MAHARASHTRA STATE ELECTRICITY TRASMISSION CO. LTD., MUMBAI V. A.C.I.T. CIRCLE -10(1), MUMBAI

ITA 2212/MUM/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7813 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 17-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH I, MU MBAI BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.2212/MUM/2011 FOR (ASSESSMENT YEAR : 2007-08 ) MAHARASHTRA STATE ELECTRICITY TRANSMISSION CO. LTD., PRAKASHGANGA, 6 TH FLOOR, PLOT NO. C-19, E BLOCK, ANANT KANEKAR MARG, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-51 PAN:AAECM2936N VS. ACIT- RANGE- 10(1), AAYAKAR BHAVAN , M.K. MARG, MUMBAI -20 (APPELLANT) (RESPONDENT) ASSESSEE BY : MR. NIRAJ SHETH -A R REVENUE BY : SHRI SAURABH KUMAR RAI -DR DATE OF HEARING : 23.02.2017 DATE OF PRONOUNCEMENT : 15.03.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THIS APPEAL BY ASSESSEE U/S.253 OF THE INCOME TAX A CT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS) [LD. CIT(A)]- 21, MUMBAI DATED 19.11.010 FOR ASSESSMENT YEAR (AY) 2007-08. THE ASSESSEE HAS RAISED ONLY ONE GROUND OF APPEAL IS THAT THE LD . CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 24,85,000/- BEING EXPENDITU RE ON REPAIRS TO PLANT AND MACHINERY. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS SU BSIDIARY OF MAHARASHTRA STATE ELECTRICITY BOARD HOLDING COMPANY LIMITED. THE ASSE SSEE IS ENGAGED IN TRANSMISSION AND DISTRIBUTION OF ELECTRICITY IN THE STATE. THE ASSESSMENT FOR RELEVANT ASSESSMENT YEAR WAS COMPLETED ON 29.09.20 09 U/S 143(3) OF THE ACT. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFFICER (AO) DISALLOWED RS. 24,85,000/- ON ACCOUNT OF OVERSTATEMENT REPAIRS . ON APPEAL BEFORE THE LD. IT A NO. 2212/M/2011 MAHARASHTRA STATE ELECTRICITY TRANSMISSION CO. LTD. 2 CIT(A), THE DISALLOWANCE WAS SUSTAINED. THUS, THE P RESENT APPEAL IS FILED BEFORE US. 3. WE HEARD THE LD AR FOR THE ASSESSEE AND THE LD DR F OR THE REVENUE. THE LD. AR OF THE ASSESSEE ARGUED THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS COVERED IN HIS FAVOUR BY THE DECISION OF MUMBAI TRIBUNAL IN CLUDING RASHTRIYA CHEMICALS AND FERTILIZERS LTD. (ITA NO. 3863/MUM/20 06 DATED 07.10.2008 AND THE DECISION OF DELHI TRIBUNAL IN ESCORTS LIMITED V S. IAC (2004) 89 TTJ (DEL) 221. THE LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE FURTHER ARGUED THAT EXPENDITURE INCURRED BY ASSESSEE IS ONLY 0.043 % OF TOTAL TURNOVER OF THE ASSESSEE-COMPANY. THE ACCOUNTS OF ASSESSEE-COMPANY ARE ALWAYS SUBJECTED TO AN AUDIT BY THE COMPTROLLER & AUDITOR GENERAL OF IN DIA IN TERM OF SECTION 619(4) OF THE COMPANIES ACT. THE ASSESSEE MADE THE EXPENDITURE ON REPAIR OF PLANT AND MACHINERY ON DIFFERENT LOCATION IN THE PR ECEDING YEAR. AS A RESULT, THE EXPENDITURE ON REPAIR AND MAINTENANCE OF PLANT AND MACHINERY WAS OVERSTATED. IN FACT THE EXPENDITURE IS ALMOST NEGLIGIBLE COMPA RATIVE TO THE TURNOVER OF THE ASSESSEE. WAS UNDER STATED. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORI TIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND GONE THROUGH THE ORDER OF AUTHORITIES BELOW. WE FIND THAT ALMOST IDE NTICAL ISSUE WAS ADJUDICATED BY CO-ORDINATE BENCH OF THIS TRIBUNAL IN RASHTRIYA CHEMICALS AND FERTILIZERS LTD. (SUPRA), WHEREIN THE EXPENSES IN DISPUTE WAS . 005% OF TOTAL TURNOVER OF THE ASSESSEE WHICH WAS ALLOWED OF ERRORS AND OMISSIO N BEING PERIOD EXPENSES WAS ALLOWED. THE CO-ORDINATE BENCH PASSED THE FOLLO WING ORDER: 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD OF THE CASE. ADMITTEDLY, THE ASSESSEE WAS FOLLOWING ME RCANTILE SYSTEM OF ACCOUNTING AND, THEREFORE, ALL THE ACCRUED LIABILIT IES AND ALL THE ACCRUED INCOME HAD TO BE ACCOUNTED FOR IN THE YEAR IN WHICH THE SAID LIABILITY CRYSTALLISED AND INCOME ACCRUED. HOWEVER, IT CANNOT BE RULED OUT THAT IN THE BIG SET UP, WHICH THE COMPANY HAD, THERE COULD NOT BE ANY ERRORS OR OMISSIONS IN MAINTAINING THE ACCOUNTS. WE FIND THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF CO-ORDINA TE BENCH IN ASSESSEES OWN CASE FOR THE AY 1997-98 (SUPRA). WHEREIN, ON ID ENTICAL FACTS, THE TRIBUNAL FOLLOWING THE DECISION OF THE ITAT DELHI I N THE CASE OF ESCORTS LIMITED (SUPRA), DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT PARA IS REPRODUCED HEREUNDER: IT A NO. 2212/M/2011 MAHARASHTRA STATE ELECTRICITY TRANSMISSION CO. LTD. 3 'IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CAS E WHEN; THE TURNOVER OF THE ASSESSEE IS SUBSTANTIAL, SOME BONAFIDE ADJUS TMENT IN THE BOOKS OF ACCOUNT WHERE THE ACCOUNTS FOR THE RELEVANT YEAR MAY HAVE BEEN CLOSED OR THE ASSESSEES AVENUES FOR CLAIMING THESE DEDUCTIONS IN THE RELEVANT YEAR HAVE BEEN EXHAUSTED THE ASSESSEE WOUL D BE ENTITLED TO CLAIM SUCH DEDUCTION IN A SUBSEQUENT YEAR. THEREFOR E, WE ARE UNABLE TO COME TO ANY OTHER CONCLUSION AND ARE OF THE OPIN ION THAT NO INTERFERENCE IN THE IMPUGNED ORDER IS CALLED FOR. A CCORDINGLY, THE GROUND RAISED BY THE REVENUE IS REJECTED. SINCE FACTS AND CIRCUMSTANCES OF THE YEAR UNDER CON SIDERATION ARE SIMILAR TO THAT OF A.Y. 1997-98 (SUPRA). FOLLOWING THE DECI SION OF THE TRIBUNAL IN ASSESSEES OWN CASE, THIS GROUND OF THE ASSESSEE IS ALLOWED. THUS, CONSIDERING THE DECISION OF CO-ORDINATE BENCH OF DELHI TRIBUNAL ON IDENTICAL FACT, WHEREIN THE ASSESSEE WAS ALSO A PUB LIC SECTOR UNDERTAKING, WE RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH ALLOWED THE GROUND OF APPEAL RAISED BY THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH MARCH 2017. SD/- SD/- (D.KARUNAKARA RAO) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 15/03/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/