY THE CHANGE IN TARI FF. ACCORDING TO HER, EFFECT ON PROFIT FOR THE EARLIER YEAR TARIFF C HANGE, COULD NOT BE GIVEN IN THE IMPUGNED ASSESSMENT YEAR AND ASSESSEE WAS OBLIGED TO TREAT EACH ASSESSMENT YEAR AS SEPARATE AND INCOME H AD TO BE TAXED CONSIDERING EACH ASSESSMENT YEAR SEPARATE. THE CLA IM OF BAD DEBT COULD NOT HAVE BEEN ALLOWED SINCE BILLS WERE RAISED AS PER POWER PURCHASE AGREEMENTS AND NOT ACCORDING TO TARIFF DET ERMINED BY CERC. 21. PER CONTRA, LEARNED A.R. STRONGLY SUPPORTED THE ORDER OF LD. CIT(APPEALS). 22. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. IT IS NOT DISPUTED THAT CERC IS THE AUTHORITY FOR D ETERMINING POWER TARIFF. IT IS ALSO NOT DISPUTED THAT POWER TARIFFS WERE DETERMINED BY THE CERC IN THE RELEVANT PREVIOUS YEAR FOR EARLIER YEARS AS WELL. :-11-: ITA NO. 1707/CHNY/2015 ASSESSEE HAD IN THE EARLIER YEARS BILLED ACCORDING TO POWER PURCHASE AGREEMENT WITH ITS RESPECTIVE CUSTOMERS. EVEN IF W E CONSIDER THAT THE ADJUSTMENT PERTAINED TO INCOME RELATABLE TO EAR LIER YEARS, IT STILL REMAINS A FACT THAT ASSESSEE COULD NOT RECOVER SUCH AMOUNT FROM THE CONCERNED CUSTOMERS SINCE THE CUSTOMERS WERE BOUND TO PAY ONLY AS PER THE TARIFF DETERMINED BY CERC. THIS BEING SO, IF IT IS NOT ALLOWED AS BAD DEBT, IT IS SURELY A BUSINESS LOSS OF THE AS SESSEE. AS HELD BY THE HONBLE APEX COURT IN THE CASE OF CIT V. WOODWA RD GOVERNOR INDIA PVT. LTD. (312 ITR 254), EVEN BUSINESS LOSS I NCURRED IN NORMAL COURSE OF BUSINESS IS ELIGIBLE FOR DEDUCTION UNDER SECTION 37 OF THE ACT. WE ARE, THEREFORE, OF THE OPINION THAT LD. CI T(APPEALS) WAS JUSTIFIED IN ALLOWING THE CLAIM. NO INTERFERENCE I S CALLED FOR. 23. APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2007- 08 IS PARTY ALLOWED FOR STATISTICAL PURPOSES. 5.2 FOLLOWING THE ABOVE ORDER, THE ASSESSEES CORRE SPONDING APPEAL GROUNDS ARE ALLOWED. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2018 AT CHENNAI. SD/- ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ! /ACCOUNTANT MEMBER /CHENNAI, 6 /DATED: 18 TH DECEMBER, 2018 JPV 1&89:9 /COPY TO: 1. ( / APPELLANT 2. &'( /RESPONDENT 3. < ) ( /CIT(A) 4. < /CIT 5. 9& /DR 6. /GF