ACIT, Cir-3(1), Hyderabad V. M/s. Saro Power & Intrastructure Ltd, Hyderabad

ITA 695/HYD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53717 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Period of limitation; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, AM AND SMT. ASHA VIJAYARAGHAVAN, JM ITA NO. 695/HYD/2011 ASSESSMENT YEAR 2007-08 THE ACIT CIRCLE-3(1) HYDERABAD VS M/S. SARO POWER & INFRASTRUCTURE LTD., HYDERABAD PAN: AAECS8030F APPELLANT RESPONDENT APPELLANT BY: SHRI V. SRINIVAS RESPONDENT BY: SHRI K.A. SAI PRASAD DATE OF HEARING: 12.10.2011 DATE OF PRONOUNCEMENT: 25.10.2011 ORDER PER CHANDRA POOJARI, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT-IV, HYDERABAD DATED 31.1.2011 AND PERTAINS TO A SSESSMENT YEAR 2006-07. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPE AL: 1. THE HONBLE CIT(A), HYDERABAD ERRED IN LAW IN ALLOWING THE ASSESSEE'S APPEAL. 2. THE HONBLE CIT(A), HYDERABAD OUGHT TO HAVE UPHE LD THE ADDITION MADE BY THE AO ON ACCOUNT OF DIFFERENC E IN TARIFF AS PER PPA AS SOME POWER PRODUCERS ARE DISPUTING THE REVISED TARIFFS SPECIFIED BY APERC AN D THE MATTER IS SUBJUDICE. 3. THE CIT(A), HYDERABAD OUGHT TO HAVE ADMITTED THE ADDITIONAL EVIDENCE FILED DURING THE COURSE OF APPELLATE PROCEEDINGS. 3. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OP INION THAT SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THIS TRIBUNA L IN I.T.A. NO. 1748/HYD/2008 IN THE CASE OF SRI BALAJI BIO MASS PO WER PVT. LTD., ITA NO. 695/HYD/2011 M/S. SARO POWER & INFRASTRUCTURE LTD. =============================== 2 HYDERABAD FOR THE ASSESSMENT YEAR 2005-06 VIDE TRIB UNAL ORDER DATED 31.1.2011, WHEREIN THE TRIBUNAL HELD AS FOLLOWS: '8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THER E IS NO DISPUTE WITH REGARD TO THE MATERIAL FACTS OF THE CASE. THE ONLY QUESTION THAT ARISES FOR CONSIDERATION IS WHETHER THE DIFFERENTIAL AMOUNT OF SALES, VIZ., WORKED OUT AT RS. 3.48/- PER UNIT AS PER THE POWER PURCHASE AGREEMENT APPLYING WHICH INVOICES FOR SUPPLY OF POWER TO APTRANSCO WERE RAISED AND RS. 3.18/- APPLYING WHIC H IN TERMS OF THE INTERIM ORDERS OF THE HONBLE A.P. HIGH COURT, INVOICES OF THE ASSESSEE WERE SETTLED BY THE APTRANSCO AND ACCOUNTED FOR BY THE ASSESSEE IN THE BOOKS OF ACCOUNT, CAN BE TREATED AS THE INCOME OF T HE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06. WE FIND THAT THE CIT(A) HAS GIVEN ELABORATE REASONING BEFORE CONCLUDING THAT THE INCOME WORKED AT THE RATE OF RS . 3.48/- PER UNIT OF POWER SUPPLIED HAD NEITHER ACCRU ED TO THE ASSESSEE NOR WAS RECEIVABLE DURING THE PREVIOUS YEAR AND THEREFORE, NO CORRESPONDING DEBT IN RESPECT OF THE DIFFERENTIAL AMOUNT STOOD CREATED IN THE BOOK OF TH E PURCHASER, I.E., APTRANCO. MERELY BASED ON THE INVOICES RAISED, INCOME CANNOT BE DEEMED TO ACCRUE TO THE ASSESSEE WHEN THE DIFFERENTIAL INCOME WAS SUBJE CT MATTER OF LITIGATION, AND THERE IS NO CERTAINTY OF THE ASSESSEE BEING ENTITLED TO SUCH INCOME, UNLESS IT SUCCEEDS IN SUCH LITIGATION. EVEN IF AN ASSESSEE SUCCEEDS ULTIMATELY IN THE LITIGATION, A DEBT ENFOR CEABLE AGAINST THE OTHER PARTY DOES NOT GET CREATED, UNLES S A CLAIM IN THAT BEHALF WAS RAISED BEFORE THE SAME BEI NG BARRED BY LIMITATION. IT IS FOR THIS REASON THAT A N ASSESSEE, TO KEEP THE ISSUE ALIVE, HAS TO RAISE THE CLAIM AGA INST THE OTHER PARTY WITHIN THE PERIOD OF LIMITATION, WHICH IN ITS VIEW IS DUE TO IT ACCORDING TO THE TERMS OF THE CONTRACT , SO AS TO GET AN ENFORCEABLE RIGHT FOR THE RECOVERY OF THE AM OUNT AS AND WHEN IT SUCCEEDS IN THE LITIGATION. IN THIS VI EW OF THE MATTER, THOUGH INVOICES RAISED CONSTITUTE FUNDAMENT AL RECORD FOR MAINTENANCE OF ACCOUNTS IN THE NORMAL CO URSE, AS OBSERVED BY THE ASSESSING OFFICER, THAT LOGIC DO ES NOT HOLD GOOD WHEN THE SUBJECT MATTER WAS UNDER DISPUTE AND WAS UNDER LITIGATION BEFORE THE JUDICIAL FORA, INCLUDING THE JURISDICTIONAL HIGH COURT AND HONBLE SUPREME C OURT DURING THE RELEVANT POINTS OF TIME. ASSESSEE'S MET HOD OF ACCOUNTING ONLY THE AMOUNT WHICH WAS NOT SUBJECT MA TTER OF LITIGATION AND WHICH IN FACT WAS RECEIVED BY IT FROM THE APTRANSCO IN TERMS OF THE INTERIM ORDER OF THE A.P. HIGH COURT, WAS IN CONFORMITY WITH THE ACCOUNTING STANDARD 9 AND THE RATIO LAID DOWN BY THE APEX COUR T, AMONG OTHERS, IN THE CASE OF LAW DISCUSSED BY THE C IT(A) ITA NO. 695/HYD/2011 M/S. SARO POWER & INFRASTRUCTURE LTD. =============================== 3 IN THE IMPUGNED ORDER, AND ALSO IN THE CASE LAW REL IED UPON BY THE ASSESSEE BEFORE US. IN THIS VIEW OF TH E MATTER, WE FIND NO INFIRMITY IN THE ORDER OF THE CI T(A), WHICH IS ACCORDINGLY CONFIRMED AND THE GROUNDS OF A PPEAL OF THE REVENUE ARE REJECTED.' 4. IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL AND S INCE THE FACTS AND CIRCUMSTANCES ARE SIMILAR TO THE CASE THAT WAS CONSIDERED BY THE TRIBUNAL STATED SUPRA, WE ARE INCLINED TO DISMISS T HE REVENUE. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER, 2011 SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 25 TH OCTOBER, 2011 COPY FORWARDED TO: 1. THE ACIT, CIRCLE-3(1), O/O. THE ACIT, CIRCLE-3(1 ), 7 TH FLOOR, B- BLOCK, IT TOWERS, HYDERABAD. 2. M/S. SARO POWER & INFRASTRUCTURE LTD., 19-2-217/ 2, MIR ALAM TANK ROAD, HYDERABAD. 3. THE CIT(A)-IV, HYDERABAD. 4. THE CIT-III, HYDERABAD 5. THE DR, A BENCH, ITAT, HYDERABAD TPRAO