Hindustan Copper Ltd. , Kolkata V. ACIT, Cir-1 LTU, KOL, Kolkata

ITA 491/KOL/2023

AI Insights

The case involves Hindustan Copper Limited appealing against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs. 73,68,76,693 to the company's income for the Assessment Year 2017-18. This addition was related to recoverable excess electricity charges following a Supreme Court decision that favored Hindustan Copper Limited in a dispute with the Madhya Pradesh State Electricity Board over electricity tariff rates. The Tribunal's decision was based on the understanding that the amount had already been adjusted against electricity charges in subsequent years, thus leading to a double addition if included again in the income for AY 2017-18.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128677 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 17-05-2023
• Other Referred Cases: Hon'ble Supreme Court decision on electricity tariff dispute
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Set aside
• Section: 263; 143(3); 143(2)

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'ए' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH, KOLKATA डॉ. मनीष बोरड, ल े खा सदस्य एवं श्री संजय शमा ा , न्याधयक सदस्य क े समक्ष Before DR. MANISH BORAD, ACCOUNTANT MEMBER & SONJOY SARMA, JUDICIAL MEMBER I.T.A. No.: 491/KOL/2023 Assessment Year: 2017-18 Hindustan Copper Limited.......................................Appellant [PAN: AAACH 7409 R] Vs. ACIT, Circle-1 LTU, Kolkata (Now changed to DCIT, Circle-5(1), Kolkata................................................................Respondent Appearances: Assessee represented by: Sh. S. Bhatacharya, FCA. Department represented by: Sh. S. Datta, CIT (D/R). Date of concluding the hearing : July 4 th , 2023 Date of pronouncing the order : October 3 rd , 2023 ORDER Per Manish Borad, Accountant Member: This appeal filed by the assessee pertaining to the Assessment Year (in short ‘AY’) 2017-18 is directed against the order passed u/s 263 of the Income Tax Act, 1961 (in short the ‘Act’) by the Commissioner of Income Tax (Appeals) [in short ld. I.T.A. No.: 491/KOL/2023 Assessment Year: 2017-18 Hindustan Copper Limited. Page 2 of 6 'CIT(A)']- NFAC, Delhi dated 24.03.2023 arising out of the assessment order framed u/s 143(3) of the Act dated 26.12.2019. 2. The assessee is in appeal before this Tribunal raising the following grounds: “1. That the Ld. Commissioner of Income-tax (Appeals), NFAC was wrong in confirming the addition to the extent of Rs.73,68,76,693 in relation to the recoverable excess electricity charges on the basis of the decision of the Hon’ble Supreme Court. 2. That without prejudice to the contention raised in Ground No. 1 above, the Ld. Commissioner of Income-tax (Appeals), NFAC failed to appreciate that in pursuance of the concerned decision of the Hon’ble Supreme Court the appellant had duly set off the earlier paid excess electricity charges aggregating to Rs.123,15,10,000 against the electricity bills relating to the Assessment Year 2017-18 (Rs.49,46,33,307), Assessment Year 2018-19 (Rs.45,72,98,217) and Assessment Year 2019-20 (Rs.27,95,78,476) whereby income had been offered for the entire sum of Rs.123,15,10,000 and thus the Ld. Commissioner of Income-tax (Appeals), NFAC erred in confirming addition to the extent of Rs.73,68,76,693 in the Assessment Year 2017-18. 3. That without prejudice to the contentions raised in Grounds Nos. 1 and 2 above, the Ld. Commissioner of Income-tax (Appeals), NFAC failed to appreciate that due to the confirmation of the addition to the extent of Rs.73,68,76,693 there occurred a double addition of the said sum of Rs.73,68,76,693 - firstly in the Assessment Year 2017-18 (Rs.73,68,76,693) and secondly, in the Assessment Years 2018-19 (Rs.45,72,98,217) and 2019-20 (Rs.27,95,78,476) and thus the Ld. Commissioner of Income-tax (Appeals), NFAC erred in confirming the addition to the extent of Rs.73,68,76,693. 4. That the appellant craves leave to add, delete or modify any Ground or Grounds of Appeal before or at the time of Hearing of the Appeal.” 3. At the outset, ld. Counsel for the assessee submitted that there was an issue regarding the rate of electricity charges which the assessee was contesting against the Madhya Pradesh I.T.A. No.: 491/KOL/2023 Assessment Year: 2017-18 Hindustan Copper Limited. Page 3 of 6 Electricity Board. The dispute travelled before the Hon'ble Supreme Court and vide order dated 10.11.2016 the assessee succeeded and Hon'ble Court held that as a logical corollary tariff has to be levied as meant for manufacturing unit. On giving effect to the judgment of the Hon'ble Apex Court the assessee was entitled to a refund of Rs. 123.15 Crore from Madhya Pradesh State Electricity Board now renamed as MPVVNL. He further, submitted that the assessee adjusted the electricity charges payable for FY 2016-17 and onwards against the outstanding amount receivable from Madhya Pradesh State Electricity Board. The remaining amount could not be adjusted during FY 2016-17 have been adjusted in the subsequent financial years. However, ld. AO has held that the sum of Rs. 123.15 Crore has to be treated as income for the AY 2017-18 and after adjusting the electricity charges for the year under consideration the remaining amount of Rs. 73.69 Crore approx. has been added to the income of the assessee and the same tantamount to double addition because in the subsequent assessment years the assessee has already adjusted the said refund by not claiming the electricity expenses payable by it. 4. On the other hand, ld. D/R vehemently argued supporting the orders of both the lower authorities and submitted that as per the order of Hon'ble Apex Court the became entitled to a refund and the same ought to have been accounted for in the books of accounts. 5. We have heard rival contentions and perused the records placed before us. We observe that the assessee is a limited I.T.A. No.: 491/KOL/2023 Assessment Year: 2017-18 Hindustan Copper Limited. Page 4 of 6 company engaged in the mining and manufacturing of copper. Income of Rs. 68.63 Crore approx. declared in the e-return filed for AY 2017-18 on 31.10.2017. During the course of assessment proceedings which were carried out after selecting the case for scrutiny through CASS and serving valid notices u/s 143(2) & 142(1) of the Act, so far as the issue under consideration is concerned, ld. AO observed that the assessee succeeded before the Hon'ble Apex Court in the case against Madhya Pradesh State Electricity Board and since the assessee was being charged for the electricity at the rates meant for mining but the assessee claimed that it should have been charged for the rates applicable for manufacturing units and finally Hon'ble Apex Court decided the issue in favour of the assessee and as a result, the excess amount of electricity paid by the assessee in the preceding years was to be refunded and the total of such amount was Rs. 123.15 Crore. The Madhya Pradesh State Electricity Board did not give the refund to the assessee and the same was being adjusted against the electricity charges payable by the assessee for the year under consideration. The electricity charges for FY 2016-17 were adjusted against the amount receivable from Madhya Pradesh State Electricity Board and the remaining amount which could not be adjusted was adjusted in the subsequent years against the electricity charges payable by the assessee. Ld. AO is of the view that the assessee ought to have declared the amount receivable from Madhya Pradesh State Electricity Board at Rs. 123.15 Crore as income for the AY 2017-18 and he therefore, made the addition of the unadjusted amount. Ld. CIT(A) has also confirmed the order of the AO taking the same view. I.T.A. No.: 491/KOL/2023 Assessment Year: 2017-18 Hindustan Copper Limited. Page 5 of 6 6. We further notice that Hon'ble Apex Court in the order dated 10.11.2016 while giving relief to the assessee has observed that “As a logical corollary, tariff has to be levied as meant for manufacturing unit, therefore, the analysis made by the High Court is not correct and, accordingly, the judgments rendered by it deserve to be set aside and we so direct. However, during this period if any amount has been paid by the appellants to the revenue, the same shall be adjusted towards future demands.” 7. From going through the above finding of the Hon'ble Apex Court we notice that the excess amount of electricity charges paid by the assessee in the past i.e. before the date of order of Hon'ble Apex Court, the same amounted to Rs. 123.15 Crore. Further, Hon'ble Apex Court has directed that such excess amount paid by the assessee shall be adjusted towards future demands. In our humble understanding, the future demands here is referred to the electricity charges payable by the assessee which it is required to be paid. The assessee has acted correctly in pursuance to the finding of the Hon'ble Apex Court and has adjusted the sum receivable from Madhya Pradesh State Electricity Board against the electricity charges payable by the assessee for AY 2017-18 and the remaining unadjusted amount has been subsequently adjusted during AY 2018-19 & AY 2019-20. Thus, the assessee has not claimed the electricity expenses for all these three assessment years which indirectly means that the income of the assessee has increased by the total amount receivable by the assessee from Madhya Pradesh State Electricity Board. The finding of ld. CIT(A) will tantamount to be double addition in the hands of the assessee because the same has already been offered to tax I.T.A. No.: 491/KOL/2023 Assessment Year: 2017-18 Hindustan Copper Limited. Page 6 of 6 during AY 2018-19 & AY 2019-20 in terms of the direction given by the Hon'ble Apex Court in the order dated 10.11.2016. We therefore, under the given facts and circumstances of the case, set aside the finding of ld. CIT(A) and decide in favour of the assessee and allow the effective ground nos. 1, 2 & 3 raised by the assessee. 8. In the result, the appeal filed by the assessee is allowed. Kolkata, the 3 rd October, 2023 Sd/- Sd/- [Sonjoy Sarma] [Manish Borad] Judicial Member Accountant Member Dated: 03.10.2023 Bidhan (P.S.) Copy of the order forwarded to: 1. Hindustan Copper Limited, Tamra Bhawan, 1, Ashutosh Chowdhury Avenue, Kolkata-700 019. 2. ACIT, Circle-1 LTU, Kolkata (Now changed to DCIT, Circle- 5(1), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata