Asst. Commissioner of Income Tax, Circle-1, Warangal V. Northern Power Distribution Company of Telangana Limited, Warangal

ITA 379/Hyd/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5677 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2021
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: DB-A
• Assessment Year: 2014-2015
• Appeal Filed On: 25-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Earning of tax free income; Rule 8D; Set aside
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”: HYDERABAD (THROUGH VIRTUAL CONFERENCE) B EFORE SH RI SA TBEER SING H GODA RA, JU DI CIA L MEM BER AND SHR I L AXMI PR AS A D SAHU , AC COUNT ANT MEMBE R ITA No. 379/H/2018 Assessment Year: 2014-15 Asst. Commissioner of Income-tax, Circle – 1, Warangal. Vs. Northern Power Distribution Company of Telangana Ltd., Warangal. PAN – AABCN 2875L (Appellant) (Respondent) Revenue by: Shri Rajendra Kumar Assessee by: Shri V. Siva Kumar Date of hearing: 16/12/2021 Date of pronouncement: 23/12/2021 O R D E R PER L.P. SAHU, A.M.: This appeal filed by the Revenue is directed against CIT(A), Hyderabad’s order dated 08/12/2017 for AY 2014- 15-16 involving proceedings u/s 143(3) of the Income Tax Act, 1961 ; in short “the Act on the following grounds of appeal: 1. The learned CIT(A) erred on both law and facts of the case. ITA No.. 379/Hyd/2018 M / s N o r t h e r n P o w e r D i s t r i b u t i o n C o m p a n y o f T e l a n g a n a L t d . , Hy d . :- 2 -: 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs.6,90,59,305/- made u/s 14A r.w.r 8D the IT Rules disregarding the CSDT circular NO.5 of 2014 dated 15.02.2014 which mandates the AO to make such disallowance even if the investments d not yield exempt income. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directed the AO to allow the amount disallowed towards claim of consumer contribution amortization of Rs.45,58,73,733/- after further verification, despite a clear finding given by the AO in the assessment order to the effect that contributions was claimed and allowed in the P&L account and the amortization claim in the computation of income amounts to double deduction. 4. Any other ground(s) that may be urged at the time of hearing.” 2. Briefly the facts of the case are that the assessee company, a public sector undertaking owned by Govt. of Telangana in the business of distribution of electrical power, filed its return of income for the AY 2014-15 originally on 29/09/2014 declaring total income of Rs. Nil after set-off of brought forward losses of Rs. 9,63,58,237/-. Subsequently, the assessee filed revised return declaring total income of Rs. Nil after set-ff of brought forward losses of Rs. 11,54,18,361. The AO completed the assessment u/s 143(3) of the Act assessing the total income of the assessee at Rs. 64,03,51,350/- by making the following disallowances: ITA No.. 379/Hyd/2018 M / s N o r t h e r n P o w e r D i s t r i b u t i o n C o m p a n y o f T e l a n g a n a L t d . , Hy d . :- 3 -: 1. Disallowance of Rs. 6,90,59,305/- u/s 14A r.w.r 8D. 2. Disallowance of Rs. 45,58,73,733/- towards claim of consumer contribution amortization. 3. When the assessee preferred an appeal before the CIT(A), the CIT(A) deleted the above disallowances made by the AO. 4. Aggrieved by the order of CIT(A), the revenue is in appeal before the ITAT. 5. The revenue has raised 4 grounds of appeal, out of which ground Nos 1 & 4 are general in nature, hence, need no adjudication. 6. As regards ground No. 2 relating to the disallowance of Rs. 6,90,59,305/-, and ground No. 3 relating to the disallowance of Rs. 45,58,73,733/- towards claim of consumer contribution amortization, the ld. AR of the assessee submitted that the issues in dispute are squarely covered by the decision of the coordinate bench of this Tribunal in assessee’s own case for AY 2013-14 in ITA No. 186/Hyd/2017 vide order dated 11/06/2021, a copy of which is filed on record. 7. The ld. DR neither controverted the submission of the ld. AR of the assessee nor brought any contrary decision in this regard. 8. We have considered the rival submissions and perused the material on record. As submitted by the ld. AR of the assessee, the issues are covered in favour of the ITA No.. 379/Hyd/2018 M / s N o r t h e r n P o w e r D i s t r i b u t i o n C o m p a n y o f T e l a n g a n a L t d . , Hy d . :- 4 -: assessee by the decision of the coordinate bench of this Tribunal in assessee’s own for AY 2013-14 cited supra. 8.1 As regards the issue of disallowance u/s 14A r.w.rule 8D, the coordinate bench in AY 2013-14 has observed as under: “3. Coming to the Revenue’s first and foremost substantive ground seeking to revive Section 14A r.w. Rule 8D disallowance of Rs.7,40,94,331/-, we find no substance in the instant ground since the CIT(A) has held that the assessee has not derived any exempt income in the relevant previous year. Case law:- i. CIT Vs. Chettinad Logistics Pvt. Ltd., [80 taxmann.com 221] (Madras); ii. CIT Vs. Corrtech Energy Pvt. Ltd., [223 Taxman 130] (Guj); iii. Cheminvest Ltd., Vs. CIT (2015) [378 ITR 33] (Del) holds that Section 14A read with Rule 8D applies only in relation to an assessee’s exempt income and not otherwise. We therefore affirming the CIT(A)’s findings deleting the impugned disallowance. The Revenue fails in its first substantive ground therefore.” 8.2 As regards the issue of disallowance of Rs. 45,58,73,733/- towards claim of consumer contribution amortization, the coordinate bench in AY 2013-14 has observed as under: 6. We are now left with last issue of consumer contribution amortization disallowance of Rs.39,44,46,826/- made by the Assessing Officer and deleted in the CIT(A)’s order as under: Space left intentionally ITA No.. 379/Hyd/2018 M / s N o r t h e r n P o w e r D i s t r i b u t i o n C o m p a n y o f T e l a n g a n a L t d . , Hy d . :- 5 -: Space left intentionally ITA No.. 379/Hyd/2018 M / s N o r t h e r n P o w e r D i s t r i b u t i o n C o m p a n y o f T e l a n g a n a L t d . , Hy d . :- 6 -: On one hand the appellant claims that amount of Rs.169,81,09,511/- does not included depreciation on assets purchased from consumer fund, whereas the Assessing Officer states that this amount includes Rs.39,44,46,826/-. Therefore what needs to be done is to verify whether the amount of Rs.169,81,09,511/- includes Rs.39,44,46,826/- or not? The Assessing Officer is directed to verify the same, if the amount of Rs.39,44,46,826/- is already included in depreciation of Rs.169,81,09,511/-, the appellant would not be entitled for additional claim of Rs.39,44,46,826/-. Therefore this ground of appeal is treated as partly allowed”. 6.1. Suffice to say, CIT(A) has only directed the Assessing Officer to verify the relevant facts at the Assessing Officer’s end itself and therefore, the Revenue itself cannot be taken as an aggrieved party per se except the fact that such an exercise of lower appellate jurisdiction is no more exigible as per the Finance Act, 2001 omitting ‘or he may set aside’ w.e.f.01-06-2001. We thus accept the Revenue’s argument in principle but follow the very course of action ourselves and direct the Assessing Officer to verify the necessary facts pertaining to the instant issue. ITA No.. 379/Hyd/2018 M / s N o r t h e r n P o w e r D i s t r i b u t i o n C o m p a n y o f T e l a n g a n a L t d . , Hy d . :- 7 -: 8.3 Since the current AY there is no exempt income received by the assessee, no addition can be made u/s 14A of the Act. Respectfully following the decision of the coordinate bench in assessee’s own case for AY 2013-14 cited supra, we uphold the decision of the CIT(A) with regard to ground No. 2 in respect of disallowance of Rs. 6,90,59,305/- made u/s 14A r.w.r. 8D and accordingly, this ground raised by the revenue is dismissed. 8.4 With regard to ground No. 3 following the decision of the coordinate bench in assessee’s own case for AY 2013-14 cited supra, we direct the AO to verify the necessary facts pertaining to this issue. Thus, this ground of the revenue is partly allowed for statistical purposes. 9. In the result, revenue’s appeal is partly allowed for statistical purposes in above terms. Pronounced in the open court on 23 rd December, 2021. Sd/- Sd/- (S.S. GODARA) (L. P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 23 rd December, 2021. Kv ITA No.. 379/Hyd/2018 M / s N o r t h e r n P o w e r D i s t r i b u t i o n C o m p a n y o f T e l a n g a n a L t d . , Hy d . :- 8 -: Copy to : 1 ACIT, Circle – 1, Aayakar Bhavan, Station Road, Warangal. 2 M/s Northern Power Distribution Company of Telangana Ltd., H.No. 2-5-31/2, Vidyuth Bhavan, Nakkalagutta, Hanamkonda, Warangal – 506001. 3 CIT(A) – 3, Hyderabad. 4 Pr. CIT – 3, Hyderabad. 5 ITAT, DR, Hyderabad. 6 Guard File.