RAJASTHAN RAJUA VIDYUT UTPADAN NIGAM LTD., Jaipur V. ACIT, Jaipur

ITA 732/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4852 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 01-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S KOTHARI CIT DHK
• Keywords: Business expenditure; Rule of consistency; Capital expenditure
• Section: 143(3); 37(1); 37

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 732/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD., VIDHUT BHAWAN, JANPATH, JYOTI NAGAR, JAIPUR CUKE VS. THE ACIT, CIRCLE-6, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCR 7436 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI D.S. KOTHARI ( CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29.11.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 15/12/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-2, JAIPUR DATED 20.05.2016 WHEREIN THE ASSES SEE HAS TAKEN THE FOLLOWING SOLE GROUND OF APPEAL: THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN U PHOLDING THE ACTION OF AO IN NOT ALLOWING THE CLAIM OF WRITE OFF OF INTER UNIT BALANCE OF RS.63,06,01,382/-. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY WAS INCORPORATED AS ONE OF THE SUCCESSOR COMPANY OF RAJ ASTHAN STATE ELECTRICITY BOARD (RSEB) IN VIEW OF THE RAJASTHAN P OWER SECTOR REFORMS ACT, 1999 TO CARRY ON THE BUSINESS OF GENERATION O F ELECTRICITY. AT THE TIME OF UNBUNDLING OF RSEB UNDER THE TRANSFER SCHEM E, INTER UNIT BALANCES OF 78.83 CRORES WERE TRANSFERRED TO THE AS SESSEE COMPANY. THE ITA NO. 732/JP/16 RAJ. RAJYA VIDYUT UTPADAN NIGAM LTD. VS. ACIT CIRCL E-6, JAIPUR 2 BOARD OF DIRECTORS OF THE COMPANY IN ITS MEETING HE LD ON 20.10.2008 APPROVED TO WRITE OFF THE INTER UNIT BALANCES OF RS . 78.83 CRORES TRANSFERRED BY THE STATE GOVERNMENT UNDER THE TRANS FER SCHEME IN FIVE EQUAL ANNUAL INSTALMENTS BEGINNING FROM A.Y. 2009- 10. ACCORDINGLY, THE FIRST INSTALMENT OF RS. 15.76 CRORES WAS WRITTEN OF F IN A.Y. 2009-20 LEAVING THE REMAINING BALANCE OF RS.63.07 CRORES TO BE WRITTEN OFF IN THE NEXT FOUR YEARS. HOWEVER, THE AUDITOR OF THE COMP ANY IN ITS AUDIT REPORT DATED 29.12.2009 FOR A.Y. 2009-10 OPINED THAT THE I NTER UNIT BALANCES OF RS.78,83 CRORES SHOULD HAVE BEEN WRITTEN OFF IN TOT O IN A.Y. 2009-10 ITSELF AND NOT IN FIVE INSTALMENTS BEING NOT RECONC ILED SINCE LONG. THE ASSESSEE THUS, IN THE YEAR UNDER CONSIDERATION, HAS WRITTEN OFF THE REMAINING BALANCE OF RS. 63.07 CRORES COMPLETELY AN D THE SAID TREATMENT HAS BEEN DISCLOSED BY WAY OF PARA NO.22 OF THE N OTES ON ACCOUNTS TO THE AUDITED FINANCIAL STATEMENTS REPRODUCED AS UNDE R: IN ABSENCE OF TANGIBLE DETAILS OF INTER UNIT BALAN CES OF RS. 78.83 CRORES TRANSFERRED BY THE STATE GOVERNMENT UNDER THE TRANS FER SCHEME, THE BOARD OF DIRECTORS OF THE COMPANY IN ITS 137 TH MEETING HELD ON DATED 13.05.2008 HAS APPROVED TO WRITE OFF THESE BALANCE S IN FIVE EQUAL ANNUAL TRANCHES BEGINNING FROM 2008-09. ACCORDINGLY THE SECOND INSTALMENT OF RS. 15.76 CRORES WAS DUE FOR WRITE OF F IN THE CURRENT YEAR BUT DUE TO CONTINUOUS OBSERVATION OF THE AUDITORS R EGARDING 100% WRITE OFF, THE MATTER WAS EXAMINED IN THE LIGHT OF AS-I, 9 AND 29 AND AS CONCLUDED THE REMAINING BALANCE OF RS. 63.07 CRORES HAS BEEN WRITE OFF COMPLETE IN COMPLIANCE TO THE APPLICABLE ACCOUNTING STANDARDS IN THE CURRENT YEAR. 2.1 THE AO ON PERUSAL OF THE AFORESAID PARA NO.22 O F THE NOTES ON ACCOUNTS REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE INTER UNIT BALANCE OF RS.63.07 CRORES WRITTEN OFF SHOULD NOT B E DISALLOWED. THE ASSESSEE IN RESPONSE TO SAME VIDE LETTER DATED 17.1 2.2012 SUBMITTED THAT THESE ARE TRANSACTIONS BETWEEN ONE UNIT TO ANO THER. DUE TO NON RECEIPT OF ADVICE, CERTAIN TRANSACTIONS BETWEEN ONE UNIT TO ANOTHER REMAINS UNRESPONDED IN ANOTHER UNIT. NORMALLY, THE SE TRANSACTIONS ARE REVENUE IN NATURE AND ALL THESE ENTRIES ARE PENDING IN THE RECONCILIATION STATEMENT. SINCE THESE ENTRIES ARE VERY OLD AND TH E AUDITORS ARE QUALIFYING THE AUDIT REPORT, THUS THE MANAGEMENT OF THE COMPANY HAS DECIDED TO WRITE OFF THESE ENTRIES. THESE ENTRIES A RE MAINLY ON ACCOUNT OF REVENUE TRANSACTIONS AND ALLOWABLE UNDER SECTION 37(1) OF THE ACT. ITA NO. 732/JP/16 RAJ. RAJYA VIDYUT UTPADAN NIGAM LTD. VS. ACIT CIRCL E-6, JAIPUR 3 2.2 THE REPLY OF THE ASSESSSEE WAS NOT FOUND ACCEPT ABLE TO THE AO. THE AO STATED THAT THE TRANSACTIONS ARE UNVERIFIABL E AND THE ASSESSEE ITSELF HAS ACCEPTED THAT ADVICE OF THESE TRANSACTIO NS WAS NOT RECEIVED. THE AO FURTHER HELD THAT IT IS NOT A QUESTION OF TH E NATURE OF THE TRANSACTIONS BUT IT IS A QUESTION OF VERIFIABILITY OF THE TRANSACTIONS. IN ABSENCE OF VERIFIABILITY OF THESE TRANSACTIONS, THE SE ARE NOT ADMISSIBLE EXPENDITURE EITHER UNDER SECTION 30 TO 36 OR U/S 37 (1) OF THE ACT. ACCORDINGLY, THE AO MADE THE DISALLOWANCE OF RS. 63 ,06,01,3832/-. 2.3 BEING AGGRIEVED, THE ASSESSEE COMPANY CARRIED T HE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE DISALLOWANCE AND HIS RELEVANT FINDINGS ARE CONTAINED AT PARA 2.3 OF ITS ORDER WHICH ARE REPRODUCED AS UNDER: I HAVE PERUSED THE FACTS OF THE CASE, THE ASSESSME NT ORDER AND THE SUBMISSIONS OF THE APPELLANT. IN THE PRESENT PROCEE DINGS ALSO, THE AUTHORISED REPRESENTATIVE HAS REITERATED THE SAME S UBMISSIONS AS MADE DURING THE ASSESSMENT PROCEEDINGS. NO DETAILS OR E VIDENCES OF THE EXPENDITURE INCURRED HAVE BEEN PROVIDED. THE AUTHO RISED REPRESENTATIVE IS HIMSELF ADMITTING THAT SINCE THE CORRECT HEAD OF EXPENSE CANNOT BE IDENTIFIED, THEY ARE BEING CHARGE D AS INTER UNIT BALANCES. IN THE ABSENCE OF ANY DETAILS OF THESE E XPENDITURE, THE AOS STAND OF NOT ALLOWING THE WRITE OFF THE SUCH EXPEND ITURE IS UPHELD. THE GROUND OF APPEAL IS DISMISSED. 2.4 AT THE OUTSET THE LD. AR OF THE ASSESSEE SUBMIT TED THAT THE FIRST INSTALMENT OF RS. 15.76 CRORES OF INTER UNIT BALANC ES WAS WRITTEN OFF IN A.Y. 2009-10. IN THE ASSESSMENT FRAMED U/S 143(3 ) FOR THAT YEAR, THE AO HAS NOT MADE ANY DISALLOWANCE IN THIS REGARD. T HUS, WHEN THE FACTS ARE SAME, THE APPROACH SHOULD BE CONSISTENT. FOR T HIS, RELIANCE IS PLACED IN CASE OF SUPREME COURT DECISION IN CASE OF RADHA SWAMI SATSANG VS. CIT 193 ITR 0321 WHEREIN VIDE PARA 9 OF THE ORDER I T WAS HELD AS UNDER: WE ARE AWARE OF THE FACT THAT, STRICTLY SPEAKING, RES JUDICATA DOES NOT APPLY TO IT PROCEEDINGS. AGAIN EACH ASSESSMENT YEA R BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOW ING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND P ARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING TH E ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE C HANGED IN A SUBSEQUENT YEAR. ITA NO. 732/JP/16 RAJ. RAJYA VIDYUT UTPADAN NIGAM LTD. VS. ACIT CIRCL E-6, JAIPUR 4 ON THESE REASONING, IN THE ABSENCE OF ANY MATERIAL CHANGE JUSTIFYING THE REVENUE TO TAKE A DIFFERENT VIEW OF THE MATTER AN D, IF THERE WAS NO CHANGE, IT WAS IN SUPPORT OF THE ASSESSEE WE DO N OT THINK THE QUESTION SHOULD HAVE BEEN REOPENED AND CONTRARY TO WHAT HAD BEEN DECIDED BY THE CIT IN THE EARLIER PROCEEDINGS, A DIFFERENT AND CONTRADICTORY STAND SHOULD HAVE BEEN TAKEN. THEREFORE, ONCE IN THE PRECEDING YEAR, THE WRITTEN OFF OF INTER UNIT BALANCES HAS BEEN ACCEPTED, FOLLOWING THE PRINCIPAL OF CONSISTENCY, THE DISALLOWANCE OF RS, 63,06,01,382/- SUSTAINED BY THE LD. CIT(A) IS UNJUSTIFIED AND UNCALLED FOR. THE LD AR FURTHER SUBMITTED THAT THE AUDITOR IN ITS AUDIT REPORT FOR A.Y. 2009-10 HAS QUALIFIED THE ACCOUNTS OF THE ASSESSEE STATING THAT DUE TO NOT WRITING OFF THESE BALANCES IN ITS ENTIRETY WHIC H IS OUTSTANDING SINCE LONG, THE LOSS IS UNDERSTATED BY RS.63.06 CRORES. THUS WHEN AUDITOR HAS HELD THAT BECAUSE OF NOT WRITING OFF THESE OUTSTAND ING, THE LOSS IS UNDERSTATED, WRITING OFF THIS AMOUNT IN THE YEAR UNDER CONSIDERATION IS ALLOWABLE AS BUSINESS LOSS IRRESPECTIVE OF WHETHER THE ASSESSEE COULD RECONCILE THESE AMOUNTS OR NOT. IT WAS FURTHER SUBMITTED THAT AS REQUIRED BY THE HO NBLE BENCH, WE ARE ENCLOSING HEREWITH THE BALANCE SHEET OF THE ASSESSE E AS ON 31.03.2001 WITH THE CORRESPONDING FIGURE OF 19.07.2000 WHICH I S ALLOCATED BY THE STATE GOVERNMENT ON UNBUNDLING OF RAJASTHAN ELECTRI CITY BOARD UNDER THE RAJASTHAN POWER SECTOR REFORM ACT, 1999. FROM SCHEDULE 13 TO THE BALANCE SHEET, IT CAN BE NOTED THAT AN AMOUNT OF RS . 75.95 CRORES WAS ALLOCATED BY THE STATE GOVERNMENT ON 19.07.2000 ON ACCOUNT OF INTER UNIT ACCOUNTS WHICH AS ON 31.03.2001 STOOD AT RS. 79.50 CRORES. THE BALANCE SHEET AND THE DETAILS OF THE INTER UNIT ACC OUNT IS ENCLOSED. THEREAFTER THIS AMOUNT WAS REDUCED TO RS. 78.83 CRO RES OF WHICH RS. 15.76 CRORES WAS WRITTEN OFF IN A.Y. 2009-10 AND TH E REMAINING AMOUNT OF RS. 63.06 CRORES WAS WRITTEN OFF IN A.Y. 2010-11 . IT WAS FURTHER SUBMITTED THAT THE AMOUNT OF INTER U NIT BALANCE OF RS. 78.83 CRORES WHICH IS WRITTEN OFF BY THE ASSESSEE H AS BEEN CONSIDERED BY THE RAJASTHAN ELECTRICITY REGULATORY COMMISSION AS OTHER EXPENSES FOR FIXING THE TARIFF OF THE ELECTRICITY GENERATED BY THE ASSESSEE. THUS, THE AMOUNT SO WRITTEN OFF HAS BEEN RECOVERED THROUGH TH E TARIFF RATE OF THE ELECTRICITY GENERATED BY THE ASSESSEE. ACCORDINGLY , WHEN REVENUE FROM ITA NO. 732/JP/16 RAJ. RAJYA VIDYUT UTPADAN NIGAM LTD. VS. ACIT CIRCL E-6, JAIPUR 5 THE SALE OF POWER WHICH INCLUDES THE EXPENSES SO WR ITTEN OFF HAS BEEN CONSIDERED IN THE INCOME, THE INTER UNIT BALANCE WR ITTEN OF NEEDS TO BE ALLOWED AS DEDUCTION. THE LD AR FURTHER SUBMITTED THAT WHERE THE CREDIT B ALANCES APPEARING ON THE LIABILITY SIDE ARE WRITTEN OFF, THE SAME ARE BR OUGHT TO TAX UNDER SECTION 41(1) OF THE ACT. ON THE SAME ANALOGY, WHE RE THE DEBIT BALANCES APPEARING ON THE ASSET SIDE ARE WRITTEN OFF, THE SA ME SHOULD BE ALLOWED AS AN ALLOWABLE LOSS/BUSINESS EXPENDITURE. 2.5 THE LD CIT DR VEHEMENTLY ARGUED THE MATTER AND SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. HE DRAWN OUR REFER ENCE TO THE AUDITORS REPORT WHERE AT PARA 13: INTER UNIT ACCOUNTS, THE A UDITORS HAVE STATED AS UNDER: THERE EXISTS A BALANCE OF RS. 65.78 CRORES UNDER TH E HEAD INTER UNIT ACCOUNTS AS ON 31.03.2009. THIS INCLUDES AMOUNT OF RS.63.06 CRORES BEING REMAINING BALANCE TRANSFERRED BY STATE GOVT. UNDER TRANSFER SCHEME AND AN AMOUNT OF RS. 2.72 CRORES IS STILL UNRECONCILED/ UNADJUSTED. IN ABSENCE OF DETAILS OF INTER UNIT AC COUNTS AT HEAD OFFICE AND AT VARIOUS OTHER UNITS, THE AMOUNT BY WHICH THE PROFIT/LOSS/ASSETS/LIABILITIES ARE OVER/UNDER STATE D CANNOT BE QUANTIFIED. THE OPENING BALANCE (AS ON 01.04.2008) OF THE INTER UNIT BALANCE TRANSFERRED BY STATE GOVT. UNDER TRANSFER SCHEME W AS RS.78.63 CRORES (PLS REFER POINT NO. 24 OF NOTES TO ACCOUNT) & AS P ER THE DECISION OF BOD IN ITS 140 TH MEETING THIS BALANCE WAS TO BE WRITTEN OF IN FIVE EQUAL INSTALMENTS I.E. 15.76 CRORES PER YEAR. IN OUR OPI NION SINCE THESE BALANCE WERE NOT RECONCILED SINCE LONG THESE WERE TO BE WR ITTEN IN THE CURRENT YEAR ITSELF IN TOTO & NOT IN FIVE INSTALMENTS. HEN CE THE LOSS IS UNDERSTATED BY RS. 63.06 CRORES AND OTHER CURRENT A SSETS ARE OVERSTATED BY THE SAME AMOUNT. DRAWING REFERENCE TO ABOVE OBSERVATIONS OF THE AUDI TOR, THE LD CIT DR SUBMITTED THAT EVEN THE AUDITORS ARE NOT CLEAR AS T O THE EXACT NATURE OF THESE INTER-UNIT TRANSACTIONS WHEN THEY REFER TO TH ESE INTER-UNITS ACCOUNTS AS RELATING TO PROFIT/LOSS/ASSETS/LIABILIT IES. GIVEN THAT THE NATURE OF LOSS WHETHER REVENUE OR CAPITAL OR BOTH C ANNOT BE DETERMINED. FURTHER, REGARDING THE CONTENTION OF THE LD AR WHER E HE DRAWN AN ANALOGY FROM THE WRITE OFF OF THE CREDIT BALANCES A ND TAXABILITY UNDER SECTION 41(1) OF THE ACT, LD CIT DR SUBMITTED THAT IT IS NOT IN ALL CASES WHERE THE CREDIT BALANCES ARE WRITTEN OFF, PROVISIO NS OF SECTION 41 CAN BE ITA NO. 732/JP/16 RAJ. RAJYA VIDYUT UTPADAN NIGAM LTD. VS. ACIT CIRCL E-6, JAIPUR 6 INVOKED. IT IS ONLY IN CASES OF TRADING LIABILITIE S WHERE AN ALLOWANCE OR DEDUCTION HAS BEEN CLAIMED EARLIER, THAT THE PROVIS IONS OF SECTION 41(1) CAN BE INVOKED WHEN THE SAME ARE WRITTEN OFF OR NO MORE PAYABLE. SIMILARLY, ON THE DEBIT BALANCES, WHERE THE SAME HA VE BEEN OFFERED TO TAX EARLIER, THE SAME CAN BE ALLOWED AS AN ALLOWABL E EXPENDITURE AND NOT OTHERWISE. FURTHER, REGARDING THE CONTENTION OF TH E LD AR THAT THESE WRITE OFFS HAVE BEEN CONSIDERED BY THE RERC FOR FIX ING THE TARIFF OF THE ELECTRICITY GENERATED BY THE ASSESSEE AND HAS BEEN RECOVERED THROUGH THE TARIFF RATE OF THE ELECTRICITY GENERATED BY THE ASSESSEE, IT WAS SUBMITTED THAT METHODOLOGY OF TARIFF FIXATION BY RE RC WHICH CAN TAKE INTO ACCOUNT BOTH REVENUE AND CAPITAL COSTS CANNOT BE MADE THE BASIS FOR ALLOWANCE UNDER THE PROVISIONS OF INCOME TAX AC T AS THE LATTER CONTAINS EXPLICIT PROVISIONS FOR ALLOWING REVENUE A ND CAPITAL EXPENDITURE. 2.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE RE WERE CERTAIN INTER-UNIT BALANCES OF 78.83 CRORES, WHICH AT THE TIME OF UNBU NDLING OF RSEB UNDER THE TRANSFER SCHEME, WERE TRANSFERRED TO THE ASSESS EE COMPANY. IT IS ALSO NOT IN DISPUTE THAT THE MANAGEMENT OF THE COMP ANY HAS APPROVED THE WRITE OFF THE INTER UNIT BALANCES OF RS. 78.83 CRORES IN FIVE EQUAL ANNUAL INSTALMENTS. DURING THE YEAR UNDER CONSIDER ATION, BASED ON THE AUDITORS OBSERVATION THAT SINCE THESE INTER-UNIT B ALANCES WERE NOT RECONCILED SINCE LONG, THESE BALANCES WERE WRITTEN OFF COMPLETELY INSTEAD OF WRITE OFF IN FIVE EQUAL INSTALLMENTS, RE SULTING IN WRITE OFF OF AN AMOUNT OF RS.63.07 CRORES DURING THE YEAR UNDER CON SIDERATION. 2.7 THE QUESTION THAT THE AUTHORITIES BELOW HAVE RA ISED RELATES TO NON-VERIFIABILITY OF THE TRANSACTIONS WHICH HAS RES ULTED IN WRITE OFF OF RS 63.07 CRORES DURING THE YEAR UNDER CONSIDERATION. I N THIS REGARD, THE LD AR HAS FURNISHED COPY OF THE BALANCE SHEET OF THE A SSESSEE AS ON 31.03.2001 WITH THE CORRESPONDING FIGURES OF 19.07. 2000 WHEN AN AMOUNT OF RS. 75.95 CRORES WAS ALLOCATED BY THE ST ATE GOVERNMENT ON ACCOUNT OF INTER-UNIT BALANCES. FURTHER, SCHEDULE 13 TO THE BALANCE SHEET AND ENCLOSED DETAILS CONTAINS INTER-UNIT BALA NCES RELATING TO FUEL, MATERIAL, CAPITAL EXPENDITURE& FIXED ASSETS, REMITT ANCE TO H.O., FUNDS TRANSFERRED FROM H.O, PERSONNEL AND OTHER TRANSFER/ ADJUSTMENTS. THE LD AR HAS SUBMITTED THAT AN AMOUNT OF RS. 75.95 CRORES WAS ALLOCATED BY THE STATE GOVERNMENT ON 19.07.2000 ON ACCOUNT OF I NTER UNIT ACCOUNTS WHICH AS ON 31.03.2001 STOOD AT RS. 79.50 CRORES. THEREAFTER THIS AMOUNT WAS REDUCED TO RS. 78.83 CRORES OF WHICH RS. 15.76 CRORES WAS ITA NO. 732/JP/16 RAJ. RAJYA VIDYUT UTPADAN NIGAM LTD. VS. ACIT CIRCL E-6, JAIPUR 7 WRITTEN OFF IN A.Y. 2009-10 AND THE REMAINING AMOUN T OF RS. 63.06 CRORES WAS WRITTEN OFF IN A.Y. 2010-11. GIVEN THAT THE ASS ESSEE HAS FURNISHED THE ABOVE DETAILS OF THE VARIOUS INTER-UNIT TRANSAC TIONS WHICH ARE GERMANE TO DETERMINATION OF ISSUE UNDER CONSIDERATI ON, THE SAME WOULD REQUIRE NECESSARY VERIFICATION BY THE AO. 2.8 NOW COMING TO THE CONTENTIONS OF THE LD AR. TH E LD AR HAS SUBMITTED THAT THE FIRST INSTALMENT OF RS. 15.76 CR ORES OF INTER UNIT BALANCES WHICH WAS WRITTEN OFF IN A.Y. 2009-10 HAS BEEN ALLOWED AND THE AO HAS NOT MADE ANY DISALLOWANCE IN THIS REGARD . FOLLOWING THE PRINCIPLE OF CONSISTENCY AS HELD BY HONBLE SUPREME COURT DECISION IN CASE OF RADHA SWAMI SATSANG (SUPRA), WHEN THE FACTS ARE SAME, THE APPROACH OF THE AO SHOULD BE CONSISTENT, THERE SHOU LD NOT BE ANY DISALLOWANCE IN THE YEAR UNDER CONSIDERATION. WE H AVE GIVEN A CAREFUL CONSIDERATION TO THE LD ARS CONTENTION. FOR THE P RINCIPLE OF CONSISTENCY TO BE FOLLOWED, WHAT IS TO BE SEEN AS HELD BY THE H ONBLE SUPREME COURT IS THAT WHERE A FUNDAMENTAL ASPECT PERMEATING THROU GH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY O R THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. IN OTHER WORDS, WHAT NEEDS TO BE SEEN IS THAT THE AO HAS EXAMINED AND DETERMINED AN ISSUE FO R A PARTICULAR YEAR AND THE SAME ISSUE IS PERMEATING THROUGH THE YEAR U NDER CONSIDERATION. IN THE INSTANT CASE, THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ISSUE UNDER CONSIDERATION RELATING TO WRITE OFF OF INTER- UNIT BALANCES HAS BEEN EXAMINED IN THE FIRST YEAR I.E, AY 2009-10. THE AS SESSMENT HAVING BEEN COMPLETED UNDER SECTION 143(3) IS NOT A CONCLUSIVE TEST TO DETERMINE WHETHER THE SAID ISSUE HAS BEEN EXAMINED BY THE AO. THEREFORE, WE ARE UNABLE TO ACCEDE TO THE SAID CONTENTIONS OF THE LD AR AND THE DECISION OF THE HONBLE SUPREME COURT DOESNT SUPPORT THE CASE OF THE APPELLANT. NOW, COMING TO THE CONTENTION OF THE LD AR THAT THE SE WRITE OFFS OF INTER-UNIT BALANCES HAVE BEEN CONSIDERED BY THE RER C FOR FIXING THE TARIFF OF THE ELECTRICITY GENERATED BY THE ASSESSEE AND HA S BEEN RECOVERED THROUGH THE TARIFF RATE OF THE ELECTRICITY GENERATE D BY THE ASSESSEE. IN THIS REGARD, WE AGREE WITH THE CONTENTION OF THE LD CIT DR THAT THE METHODOLOGY OF TARIFF FIXATION ADOPTED BY RERC CANN OT BE MADE THE SOLE BASIS FOR ALLOWANCE OF AN EXPENDITURE, THE NATURE A ND VERIFIABILITY OF WHICH IS IN QUESTION AT FIRST PLACE. IN OUR VIEW, THESE WRITE OFFS BEEN CONSIDERED BY THE RERC FOR TARIFF FIXATION AT BEST SUPPORT THE PROPOSITION ITA NO. 732/JP/16 RAJ. RAJYA VIDYUT UTPADAN NIGAM LTD. VS. ACIT CIRCL E-6, JAIPUR 8 THAT THE EXPENDITURE HAS BEEN INCURRED OR RELATES T O OR INCIDENTAL TO THE BUSINESS OF THE ASSESSEE. HOWEVER, FOR ALLOWABILIT Y OF THE SAME EXPENDITURE FOR TAX PURPOSES, THE AO IS WELL WITHIN HIS POWERS TO DETERMINE THE NATURE OF SUCH EXPENDITURE WHETHER CAPITAL OR REVENUE IN NATURE AND SEEK NECESSARY SUPPORTING DOCUMENTATI ON TO VERIFY THE SAME. IN LIGHT OF ABOVE DISCUSSIONS, WE DEEM IT APPROPRIA TE TO SET ASIDE THE MATTER TO THE FILE OF THE AO TO EXAMINE IT A FRESH TAKING INTO CONSIDERATION THE DETAILS OF INTER-UNIT BALANCES FU RNISHED (REFERRED SUPRA), AFTER PROVIDING REASONABLE OPPORTUNITY TO T HE ASSESSEE. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15/12 /2016. SD/- SD/- (KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 15/12/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- RAJASTHAN RAJYA VIDHYUT UTPADAN NIGAM LTD. 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE-6, JAIPUR 3. VK;DJ VK;QDR@ CIT II, JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-II, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.732/JP/2016) VKNS'KKUQLKJ@ BY ORDER, GK;D IATHDKJ@ ASSISTANT. REGISTRAR. ITA NO. 732/JP/16 RAJ. RAJYA VIDYUT UTPADAN NIGAM LTD. VS. ACIT CIRCL E-6, JAIPUR 9