NUCLEAR POWER CORPORATION OF INDIA LTD, MUMBAI V. CIT LTU, MUMBAI

ITA 3880/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8972 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Keywords: Question of law; Assessment record
• Section: 115JB; 263; 154; 11

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -BBENCH MUMBAI , , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMARJIT SINGH,JUDICIAL MEMBER ./I.T.A./3880/MUM/2014, / ASSESSMENT YEAR: 2009-10 NUCLEAR POWER CORPORATION OF INDIA LTD. VIKRAM SARABHAI BHAWAN CENTRAL AVENUE, ANUSHAKTI NAGAR MUMBAI-400 094. PAN:AAACN 3154 F VS. CIT-(LTU) 29 TH FLOOR, CENTRE NO.1, WORLD TRADE CENTRE, CUFFE PARADE MUMBAI-400 005. ( /APPELLANT ) ( / RESPONDENT) / REVENUE BY: SHRI N.P. SINGH-CIT-DR /ASSESSEE BY: SHRI NITESH JOSHI / DATE OF HEARING: 13/12/2016 / DATE OF PRONOUNCEMENT: 11.01.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA A.M. - CHALLENGING THE ORDERS DATED 26/03/2014 OF THE CIT- (LTU),MUMBAI,PASSED U/S. 263 OF THE ACT,THE ASSESSEE HAS FILED THE PRESENT APPEAL.THE A SSESSEE HAD FILED ITS RETURN OF INCOME ON 30/09/2009,DECLARING TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT AT RS. NIL AND THE BOOK PROFIT AS PER THE PROVISIONS OF SECTION 115 JB AT RS. 28,003.18 LAKHS.THE ASSESSING OFFICER (AO)COMPLETED THE ASSESSMENT U/S. 143 (3) O F THE ACT ON 09/12/2011, DETERMINING THE INCOME OF THE ASSESSEE AT RUPEES NIL UNDER THE NORM AL PROVISIONS AND AT RS. 311,58,55, 000/- U/S. 115 JB OF THE ACT. 2. PERUSAL OF THE ASSESSMENT RECORDS SHOWED THAT FOLLO WING FOUR ITEMS WERE NOT CREATED TO THE P&L ACCOUNT OF THE ASSESSEE- I. INTEREST INCOME ON DECOMMISSIONING FUND - RS . 50.02 CRORES II. LEVY FOR YEAR TRANSFERRED FROM SALE OF DECOMMIS SIONING - RS. 25.46 CRORES III. INTEREST INCOME ON RENOVATION AND MODERNISATIO N FUND(R&M FUND)-RS. 10.46 CRORES IV. INTEREST INCOME ON RESEARCH AND DEVELOPMENT(R&D ) - RS. 23.24 CRORES ------------------- RS. 109.31 CRORES . HE FURTHER FOUND THAT WHILE COMPLETING THE ASSESSME NT UNDER NORMAL PROVISIONS THE AO HAD REJECTED THE CLAIM OF THE ASSESSEE AND HAD ADDED TH E AMOUNT OF RS. 1 09, 31, 36, 711/-TO THE TOTAL INCOME OF THE ASSESSEE, THAT WHILE COMPUTING THE BOOK PROFIT U/S. 115 JB OF THE ACT, HE DID NOT CONSIDER SAID AMOUNT. ACCORDINGLY, THE CIT ISSUED A NOTICE U/S. OF THE ACT ASKING THE 3880/M/14-NTPC 2 ASSESSEE AS TO WHY THE SAID AMOUNT SHOULD NOT BE AD DED TO THE BOOK PROFIT,VIDE HIS LETTER DATED 12/03/2014. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE CASES RELIED UPON BY IT, THE CIT HELD THAT CONTRIBUTIONS TO DECOMMISSIONING FUND,R&M FUND AND R&D FUND WERE COLLECTED AS PART OF ELECTRICITY CHARGES BY THE ASSESSEE FROM THE CONSUMERS, THAT AFTER THE CHARGES WERE COLLECTED THE ASSESSEE WOULD TRANSFER PORTION OF TH E CHARGES TO VARIOUS FUNDS AS MANDATED BY THE GOVERNMENT OF INDIA, THAT THERE WAS NO MERIT IN THE CONTENTION THAT CONTRIBUTIONS TO THE VARIOUS FUNDS DID NOT FORM PART OF THE INCOME OF TH E ASSESSEE AND THEREFORE SAME SHOULD NOT BE ADDED BACK TO THE PROFIT AS PER THE PROFIT AND L OSS ACCOUNT TO ARRIVE AT BOOK PROFIT. HE RELIED UPON THE CASE OF VELLORE ELECTRIC CORPORATION LTD. (227 ITR 557) AND HELD THAT THERE WAS NO WERE DEBATABLE ISSUE IN THAT REGARD, THAT THE FAILU RE OF THE AO IN ADDING BACK THE INTEREST INCOME TO DECOMMISSIONING FUND, LEVY FOR THE YEAR T RANSFERRED FROM SALE OF DECOMMISSIONING, INTEREST INCOME ON RENOVATION AND MODERNISATION FUND AND THE INTEREST INCOME ON RESEARCH AND DEVELOPMENT WAS ERRONEOUS AN D WAS PREJUDICIAL TO THE INTEREST OF REVENUE. SETTING ASIDE THE ORDER OF THE AO, THE CIT DIRECTED HIM TO THAT BACK THE ABOVE ITEMS TO THE PROFIT AS PER THE P&L ACCOUNT TO ARRIVE AT T HE BOOK PROFIT U/S. 115 JB OF THE ACT. 3. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI SED REPRESENTATIVE(AR) CONTENDED THAT THE ASSESSEE HAD FURNISHED ALL THE DOCUMENTS CALLED FOR BY THE AO DURING THE ASSESSMENT PROCEEDINGS, THAT THE AO HAD APPLIED HIS MIND WHILE COMPUTING THE INCOME UNDER THE NORMAL PROVISIONS AS WELL AS U/S. 115 JB OF THE ACT, THAT THE AO HAD ISSUED A NOTICE U/S. 154 OF THE ACT ON 15/05/2012 WHEREIN HE HAD ASKED THE ASSESSEE AS TO WHY REMEDIAL ACTION SHOULD NOT BE TAKEN FOR COMPUTING THE INCOME UNDER THE MAT PROVIS IONS, THAT VIDE ITS LETTER DATED 22/05/2012 THE ASSESSEE HAD MADE DETAILED SUBMISSIO NS IN THAT REGARD, THAT THE METHOD OF COMPETITION OF BOOK PROFIT HAD BEEN PROVIDED IN THE EXPLANATION BELOW THE SECTION 115 JB (2), THAT ONLY THE ADJUSTMENT CONTEMPLATED IN SECTION 11 5 JB COULD BE CARRIED OUT FOR COMPUTING BOOK PROFIT AND THAT NO ADJUSTMENT ON ACCOUNT OF DE COMMISSIONING LEVY AND INTEREST THEREON, INTEREST ON R&M AND R&D FUND WAS NOT POSSIBLE, THAT NONE OF THE ABOVE-MENTIONED FOR ITEMS FELL UNDER ANY OF THE ADJUSTMENTS MENTION IN THE SECTION, THAT THE HONBLE JURISDICTION HIGH COURT HAS ADMITTED SUBSTANTIAL QUESTION OF LAW IN CASE OF THE ASSESSEE AGAINST THE QUANTUM ORDER PASSED BY THE TRIBUNAL, THAT THE ISSU E WAS DEBATABLE. HE RELIED UPON THE CASES OF MALAYALA MANORAMA CO.LTD. (300 ITR 251) APOLLO T YRES LTD (255 ITR 273),NICO EXTRUSION LTD. (ITA/3662/MUM/2015 AY. 2009-10, DATE D 08/07/2016). THE DEPARTMENTAL REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE CIT A ND HEAVILY RELIED UPON THE JUDGEMENT OF 3880/M/14-NTPC 3 THE HONORABLE DELHI HIGH COURT DELIVERED IN THE CAS E OF ASHOK LOGANI (ITA NO. 553 OF 2010, DATED 11/05/2011). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND IN THE CASE UNDER CONSIDERATION, WHILE COMPLETING THE ASSESSMEN T,THE AO HAD MADE ADDITIONS UNDER FOUR HEADS OF INCOME NAMELY INTEREST ON DECOMMISSIONING FUND,LEVY FOR DECOMMISSIONING,R&M FUND,R&D FUND ,THAT WHILE COMPUTING THE BOOK PROFIT U/S. 115 JB HE DID NOT INCLUDE THOSE ITEMS, THAT LATER ON HE ISSUED A NOTICE U/S. 154 OF THE ACT FOR INCLUDING THE SAID ITEMS, THE CIT HAD ISSUED A NOTICE U/S. 263 OF THE ACT, THAT HE DI RECTED THE AO TO RECOMPUTE THE INCOME UNDER THE MAT PROVISIONS AND TO INCLUDE THE ABOVE I TEMS.WE FIND THAT WHILE COMPLETING THE ORIGINAL ASSESSMENT THE AO HAD CALLED FOR DETAILS O F 115 JB COMPUTATION IN THE NOTICE ISSUED U/S. 142 (1) OF THE ACT AND THE ASSESSEE HAD FILED THE REQUISITE DETAILS (PG. 7,10-13 OF THE PAPER BOOK). AFTER CONSIDERING THE AVAILABLE MATERI AL THE AO HAD PASSED THE ORIGINAL ORDER. NOT ONLY THIS, LATER ON HE ISSUED A NOTICE U/S. 154 TO INCLUDE THE SAME ITEMS FOR COMPUTING BOOK PROFIT, THAT THE ASSESSEE HAD FILED DETAILED R EPLY IN THAT REGARD. IN THE CIRCUMSTANCES,WE ARE OF THE OPINION THAT THE AO HAD APPLIED HIS MIND WHILE PASSING THE ORIGINAL ORDER AND DROPPING THE RECTIFICATION PROCEEDINGS. WE ALSO FIN D THAT THE CIT HAD DIRECTED THE AO TO MAKE THE ADDITIONS. THUS, HE HAS LEFT THE AO WITH N O OPTION BUT TO MAKE ADDITIONS.THE PROVISIONS OF SECTION 263 OF THE ACT PERMIT THE CIT TO REVISE THE ORDERS WHICH ARE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE BUT IT D OES NOT GIVE UNBRIDLED POWER TO THE CIT TO TAKE OVER THE POWER OF THE AO AND TO DECIDE THE ISS UE AT HIS END. 4.1. THE PROVISIONS OF SECTION 115JB OF THE ACT,WERE INT RODUCED IN THE ACT WITH SPECIFIC PURPOSES.WHILE COMPUTING THE INCOME UNDER THE SAID SECTION CERTAIN ITEMS ARE TO BE ADDED AND CERTAIN ITEMS ARE TO BE DEDUCTED.THE AO OR THE ASSESSEE CANNOT TRAVEL BEYOND THE LAXMAN REKHA DRAWN BY THE SECTION ITSELF.THE DISPUT ED FOUR ITEMS ARE NOT PART OF THE LIST APPEARING IN THE SECTION.THEREFORE,IN OUR OPINION,T HERE WAS NO JUSTIFICATION FOR THE CIT TO USE HIS REVISIONARY POWERS IN THE CASE UNDER CONSIDERAT ION.IT IS TO BE REMEMBERED THAT THE ACCOUNTS OF THE ASSESSEE WERE AUDITED BY THE C&AG A ND BY A SPECIAL AUDITOR.THEY HAD NOT FOUND ANY DEFECT IN THE ACCOUNTS PREPARED BY IT.BES IDES,IN THE JUDGMENT OF APOLLO TYRES LTD.(SUPRA),THE HONBLE SUPREME COURT HAS HELD AS U NDER: THE ASSESSING OFFICER, WHILE COMPUTING THE BOOK PRO FITS OF A COMPANY U/S. 115J OF THE INCOME-TAX ACT, 1961, HAS ONLY THE POWER OF EXAMINI NG WHETHER THE BOOKS OF ACCOUNT ARE CERTIFIED BY THE AUTHORITIES UNDER THE COMPANIES AC T AS HAVING BEEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE COMPANIES ACT.THE ASSESSING OFF ICER, THEREAFTER, HAS THE LIMITED POWER OF MAKING INCREASES AND REDUCTIONS AS PROVIDED FOR IN THE EXPLANATION TO SECTION 115J . THE 3880/M/14-NTPC 4 ASSESSING OFFICER DOES NOT HAVE THE JURISDICTION TO GO BEHIND THE NET PROFITS SHOWN IN THE PROFIT AND LOSS ACCOUNT EXCEPT TO THE EXTENT PROVID ED IN THE EXPLANATION. THE USE OF THE WORDS IN ACCORDANCE WITH THE PROVISIONS OF PARTS I I AND III OF SCHEDULE VI TO THE COMPANIES ACT IN SECTION 115J WAS MADE FOR THE LIM ITED PURPOSE OF EMPOWERING THE ASSESSING OFFICER TO RELY UPON THE AUTHENTIC STATEM ENT OF ACCOUNTS OF THE COMPANY. WHILE SO LOOKING INTO THE ACCOUNTS OF THE COMPANY, THE ASSES SING OFFICER HAS TO ACCEPT THE AUTHENTICITY OF THE ACCOUNTS WITH REFERENCE TO THE PROVISIONS OF THE COMPANIES ACT, WHICH OBLIGATE THE COMPANY TO MAINTAIN ITS ACCOUNTS IN A MANNER PROVIDED BY THAT ACT AND THE SAME TO BE SCRUTINISED AND CERTIFIED BY STATUTORY A UDITORS AND APPROVED BY THE COMPANY IN GENERAL MEETING AND THEREAFTER TO BE FILED BEFORE T HE REGISTRAR OF COMPANIES WHO HAS A STATUTORY OBLIGATION ALSO TO EXAMINE AND BE SATISFI ED THAT THE ACCOUNTS OF THE COMPANY ARE MAINTAINED IN ACCORDANCE WITH THE REQUIREMENTS OF T HE COMPANIES ACT. SUB-SECTION (1A) OF SECTION 115J DOES NOT EMPOWER THE ASSESSING OFFICER TO EMBARK UPON A FRESH ENQUIRY IN REGARD TO THE ENTRIES MADE IN THE BOOKS OF ACCOUNT OF THE COMPANY. CONSIDERING THE ABOVE,WE ARE NOT ABLE TO PERSUADE O URSELVES TO ENDORSE THE ACTION TAKEN BY THE AO U/S.263 OF THE ACT. HERE,WE WOULD LIKE TO MENTION THAT THE CASE RELIED UPON BY THE DR IS OF NO HELP TO REVENUE.IT WAS A CASE OF AN INDIVIDUAL AND AN ACTION U/S.132(1 )OF THE ACT WAS TAKEN IN HIS CASE.THE MATTERS RELATES DISCLOSURE MADE AND THE DISCREPANCI ES FOUND IN THE RECONCILIATION OF CASH FOUND AND ADMISSION MADE.FACTS OF THAT CASE ARE TOT ALLY DIFFERENT AND NOT RELEVANT TO DECIDE THE PRESENT MATTER.REVERSING THE ORDER OF THE CIT,W E DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS ALL OWED. !'#$%&' . ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY, 2017. 11 , 2017 SD/- SD/- ( $ / AMARJIT SINGH ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :11.01.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR B BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.