DCIT, Dehradun V. Uttaranchal Jal Vidyut Nigam Ltd., Dehradun

ITA 5724/DEL/2015

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3620 (ITAT-DEHRADUN)
• Duration Of Justice: 5 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 12-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N C UPPADHAY
• Keywords: Depreciation; Set aside
• Section: 143(3); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL DEHRADUN CIRCUIT BENCH: DEHRADUN BEFORE, SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.5724/DEL/2015 (ASSESSMENT YEAR: 2004-05) DY. CIT, CIRCLE-2, DEHRADUN. VS. M/S UTTARANCHAL JALVIDYUT NIGAM LTD., UJJWAL MAHARANI BAGH, GMS ROAD, DEHRADUN. PAN AAACU 6672R (APPELLANT) (RESPONDENT) APPELLANT BY SH. N.C.UPPADHAY, SR. DR RESPONDENT BY DR. RAKESH GUPTA, ADV. SH. SOMIL AGGARWAL, ADV. DATE OF HEARING 03.03.2021 DATE OF PRONOUNCEMENT 31.05.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: REVENUE HAS FILED THIS APPEAL AGAINST ORDER DATE D 25 TH AUGUST 2015 PASSED BY THE LD. COMMISSIONER OF INCO ME TAX (APPEALS), DEHRADUN {CIT (A)} IN APPEAL NO. 234(A)/ 2014-15 FOR ASSESSMENT YEAR (AY) 2004-05. FOLLOWING GROUNDS OF A PPEALS HAVE BEEN RAISED: 2 ITA NO.5724/DEL/2015 DCIT VS. M/S UTTARANCHAL JAL VIDYUT NIGAM LTD. 1. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS T O ALLOW DEPRECIATION ON ASSETS FOR WHICH THE ACTUAL COST AS PER SECTION 43(1) OF THE INCOME TAX ACT, 1961 WAS NIL 2.0 THESE ARE SECOND ROUND OF APPELLATE PROCEEDIN GS BEFORE US. BRIEFLY STATED, THE FACTS OF THE CASE AR E THAT FOR THE YEAR UNDER CONSIDERATION A RETURN DECLARING TOTAL INCOME OF RS.8,94,85,800/- WAS FILED BY THE ASSESSEE ON 29 TH OCTOBER 2004. ASSESSMENT WAS FRAMED U/S 143(3) OF THE INCOME TAX A CT, 1961 (HEREINAFTER CALLED THE ACT) ON 22 ND DECEMBER 2006 ASSESSING TOTAL INCOME OF THE ASSESSEE AT RS40,67,51,498/-. BEING A GGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE LD. CIT (A). THE LD . FIRST APPELLATE AUTHORITY, VIDE ORDER DATED 30 TH DECEMBER 2008, ALLOWED PART RELIEF. ASSESSEE FILED A FURTHER APPEAL BEFORE THIS TRIBUNA L (ITAT). A COORDINATE BENCH, VIDE ORDER DATED 25 TH FEBRUARY 2011 IN ITA NO. 1174/DEL/2009, SET ASIDE THE MATTER WITH THE FOLLOWIN G DIRECTIONS: 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS A ND GONE THROUGH THE RECORD CAREFULLY. NO DOUBT, AUDITED ACC OUNTS FOR THIS ASSESSMENT YEAR AS WELL AS EARLIER ASSESSMENT YEARS ARE RELEVANT MATERIAL FOR DETERMINING THE TRUE INCOME O F THE ASSESSEE. IN THE ABSENCE OF SUCH ACCOUNTS, IT IS DI FFICULT TO DETERMINE THE TAXABLE INCOME OF THE ASSESSEE. ASSES SING OFFICER 3 ITA NO.5724/DEL/2015 DCIT VS. M/S UTTARANCHAL JAL VIDYUT NIGAM LTD. HAS MADE A MAJOR DISALLOWANCE IN RESPECT OF DEPRECI ATION CLAIM BECAUSE OF THIS ANOMALY. IT IS ALSO TRUE THAT AUDIT OR OF THE ASSESSEE HAS TO BE APPOINTED BY LEARNED CAG BUT TO OUR MIND, ASSESSEE SHOULD HAVE PERSUADED THE LEARNED CAG TO G ET THE AUDITOR APPOINTED IN TIME. IF WE LOOK INTO THE NEGL IGENCE AT THE END OF ASSESSEE VIS A VIS THE PUNISHMENT IN THE SHA PE OF TAX LIABILITY THEN THE PUNISHMENT IS DISPROPORTIONATE T O THE NEGLIGENCE. THEREFORE, IN THE INTEREST OF JUSTICE, WE ARE OF THE OPINION THAT ASSESSEE DESERVES ONE MORE OPPORTUNITY TO PLEAD ALL THE ISSUES ON THE BASIS OF THE AUDITED ACCOUNTS BEFORE THE ASSESSING OFFICER. WE ALLOWED THE APPEAL OF ASSESSE E SET ASIDE THE ORDER OF REVENUE AUTHORITIES BELOW AND REMIT AL L THE ISSUES TAKEN UP IN THE ASSESSMENT ORDER BEFORE THE ASSESSI NG OFFICER FOR READJUDICATION. WE DIRECT THE ASSESSEE TO COOPE RATE WITH THE ASSESSING OFFICER AND SUBMIT THE REQUISITE DETAILS. WE FURTHER DIRECT THE ASSESSEE THAT IT SHOULD REMAIN VIGILANT FOR GETTING ITS ACCOUNTS AUDITED IN THE SUBSEQUENT ASSESSMENT YEARS . 2.1 POST THE SET ASIDE BY THIS TRIBUNAL, FRESH ASSESSMENT PROCEEDINGS WERE INITIATED BY THE AO. TH E AO AGAIN MADE A DISALLOWANCE OF DEPRECIATION OF RS 29,95,08, 702/- AND ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS 38, 89,94,500/-. IN THIS REGARD, VIDE ORDER DATED 28 TH MARCH 2013, IT HAS BEEN HELD BY THE AO AS UNDER: 4 ITA NO.5724/DEL/2015 DCIT VS. M/S UTTARANCHAL JAL VIDYUT NIGAM LTD. DURING THE YEAR UNDER CONSIDERATION IT IS NOTICED THAT THE OPENING WDV FOR THE ASSETS FOR A.Y. 2004-05 DO NOT TALLY WITH THE CLOSING WDV FOR A.Y.2003-04. HENCE FOR THE PURP OSE OF COMING TO THE AMOUNT TO BE DISALLOWED FOR DEPRECIAT ION ON ASSETS TAKEN OVER AT THE TIME OF INCEPTION FREE OF COST, THE FOLLOWING METHOD IS BEING ADOPTED. FOR THE ADDITION S MADE DURING THE YEAR, THE DEPRECIATION PERMISSIBLE UNDER THE I.T. ACT, 1961 IS TO BE ALLOWED, AS IN THE PREVIOUS YEARS THE RE IS NO ADDITION TO THE FIXED ASSETS AS PER THE SCHEDULE SU BMITTED. THE BALANCE DEPRECIATION CLAIMED IN THE PROFIT AND LOSS ACCOUNT IS TO BE DISALLOWED AND IS TO BE ADDED BACK TO THE TAXABL E INCOME FOR THE YEAR. THE DEPRECIATION ON ADDITIONS MADE DURING THE YEAR COMES TO RS.2,44,07,898/-. AFTER APPLICATION OF THE RATES AS PER I.T. ACT 1961, AND THE ASSESSEE HAS DEBITED AN AMOU NT OF RS.32,39,16,600/-. THE DEPRECIATION AMOUNTING TO RS.29,95,08,702/- WHICH IS THE BALANCE IS THEREFORE , DISALLOWED AND ADDED BACK TO THE TAXABLE INCOME OF THE ASSESSE E. 2.2 AGGRIEVED AGAIN, THE ASSESSEE FILED AN APPEA L BEFORE THE LD. FIRST APPELLATE AUTHORITY. THE LD CI T (A) HAS EXTENSIVELY RECORDED THE FACTS OF THE CASE AND HAS FOUND MERIT IN CLAIM MADE BY THE ASSESSEE. THE APPEAL HAS BEEN ALL OWED BY ADJUDICATING AS UNDER: 5 ITA NO.5724/DEL/2015 DCIT VS. M/S UTTARANCHAL JAL VIDYUT NIGAM LTD. THE LD. AR HAS CHALLENGED THIS ACTION ON THE GROUN D THAT CLAIM OF DEPRECIATION ON OLD ASSETS HAS BEEN CONSISTENTLY ALLOWED IN THE PAST AT APPELLATE STAGES AND THUS SHOULD BE ALL OWED THIS YEAR ALSO. SOME OF THE SUBMISSIONS MAY BE EXTRACTED : THAT UTTARANCHAL JAL VIDYUT NIGAM LTD. (UJVNL) WAS INCORPORATED ON 12-2-2001 BY GOVERNMENT OF UTTARANC HAL FOR MANAGEMENT OF RUNNING GENERATING STATIONS, DEVELOPM ENT AND CONSTRUCTION OF NEW HYDROPOWER PROJECTS IN THE STAT E OF UTTARANCHAL. THE CENTRAL GOVERNMENT VIDE ITS ORDER DATED 5-11- 2001 TRANSFERRED ALL HYDRO POWER PLANTS LOCATED IN THE STATE OF UTTARANCHAL TO UJVNL. ALTHOUGH THE COMPANY TOOK THE FINANCIAL & ADMINISTRATIVE CONTROL OF THE PLANTS IMMEDIATELY THEREAFTER WITH EFFECT FROM 9-11-2001, THE TRANSFER SCHEME FOR TRANSFER OF VALUES OF ASSETS & LIABILITIES HAS NOT BEEN FINALIZ ED. IN ABSENCE OF ANY TRANSFER SCHEME, NIGAM HAS DERIVED ITS PROVI SIONAL OPENING BALANCES, ON THE BASIS OF INFORMATION AVAIL ABLE WITH IT RECEIVED FROM UPJVNL, TO COMPLETE ITS ACCOUNTS. THE DIFFERENCE BETWEEN OPENING BALANCES OF ASSETS & LIABILITIES HA S BEEN SHOWN AS RECONSTRUCTION RESERVE UNDER CAPITAL RESER VE IN THE BALANCE SHEET PENDING FINALIZATION OF TRANSFER SCHE ME. FROM THE PERUSAL OF THE BALANCE SHEET OF UPJVNL IT WILL BE CLEAR THAT THERE WAS TOTAL FIXED ASSETS AS ON 31-3-2001 IS RS. 998.92 CRORES, OUT OF WHICH 682.05 CRORES WAS RECEIVED OUT OF DEMERGER OF UPJVNL VIDE NOTIFICATION LETTER DATED 5-11-2001 CORRESPONDINGLY THE DEPRECIATION UPTO THAT DATE HAS ALSO BEEN 6 ITA NO.5724/DEL/2015 DCIT VS. M/S UTTARANCHAL JAL VIDYUT NIGAM LTD. ACCOUNTED FOR IN OUR ACCOUNTS, AS SUCH THE DEPRECIA TION ON THE WRITTEN DOWN VALUE AS ON 9-11-2001 WAS CONSIDERED B Y UJVNL. SINCE THESE ASSETS REPRESENTED SHARE CAPITAL IN THE BALANCE SHEET OF UPJVNL HENCE IT CANNOT BE SAID THAT THESE ASSETS HAVE BEEN OBTAINED FREE OF COST FROM UPJVNL. THE DIFFERE NCE OF ASSETS AND LIABILITIES HAVE BEEN SHOWN AS RECONSTRU CTION RESERVE UNDER THE CAPITAL RESERVE IN THE BALANCE SH EET. AS SUCH THIS WOULD BE A DEMERGER FOR THE PURPOSE INCOME TAX ACT 1961. IN CASE OF DEMERGER ONLY A PORTION OF THE ASSETS AN D LIABILITIES OF THE COMPANY ARE ASSIGNED TO THE DEMERGED COMPANY WH ICH IN THIS CASE DID NOT INVOLVE ANY PAYMENT OF CASH AND S HARES FOR THE ASSETS AND LIABILITIES TRANSFERRED FROM UPJVNL TO UJVNL. HENCE IT MAY BE STATED THAT BOTH THE SHARE CAPITAL AS WELL AS RESERVES INCLUDING THE RECONSTRUCTION RESERVE WHICH BELONGS TO SUBSCRIBER OF THE SHARE CAPITAL I.E., IN THIS CASE THE STATE OF UTTARANCHAL HAD BEEN UTILIZED FOR GETTING THE ASSET S. THE LD. COMMISSIONER OF INCOME TAX APPEAL-I, DEHRAD UN, HAS ALSO GIVEN DUE RELIEF ON ACCOUNT OF DEPRECIATION ON FIXED ASSETS WHILE DISPOSING OF APPEALS FOR THE FOLLOWING ASSESS MENT YEARS. A.Y. APPEAL NO. DATE OF ORDER 2002-03 283/DDN/2007-08 30-12-2008 2003-04 057/DDN/06-07 14-8-2007 2004-05 340/DDN/06-07 30-12-2008 7 ITA NO.5724/DEL/2015 DCIT VS. M/S UTTARANCHAL JAL VIDYUT NIGAM LTD. 2005-06 284/DDN/07-08 30-12-2008 2007-08 139/DDN/2009-10 27-12-2011 2008-09 68/DDN/2010-11 31-01-2012 2009-10 328/CIT(A)-1/2011-12 30-03-2012 2011-12 16/CIT(A)/DDN/14-15 30-03-2015 THE LD. CIT (A) HAS ALSO HELD THAT THE ASSESSEE WOU LD BE ENTITLED TO CLAIM OF DEPRECIATION ON ASSETS TRANSFE RRED FROM UP JAL VIDYUT NIGAM LIMITED TO UJVNL. COPY OF THE ORDE RS ARE ENCLOSED HEREWITH AS ANNEXURE 1 TO 8. IT MAY BE BROUGHT TO YOUR KIND NOTICE THAT FOR THE AY 2005-06 MOST OF THE RELIEF WAS ALLOWED BY THE LD. COMMISSIO NER OF I. TAX APPEALS, AS SUCH NO APPEAL WAS FILED BY THE ASSESSE E FOR THE AFORESAID ASSESSMENT YEAR. HOWEVER, THE DEPARTMENT HAD FILED AN APPEAL BEFORE THE HONBLE ITAT AGAINST THE ORDER OF CIT(A)-1. DEHRADUN FOR THE AFORESAID A.Y. 2005-06 ONLY ON ONE GROUND I.E., FOR ALLOWING DEPRECIATION ON FIXED ASSETS ACQ UIRED FROM UPJVNL, THE AFORESAID APPEAL OF THE DEPARTMENT HAS BEEN DISMISSED BY THE LD. ITAT NEW DELHI ON 13 TH AUGUST, 2009, DUE TO NON APPROVAL OF COD (COMMITTEE OF DISPUTE). AS P ER OUR KNOWLEDGE NO APPEAL HAS BEEN FILED SO FAR, AGAINST THE AFORESAID ORDER OF THE HONBLE ITAT, MOREOVER THE A BOVE PROCEEDINGS ARE ALSO TIME BARRED BY LIMITATION, HEN CE THE ORDER 8 ITA NO.5724/DEL/2015 DCIT VS. M/S UTTARANCHAL JAL VIDYUT NIGAM LTD. OF THE LD. CIT (A) IS FINAL. COPY OF THE ORDER OF H ONBLE ITAT IS ENCLOSED HEREWITH AS ANNEXURE 9. 4.2 THE FINDINGS OF LD. AO AND THE AVERMENTS OF THE LD. AR HAVE BEEN CONSIDERED. A PERUSAL OF THE FACTS REVEAL THAT ON DEMERGER THE ASSETS WERE DIVIDED IN A FIXED RATIO A ND NEEDLESS TO SAY, THE COST OF THE SAME (WDV AS ON THAT DATE) WAS DULY ACCOUNTED FOR BY BOTH THE ENTITIES. THUS, IT IS DIF FICULT TO UNDERSTAND HOW IT CAN BE SAID THAT THE ASSETS WERE ACQUIRED FREE OF COST. IN ANY CASE THERE HAVE BEEN A SUCCESS ION OF APPELLATE ORDERS (AS MENTIONED IN THE EXTRACT OF SU BMISSIONS ABOVE) WHICH HAVE ALLOWED THE CLAIM OF DEPRECIATION . FOLLOWING THOSE ORDERS THE CLAIM IS ALLOWED FOR THIS YEAR ALS O WITH THE DIRECTION THAT THE CLOSING VALUE OF WDV FOR AY 2003 -04 SHALL BE ADOPTED FROM THE AUDITED ACCOUNTS OF THAT YEAR AND TAKEN AS OPENING VALUE FOR THE PRESENT YEAR AS PER AUDITED A CCOUNTS FOR AY 2004-05. THIS GROUND IS ACCORDINGLY ALLOWED WITH THE DELETION OF ADDITION OF RS.29,95,08,702. 3.0 BEING AGGRIEVED, REVENUE IN APPEAL BEFORE US NOW. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD DR VEHEMENTLY SUPPORTED THE DISALLOWANCE MADE BY THE TH E AO. HOWEVER, WHEN SPECIFICALLY QUESTIONED, THE LD DR WAS UNABLE TO REBUT THE CONCLUSIONS RECORDED BY THE LD CIT (A) TH AT WHEN THE CENTRAL GOVERNMENT, VIDE ITS ORDER DATED 5 TH NOVEMBER 2001, HAD 9 ITA NO.5724/DEL/2015 DCIT VS. M/S UTTARANCHAL JAL VIDYUT NIGAM LTD. TRANSFERRED ALL HYDRO POWER PLANTS LOCATED IN THE S TATE OF UTTARANCHAL TO THE ASSESSEE, IT HAD RECOGNIZED THE ASSETS IN ITS BALANCE SHEET AND FOR THE VALUE OF ASSETS TAKEN OVE R CONSIDERATION WAS PAID BY THE ASSESSEE THROUGH ISSUANCE OF SHARE C APITAL. HENCE, IT CANNOT BE SAID THAT THESE ASSETS HAVE BEEN OBTAI NED FREE OF COST BY THE ASSESSEE. 4.0 ON THE OTHER HAND, THE LD AR SUPPORTED THE REASONING GIVEN BY THE LD CIT (A). 5.0 WE HAVE CAREFULLY CONSIDERED THE FACTS OF TH E CASE AND THE MATERIAL AVAILABLE ON RECORD. IN OUR C ONSIDERED OPINION THE CONCLUSIONS RECORDED BY THE LD. CIT (A) MERIT T O BE UPHELD. THE SITUATION ARISING IN THE PRESENT CASE IS WHAT HAS BE EN RECOGNIZED AS A DEMERGER IN TERMS OF EXPLANATION 4 TO SECTION 2(1 9AA) OF THE INCOME TAX ACT. THE AO HAS DISALLOWED DEPRECIATION ON THE GROUND THAT THE ASSESSEE HAD RECEIVED ASSETS FREE OF COST FROM THE GOVERNMENT OF UTTARANCHAL. THE ACTION OF THE AO IN DISALLOWING DEPRECIATION IS NOT AS PER LAW. AS PER SETTLED ACCOU NTING PRINCIPLES, EVERY RUPEE INVESTED IN THE BUSINESS HAS A COST. TH E COST OF BORROWING FROM THE BANK IS KNOWN TO THE BUSINESS DEP ENDING ON 10 ITA NO.5724/DEL/2015 DCIT VS. M/S UTTARANCHAL JAL VIDYUT NIGAM LTD. THE RATE OF INTEREST BUT THAT DOES NOT MEAN THAT TH E CAPITAL INTRODUCED IN THE FORM OF SHAREHOLDERS FUND HAS NO COST. IN THE PRESENT CASE, ASSETS GENERATING HYDRO POWER HAVE BE EN RECEIVED BY THE ASSESSEE FROM THE DEMERGER OF UP JAL VIDYUT NIG AM ALONG WITH CORRESPONDING LIABILITIES WHICH IT OWNS TO THE UTTARA NCHAL GOVERNMENT AND OTHERS. THIS LIABILITY REPRESENTS NO THING BUT THE COST OF THE ASSETS RECEIVED ON DEMERGER. THE ASSESS EE IS ENTITLED TO DEPRECIATION ON THE WRITTEN DOWN VALUE OF THESE ASSET S WHICH BEEN PRESCRIBED IN EXPLANATION 2B OF SECTION 43(6) OF TH E INCOME TAX ACT, 1961. THE ASSESSEE IS, THEREFORE, ENTITLED TO DEPRE CIATION. SOMEWHAT SIMILAR SITUATION AROSE IN CASE OF M/S BHARAT SANCH AR NIGAM LIMITED (BSNL) WHEN IT GOT INCORPORATED IN 2000. PR IOR TO BSNLS INCORPORATION, THE TELECOMMUNICATION SERVICES WERE BEING PROVIDED BY GOVERNMENT OF INDIA, MINISTRY OF COMMUNICATION T HROUGH ITS TWO DEPARTMENTS, NAMELY DEPARTMENT OF TELECOMMUNICATION SERVICES AND DEPARTMENT OF TELECOMMUNICATION OPERATION. THE AO IN CASE OF BSNL REFERRED TO THE CAPITAL STRUCTURE OF THE BS NL TO DRAW AN INFERENCE THAT THE COST OF ASSETS WAS BEING MET BY T HE GENERAL RESERVE AS REFLECTED IN THE CAPITAL STRUCTURE OF TH E COMPANY. AS PER 11 ITA NO.5724/DEL/2015 DCIT VS. M/S UTTARANCHAL JAL VIDYUT NIGAM LTD. AO, A SUM EQUAL TO THE GENERAL RESERVE WOULD BE REQ UIRED TO BE REDUCED FROM THE COST OF THE ASSETS IN TERMS OF EXP LANATION 10 OF SECTION 43(1) OF THE ACT. THIS HAS BEEN NEGATED BY THE HONBLE DELHI HIGH COURT VIDE ORDER DATED 09 TH MAY 2013 REPORTED IN 355 ITR 188(DEL) BY OBSERVING AS UNDER: 26. THE SCHEME OF HIVING OFF THE BUSINESS OF TELEC OM SERVICES BY GOVERNMENT OF INDIA TO A CORPORATE ENTITY ENTAIL ED INCORPORATION OF A WHOLLY OWNED GOVERNMENT COMPANY (I.E, THE PETITIONER COMPANY) AND THE TRANSFER OF THE BUSINES S AS A GOING CONCERN ALONG WITH ALL ITS ASSETS AND LIABILITIES T O THE COMPANY. THE NET ASSETS WERE TRANSFERRED AT BOOK VALUE, WHIC H WAS AGREED TO BE AT LEAST RS 63,000/- CRORES AND IN CON SIDERATION OF THIS THE PETITIONER COMPANY ACCEPTED A LIABILITY OF RS 7500 CRORES AND ISSUED BOTH EQUITY AND PREFERENCE SHARE CAPITAL OF THE FACE VALUE OF RS 5000 CRORES AND RS 7,500 CRORE S, RESPECTIVELY. THE BALANCING FIGURE WAS REFLECTED AS RESERVES WHICH IS AN INTEGRAL PART OF THE SHAREHOLDERS FUNDS . THE GOVERNMENT OF INDIA HAS TRANSFERRED THE ASSETS TO T HE PETITIONER COMPANY AT THEIR BOOK VALUE I.E., THE VALUE AT WHIC H THE SAID ASSETS ARE REFLECTED IN THE BOOKS OF DTS AND DTO AN D THE BOOK VALUE OF THE GOVERNMENT OF INDIA'S HOLDING IN THE P ETITIONER COMPANY AS SHAREHOLDER AND A CREDITOR AGGREGATES TH E BOOK VALUE OF THE ASSETS TRANSFERRED. THE CONFIGURATION OF THE CAPITAL 12 ITA NO.5724/DEL/2015 DCIT VS. M/S UTTARANCHAL JAL VIDYUT NIGAM LTD. STRUCTURE OF THE PETITIONER HAS NO IMPACT ON THE VA LUE OF THE GOVERNMENT'S HOLDING IN THE PETITIONER COMPANY AS R ESERVES OF A COMPANY ARE SUBSUMED IN THE BOOK VALUE OF ITS CAPIT AL. WE FIND NO BASIS, AT ALL, FOR THE ASSESSING OFFICER TO SURM ISE THAT RESERVES REPRESENT A SUBSIDY, GRANT OR REIMBURSEMEN T FROM WHICH THE COST OF ASSETS OF THE PETITIONER COMPANY ARE MET AND THE WHOLE CONSIDERATION RECEIVED BY THE GOVERNMENT OF INDIA FOR TRANSFER OF BUSINESS IS LIMITED TO THE VALUE OF LOA NS AND THE FACE VALUE OF THE SHARES ISSUED TO THE GOVERNMENT OF IND IA. A RESERVE REPRESENTS THE SHAREHOLDERS' FUND AND MAY BE UTILIZ ED IN VARIOUS WAYS INCLUDING TO DECLARE DIVIDENDS OR FOR ISSUING BONUS SHARES. THERE IS NO PLAUSIBLE REASON TO ASSUM E THAT THE VALUE OF SHAREHOLDERS' HOLDING IN A COMPANY IS LIMI TED TO THE FACE VALUE OF THE ISSUED AND PAID UP SHARE- CAPITAL AND THE RESERVES REPRESENT A SUBSIDY OR A GRANT OR A REIMBU RSEMENT BY THE SHAREHOLDERS FROM WHICH DIRECTLY OR INDIRECTLY THE COST OF THE ASSETS IN THE HANDS OF A COMPANY ARE MET. WE ARE TH US OF THE VIEW THAT THE REASONS AS FURNISHED BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENTS COULD NOT POSSIBLY GIVE R ISE TO ANY BELIEF THAT INCOME OF THE PETITIONER HAD ESCAPED AS SESSMENT AND PROCEEDINGS INITIATED ON THE BASIS OF SUCH REASONS ARE LIABLE TO BE QUASHED. 5.1 WE, THEREFORE, FIND NO REASON TO INTERFERE IN THE FINDINGS RECORDED BY THE LD CIT (A). 13 ITA NO.5724/DEL/2015 DCIT VS. M/S UTTARANCHAL JAL VIDYUT NIGAM LTD. 6.0 IN THE FINAL RESULT, THE APPEAL OF THE REVE NUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/05 /2021. SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA ) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 31/05/2021 *DRAGON* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI (DEHRADUN CIRCUIT BENCH, DEHRADUN)