The ITO, Ward-4(1), Baroda V. Madhya Gujarat Vij Co.Ltd., Baroda

ITA 2015/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6930 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 01-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Keywords: Opportunity of being heard
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HON'BLE SHRI G.D.AGRAWAL, V.P. & HONBL E SHRI T.K. SHARMA, J.M. ) I.T.A. NO. 2015/AHD./2010 ASSESSMENT YEAR : 2006-2007 I.T.O., WARD-4(1), BARODA -VS- M/S. MADH YA GUJARAT VIJ COMPANY LTD., BARODA (PAN : AADCM 7439H) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ALOK JOHRI, CIT (DR) RESPONDENT BY : WRITTEN SUBMISSION O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 18.03.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-III, B ARODA FOR THE ASSESSMENT YEAR 2006- 2007. 2. THE ONLY GROUND RAISED BY THE REVENUE IN THIS AP PEAL IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN ALLOWING THE UNPAID ELECTRICITY DUTY AND TAX ON SA LE OF ELECTRICITY AMOUNTING TO RS.2,30,99,298/-, OVERLOOKING THE PROVISIONS OF SE CTION 43B OF THE INCOME-TAX ACT 1961, AND THE FACT THAT RECOVERY BY WAY OF ADJUST MENT BY GUJARAT GOVT. IS NOT TANTAMOUNT TO SUM ACTUALLY PAID BY THE ASSESSEE AS REQUIRED U/S 43B OF THE INCOME- TAX ACT 1961. 3. AT THE TIME OF HEARING, NONE WAS PRESENT ON BEHA LF OF THE ASSESSEE. HOWEVER, WRITTEN SUBMISSION WAS FILED WHEREIN IT WAS REQUESTED THAT THE APPEAL OF THE REVENUE BE DECIDED, AFTER CONSIDERING THE WRITTEN SUBMISSIONS, WHICH RE ADS AS UNDER: GROUND NO. : DISALLOWANCE ON ACCOUNT OF UNPAID ELECTRICITY DUTY AND TAX ON SALE OF ELECTRICITY DUTY 1.0 THE ONLY ISSUE INVOLVED IN THE APPEAL I S RELATING TO THE DISALLOWANCE OF ELECTRICITY DUTY PAYABLE TO GOVERNMENT AMOUNTING TO RS 2,30,99,298/- BY INVOKING THE PROVISIONS OF SECTION 43B OF THE I T ACT MADE BY T HE ASSESSING OFFICER AND DELETED BY COMMISSIONER (APPEALS). 2 ITA NO. 2015-AHD-2010 1.1 IT IS SUBMITTED THAT ELECTRICITY DUTY IS NOT RECOGNIZED AS EITHER INCOME OR EXPENSE IN THE ANNUAL ACCOUNTS OF THE COMPANY. IT WAS EXPLAINED THAT THE ELECTRICITY DUTY IS ASSESSED THROUGH ENERGY BILLS SERVED TO TH E CONSUMERS AND CREDITED TO REVENUE A/C IN THE FIRST STAGE AND THEREAFTER CONTRA ENTRY IS PASSED BY DEBITING THE REVENUE A/C BY EQUAL AMOUNT AND THE LIABILITY IS CREATED FOR P AYMENT TO THE GOVERNMENT. THUS THE ELECTRICITY DUTY.JS NOT RECOGNIZED AS EXPENSE OR I NCOME IN THE BOOKS BUT THE SAME IS SHOWN AS LIABILITY IN THE BALANCE SHEET. THE SAME IS ADJUSTED BY THE GOVERNMENT OF GUJARAT AGAINST SUBSIDIES PAYABLE BY GOVERNMENT. IT IS FURTHER SUBMITTED THAT THE ELECTRICITY DUTY IS COLLECTED FROM THE CONSUMERS AND ACCORDINGLY PAYMENT/ADJUSTMENT IS MADE TO THE GOVE RNMENT'S ACCOUNT. IF ANY CONSUMER DOES NOT PAY THE ELECTRICITY DUTY, THE SA ME IS NOT PAID TO THE GOVERNMENT. IN VIEW OF THE ABOVE FACTS IT IS CLEAR THAT THE PR OVISIONS OF SECTION 43B OF THE I T ACT ARE NOT APPLICABLE TO THE ELECTRICITY DUTY AND TAX ON SALE OF ELECTRICITY DUTY. 1.2 WITHOUT PREJUDICE TO THE ABOVE, IT IS SU BMITTED THAT THE ELECTRICITY DUTY AND TAX ON SALE OF ELECTRICITY DUTY AMOUNTING TO RS.2, 30,99,298/- PAYABLE AS ON 31 ST MARCH, 2006 HAS ALREADY BEEN ADJUSTED BY THE GOVT. OF GUJARAT IN THE MONTH OF JULY,2006 I.E., BEFORE THE DUE DATE OF FILING OF T HE RETURN AND HENCE NO DISALLOWANCES ARE WARRANTED ON THIS COUNT. THE BREAK-UP OF ELECTRICITY DUTY AMOUNTING TO RS.2 ,30,99,Z98/- IS AS UNDER AMOUNT RS. ELECTRICITY DUTY & TAX ON SALE OF ELECTRICITY DUT Y 2,15,82,707 COMPOUNDING FEES 15,16,591 TOTAL _______________________________ 2,30,99,298 OUT OF THE ABOVE ELECTRICITY DUTY AND TAX ON SALE OF ELECTRICITY DUTY IS ADJUSTED AGAINST THE GOVERNMENT SUBSIDY AND THE COMPOUNDING FEES IS PAID BY THE APPELLANT. THE ABOVE AMOUNT PAYABLE AS ON 31 S ' MARCH, 006 HAS BEEN ADJUSTED /PAID AS UNDER: PARTICULARS AMOUNT RS. ELECTRICITY DUTY & TAX ON SALE OF ELECTRICITY DULY AS ON 1-4-2006 2,15,82,707 ADD : ELECTRICITY DUTY & TAX ON SALE OF ELECTRIC ITY DUTY FROM 1-4-2006 TO 31-07-2006 90,26,00 ,432 92,41,83,139 LESS : ADJUSTED BY GOVT. OF GUJARAT VIDE RESOLUTI ON NO. 5BY-13- 2006-(2)-K DATED 16-05-2006 17,58,12 ,512 ELECTRICITY DUTY & TAX ON SALE OF ELECTRICITY DUTY AS ON 31-7-2006 74,83,70,627 3 ITA NO. 2015-AHD-2010 THE COPY OF THE RESOLUTION NO SBY-13-2006-(2)-K DA TED 16-05-2006 IS ENCLOSED HEREWITH IN ANNEXURE-I. IT IS SUBMITTED THAT THE S AID AMOUNT HAS BEEN ACCOUNTED IN THE BOOKS OF HOLDING COMPANY GUJARAT URJA VIKAS NIGAM LIMITED IN THE MONTH OF JULY, 2006 VIDE JV NO.15 OF JULY, 2006. ON THE BASIS OF THE SAME IT HAS BEEN ALLOCATED TO THE SUBSIDIARY COMPANIES. 1.2 REGARDING COMPOUNDING FEES OF RS.15,16,591/- IT IS SUBMITTED THAT THE SAME HAS ALSO BEEN PAID BEFORE THE DUE DATE OF FILING OF TH E I T RETURN. THE DETAILS OF PAYMENT OF THE SAME ARE AS UNDER : DATE OF PAYMENT AMOUNT RS. 19-04-2006 1,36,737 10-05-2006 3,00,154 05-07-2006 9,07,894 12-07-2006 3,92,765 24-07-2006 1,42,383 TOTAL 15,16,591 THE COPIES OF THE CHALLANS SHOWING THE PAYMENTS AR E ENCLOSED IN ANNEXURE-II. IN VIEW OF THE FACTS AND CIRCUMSTANCES, IT IS CLEA R THAT EVEN IF THE PROVISIONS OF SECTION 43B ARE MADE APPLICABLE TO THE UNPAID ELECTRICITY DUTY, THE SAME HAS BEEN FULLY PAID BEFORE THE DUE DOTE OF FILING OF THE I T RETURN AN D HENCE NO DISALLOWANCES ARE WARRANTED ON THIS COUNT. IT IS, THEREFORE, SUBMITT ED THAT THE COMMISSIONER (APPEALS) HAS RIGHTLY DELETED THE ADDITIONS MADE ON THIS COU NT. 3.1 THE AFORESAID WRITTEN SUBMISSIONS WERE HANDED O VER TO THE LD. D.R. FOR HIS COMMENTS. THE LD. D.R. POINTED OUT THAT THE ELECTRICITY DUTY IS COVERED BY SECTION 43B OF THE I.T. ACT, 1961. IN THE AFORESAID WRITTEN SUBMISSIONS, THE ASS ESSEE HAS MERELY STATED THAT THE SAID AMOUNT HAS BEEN ACCOUNTED IN THE BOOKS OF THE HOLDI NG COMPANY GUJARAT URJA VIKAS NIGAM IN THE MONTH OF JULY, 2006 VIDE JV NO.15 OF JULY, 2 006. THIS NEEDS VERIFICATION AT THE END OF THE ASSESSING OFFICER. THE LD. D.R. CONTENDED THAT IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS REJECTED TH E CONTENTION OF THE ASSESSEE THAT THE 4 ITA NO. 2015-AHD-2010 PROVISION OF SECTION 43B DOES NOT APPLY TO ELECTRIC ITY DUTY AND TAX ON ELECTRICITY DUTY PAYABLE TO GOVERNMENT OF GUJARAT AND LEARNED COMMISSIONER O F INCOME TAX(APPEALS) ALLOWED THE RELIEF ON THE GROUND THAT AMOUNT HAS BEEN RECOVERED BY THE GOVERNMENT OF GUJARAT BY WAY OF ADJUSTMENT FROM THE GRANTS WHICH IS ALLOWABLE UNDER SECTION 43B OF THE I.T. ACT, 1961. HE FURTHER HELD THAT COMPOUNDING FEES HAVE BEEN PAID P RIOR TO FILING OF RETURN. THE SAME IS ALSO ALLOWABLE. HE SUBMITTED THAT INSTEAD OF ALLOWING TH E SAME, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OUGHT TO HAVE DIRECTED THE ASSE SSING OFFICER TO VERIFY THE ACTUAL DATE OF PAYMENT/ENTRIES PASSED IN THE BOOKS OF ACCOUNTS . 4. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN PARA 11.2 OF THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS) ALLOWED THE RELIEF TO THE ASSESSEE, WHICH READS AS UNDER: 11.2 I HAVE GIVEN MY CAREFUL CONSIDERATION TO TH E SUBMISSIONS AND FACTS AVAILABLE ON RECORD. THE APPELLANT'S CONTENTION THAT THE PRO VISION OF SEC.43B DOES NOT APPLY TO ELECTRICITY DUTY AND TAX ON ELECTRICITY DUTY PAYAB LE TO GOVERNMENT OF GUJARAT IS NOT SUSTAINABLE IN LAW. TO THAT EXTENT THE AO WAS JUST IFIED IN HOLDING THAT THE PROVISIONS OF SEC.43B ARE APPLICABLE. HOWEVER, IN VIEW OF THE FACT THAT THE AMOUNT HAS BEEN RECOVERED BY THE GOG BY WAY OF ADJUSTMENT FROM THE GRANTS GIVEN THE SAME IS ALLOWABLE UNDER SECTION 43B OF THE ACT, SIMILARLY SINCE, THE COMPOUNDING FEES HAVE BEEN PAID PRIOR TO FILING OF RETURN, THE SAME IS A LSO ALLOWABLE. THIS GROUND IS THEREFORE ALLOWED. 4.1 WITH REGARD TO VERIFICATION OF DATE OF PAYMENT, WE ARE OF THE VIEW THAT THIS NEEDS VERIFICATION AT THE END OF THE ASSESSING OFFICER. W E ARE, THEREFORE, OF THE VIEW THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OUGHT T O HAVE ALLOWED AN OPPORTUNITY OF BEING HEARD TO THE ASSESSING OFFICER TO EXAMINE THE DATES ON WHICH THE AMOUNT HAS BEEN RECOVERED BY THE GOVERNMENT OF GUJARAT BY WAY OF AD JUSTMENT FROM THE GRANTS GIVEN THE SAME ALLOWABLE UNDER SECTION 43B OF THE I.T. ACT. S IMILARLY, WHETHER THE COMPOUNDING FEES HAVE BEEN PAID PRIOR TO FILING OF THE RETURN ALSO N EEDS VERIFICATION. IN CASE, BOTH HAVE BEEN PAID PRIOR TO FILING OF RETURN OF INCOME, IN THAT E VENT, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE SAME. THEREFORE, FOR THE PURPOSE OF LIMIT ED VERIFICATION, THE MATTER IS RESTORED TO THE 5 ITA NO. 2015-AHD-2010 FILE OF ASSESSING OFFICER, WHO WILL MAKE THE NECESS ARY VERIFICATION, AFTER GIVING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL FILED BY THE REVENUE IS TREATED AS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE COURT ON 08.04.2011. SD/- SD/- (G.D.AGRAWAL) (T.K. SHARMA) VICE PRESIDENT JUDICIAL MEMBER DATED : 08/04/2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT. 3) CIT(A.) CONCERNED, 4) CIT CONCERNED, 5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGIST RAR, ITAT, AHMEDABAD TALUKDAR/SR.P.S.