DCIT, Patiala V. M/s Punjab State Electricity Board, Patiala

ITA 817/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6978 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 23-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Assessee Lawyers: K P BAJAJ
• Keywords: Audit objection; Bad and doubtful debts; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.816/CHD/2016 ASSESSMENT YEAR: 2008-09 THE PUNJAB STATE ELECTRICITY VS. THE ACIT BOARD, CIRCLE, PATIALA THE MALL PATIALA PAN NO. AABCP7651E ITA NO.817/CHD/2016 ASSESSMENT YEAR: 2008-09 THE DCIT, VS. THE PUNJAB STATE ELECTRICITY CIRCLE, PATIALA BOARD, THE MALL, PATIALA PAN NO. AABCP7651E (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. K.P. BAJAJ REVENUE BY : SH. RAVI SARANGAL DATE OF HEARING : 29/06/2017 DATE OF PRONOUNCEMENT : 02/08/2017 ORDER PER B.R.R. KUMAR A.M. THESE CROSS APPEALS HAS BEEN FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE COMMON ORDER OF LD. CIT(A), MEERUT ,CAM P PATIALA DT. 30/03/2016. 2. FIRSTLY WE SHALL DEAL WITH THE APPEAL OF THE ASS ESSEE IN ITA NO. 816/CHD/2016 IN WHICH ASSESSEE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION ON ACCOUNT OF RS. 1,03,14 ,982/- ON ACCOUNT OF BAD DEBTS. 2. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS. 236,96,51,538/- ON AC COUNT OF PRIOR PERIOD EXPENSES. 3. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS. 9,76,966/- ON ACCO UNT OF DEFERRED COST EXPENSES. 4. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS. 126,24,00,000/- ON ACCOUNT OF EXPENSES AS PER AUDIT OBSERVATIONS. 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A 100% GOVERNMENT OWNED PSU AND ACCOUNTS HAVE BEEN MAINTAINED, FOR THE YEAR UNDER APPEAL AS PER THE PROVISIONS OF ELECTRICITY ACT, 2003 FOR WHICH PURPO SE VARIOUS HEADS HAVE BEEN PROVIDED. THE ACCOUNTS OF THE ASSESSEE ARE SUBJECT TO AUDIT BY THE COMPTROLLER AND AUDITOR GENERAL OF INDIA. GROUND NO.1: . THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION ON ACCOUNT OF RS. 1,03,14,98 2/- ON ACCOUNT OF BAD DEBTS. ACCOUNT HEAD NO. 79.4 DEAL WITH THE DEBTS WHICH HA VE BECOME ACTUALLY BAD AND WRITTEN OFF IN THE BOOKS OF ACCOUNT IN SCHEDULE 15 OF THE AUDITED ACCOUNTS. PROVISION FOR BAD AND DOUBTFUL DEBTS IS ALSO CREATE D WHICH IS THOUGH CLAIMED IN THE PROFIT AND LOSS ACCOUNT BUT THE SAME IS ADDED B ACK WHILE COMPUTING THE INCOME FOR THE PURPOSE OF FILING OF THE RETURN. 4. THE ASSESSEE HAS DEBITED RS.4,76,60,359/- AS BAD AND DOUBTFUL DEBTS WRITTEN OFF/ PROVIDED FOR AS PER SCHEDULE 15, IN TH E RELEVANT YEAR WHILE ACTUAL BAD DEBTS WERE TO THE TUNE OF RS. 1,03,14,982/- PRO VISION WAS CREATED AT RS. 67,79,336/-. THE PROVISION WAS ADDED BACK AT THE TI ME OF FILING THE RETURN AS DISALLOWANCE. THE A.O. DISALLOWED THIS AMOUNT BEING THE PROVISION UNDER BAD DEBTS 5. THE LD. CIT (A) HELD, THAT EACH YEAR IS A SEPARATE YEAR AND FOR ALLOWING ANY AMOUNT AS BAD DEBTS IT IS TO BE ESTABLISHED THAT TH E SAID AMOUNT HAD BEEN OFFERED IN INCOME IN ANY OF THE PREVIOUS YEAR AND THERE EXISTS DEBTOR CREDITOR RELATIONSHIP AND THE AMOUNT HAS ACTUALLY BECAME IRRECOVERABLE. SINCE IT IS MATTER OF FACT AND FOR ALLOWABILITY OF BAD DEBTS THE CONDITIONS SPECIFIED IN SEC 36(L)(VII) ARE TO BE SATISFIED. SINCE NO DETAILS/JUSTIFICATION FOR ALLOWABILITY OF BAD DEBTS HAVE BEEN SUBMITTED THE DISALLOWANCE IS CONFIRMED. 6. BEFORE US THE LD.AR SUBMITTED THAT THE ISSUE OF ACTUAL BAD DEBTS ALSO CAME UP FOR ADJUDICATION BEFORE THE HON'BLE TRIBUNAL FOR THE ASSESSMENT YEARS 2006-07 AND FOLLOWED IN A.Y. 2007-08 IN ITA NO. 1127/CHANDI /2009 (BY THE ASSESSEE) AND 1130/2009 BY THE DEPARTMENT. FOR READY REFERENCE THE RELEVANT PARA 52 OF THE ORDER WHICH WAS RELIED UPON FOR THE A.Y.2007-07 IS REPRODUCED HEREUNDER: 52. WE HAVE HEARD. THE RIVAL CONTENTIONS AND PERUS ED THE RECORD. THE PERUSAL OF THE ANNUA' STATEMENT OF ACCO UNT I.E. SCHEDULE 15(A) AT REVERSE OF PAGE 58 OF THE PAPER B OOK REFLECTS THAT UNDER THE HEAD 'OTHER DEBTS' TOTALING RS.4.43 CRORES, THE ASSESSEE HAD CLAIMED EXPENDITURE OF BAD AND DOUBTFUL DEBTS WRITTEN OFF/PROVIDED FOR AS PER ACCOUNT CODE 79.4 AT RS. 13,37,113. THE ASSESSEE HAD ALSO MADE A PROVISION F OR DOUBTFUL 3 DEBTS FROM THE CUSTOMER UNDER ACCOUNT CODE 23.9 AT RS.25,87,71,432/- DEBITED UNDER SCHEDULE 26B AT PAG E 66 OF THE PAPER BOOK. WHERE THE ASSESSEE HAD WRITTEN OFF OF BAD DEBTS IN ITS ACCOUNT THE SAID IS ALLOWABLE AS AN EXPENDITURE IN VIEW OF THE PROVISIONS OF SECTION 36(L)(VII) R.W.S. 36(2) OF THE ACT. THE NECESSARY DETAILS AND EVIDENCE IN THIS RES PECT ARE NOT AVAILABLE ON RECORD AND CONSEQUENTLY WE DIRECT THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESS EE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. -REASONABL E OPPORTUNITY OF HEARING SHALL BE AFFORDED TO THE ASS ESSEE. THE GROUND NO.5 RAISED BY THE ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. 7. WE HAVE GONE THROUGH THE FACTS OF THE CASE, THE ORDER OF ASSESSMENT, ORDER OF THE CIT(A) AND THE APPELLATE ORDER BY THE HON'BLE TRIBUNAL. THE ASSESSEE HAD NEITHER GIVEN ANY DETAILS OF BAD DE BTS BEFORE A.O NOR IN APPELLATE PROCEEDINGS. IT HAS NOT BEEN ABLE DEMONST RATE AS TO WHICH PARTICULAR AMOUNT HAS BECOME BAD. SINCE, EVIDENCE IN THIS RESPECT ARE NOT AVAILABLE ON RECORD AND CONSEQUENTLY WE DIRECT THE ASSESSING OFF ICER TO VERIFY THE CLAIM OF THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WIT H LAW. 8. IN THE RESULT THIS GROUND OF APPEAL IS ALLOWED F OR STATISTICAL PURPOSE. 9. GROUND NO. 2: DISALLOWANCE OF PRIOR PERIOD EXPENSES AMOUNTING TO RS. 236,96,51,538/-. 10. THE ASSESSING OFFICER MADE ADDITION OF RS. 236, 96,51,538/-BEING PRIOR PERIOD EXPENSES NOT ALLOWABLE IN THE CURRENT YEAR. 11. THE LD. CIT (A) HELD THAT PRIOR PERIOD EXPENSE S COULD HAVE BEEN CLAIMED BY FILING REVISED RETURN WITHIN PERMISSIBLE TIME WH ICH STOOD EXPIRED. 12. BEFORE US THE LD.AR RELIED ON THE ORDER OF THE TRIBUNAL FOR EARLIER YEARS AND THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OF FICER. 13. WE HAVE PERUSED THE FACTS ON RECORD. 14. THE DETAILS OF PRIOR PERIOD INCOME AND PRIOR PE RIOD EXPENSES ARE GIVEN AT PAGE 51 SCHEDULE - 18. WHILE THE INCOME OF PRIOR PE RIOD BROUGHT TO TAX IS 348,08,55,893/- AND PRIOR PERIOD EXPENSES WERE RS. 236,96,51,538/-. HON'BLE DELHI COURT IN THE CASE OF CIT V. EXXON MOBILE LUBRICANTS PVT. LTD., REPORTED IN (2010) 328 ITR 17 HELD THAT WHERE THE ASSESSEE HAD SHOWN PRIOR PERIOD INCOME WHICH WAS NOT EXCLUDED WHILE WORKING OUT CURRENT YEARS T AXABLE INCOME, THEN THERE WAS NO REASON TO DISALLOW PRIOR PERIOD EXPENSES. T HIS ISSUE HAS BEEN DEALT BY THIS TRIBUNAL IN THE EARLIER ASSESSMENT YEARS 2006-07 & 2007-08. IN ALL FAIRNESS WE REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THE SAID CLAIM OF THE ASSESSEE AND IF FOUND TO BE CORRECT THE SAID EXPEND ITURE IS ALLOWABLE IN THE 4 HANDS OF THE ASSESSEE ON THE SAME PARITY OF REASONI NG UNDER WHICH PRIOR PERIOD INCOME HAS BEEN INCLUDED IN THE HANDS OF THE ASSESS EE. 15. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES . 16. GROUND NO. 3: LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ADDITI ON OF RS. 9,76,966/- ON ACCOUNT OF DEFERRED COST EXPENSES. 17. THE ASSESSING OFFICER HAS MADE THE ADDITION OF 9,76,966/- ON ACCOUNT OF DEFERRED COST AS GIVEN IN THE SCHEDULE 23 . BEFORE THE ASSESSING OFFICER IT WAS SUBMITTED THAT THE TOTAL AMOUNT DEBITED TO P&L ACCO UNT UNDER THIS HEAD WAS RS. 27,94,179/- OUT OF THE TOTAL EXPENDITURE AN AMO UNT OF RS. 9,76,966/- IS ON ACCOUNT OF SURVEY AND FEASIBILITY PROJECTS WHICH DO ES NOT CULMINATE INTO FINALITY. THE ASSESSING OFFICER MADE THIS DISALLOWANCE AS THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE TO SUBSTANTIATE THE CLAIM. 18. THE LD. CIT(A) HAS UPHELD THE ADDITION ON THE G ROUNDS THAT THE ASSESSEE HAS NOT SUBMITTED ANY DETAILS / PROOF BEFORE THE AS SESSING OFFICER FOR ALLOWABILITY OF THIS EXPENDITURE. HE FURTHER HELD THAT EVEN DURI NG THE APPELLATE PROCEEDINGS THE AR HAS FAILED TO BRING ON RECORD ANY EVIDENCE T O SUBSTANTIATE ITS CLAIM FOR DEDUCTION OF EXPENSES CLAIMED. 19. BEFORE US THE LD.AR RELIED ON THE ORDER OF THE TRIBUNAL FOR EARLIER YEARS AND THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OF FICER. THIS ISSUE HAS BEEN DEALT BY THIS TRIBUNAL IN THE EARLIER ASSESSMENT YEARS 20 06-07 & 2007-08. THE EXPENSES HAVE BEEN DISALLOWED AS THE ASSESSEE COULD NOT PROD UCE ANY DOCUMENTARY EVIDENCES BEFORE THE LOWER AUTHORITIES. IN ALL FAIR NESS WE REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THE SAI D CLAIM OF THE ASSESSEE AND IF FOUND TO BE CORRECT THE SAID EXPENDITURE IS TO BE A LLOWED. 20. THIS GROUND OF APPEAL IS ALLOWED FOR STATISTIC AL PURPOSES. 21. GROUND NO. 4 : IMPACT OF AUDIT OBSERVATION AND ADDITION OF RS. 126,24,00,000/- 22. THE ASSESSING OFFICER MADE ADDITION OF THIS AMO UNT BASED ON THE AUDIT OBJECTIONS AS THE ASSESSEE HAS WRONGLY OVERSTATED I TS DEFICIT DESPITE MAINTAINING ACCOUNTS ON MERCANTILE BASIS. 23. THE LD. CIT(A) UPHELD THE ADDITION ON THE GROUN DS THAT THE ADDITION WAS MADE BASED ON THE RESULTS OF THE AUDIT OBJECTIONS A ND THESE OBSERVATIONS MADE ARE EITHER ACCEPTED OR NOT ACCEPTED BY THE ASSESSEE . HE HELD THAT THE CAG AUDIT SHOULD NOT BE TAKEN COGNIZANCE OFF AND SINCE THE ASSESSEE HAS NOT PROVED THAT THE OBJECTION WAS WRONG, THE ADDITION W AS RIGHTLY CALLED FOR. 5 24. BEFORE US THE LD.AR RELIED ON THE ORDER OF THE TRIBUNAL FOR EARLIER YEARS AND THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OF FICER. 25. THIS ISSUE ALSO CAME UP FOR CONSIDERATION BEFOR E THE HON'BLE TRIBUNAL IN ITA NOS. 1127 & 1130/CHANDI/2009 AND WAS SET ASIDE TO T HE FILE OF THE ID. A.O. FOR BREVITY SAKE THE RELEVANT PARA OF THE ORDER OF THE TRIBUNAL IS REPRODUCED HEREUNDER: WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE RECORD. THE AUDITORS IN THEIR ANNUAL STATEMENT OF ACCOUNTS OBSERVED DISCREP ANCIES IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE. THE AUDITORS IN THE ANN UAL STATEMENT OF ACCOUNT HAD PREPARED A STATEMENT SHOWING THE IMPACT OF COMM ENTS ON ACCOUNTS AS PER ANNEXURE-C ANNEXED AT REVERSE OF PAGE 33 OF THE PAP ER BOOK. THE COMMENTS OF THE AUDITORS ADVICE ARE AT PAGES 33 TO REVERSE OF P AGE 34 OF THE PAPER BOOK. ADMITTEDLY, THE ASSESSEE IS FOLLOWING THE MERCANTIL E SYSTEM OF ACCOUNTING AND CERTAIN EXPENSES HAVE NOT BEEN BOOKED THOUGH RELATA BLE TO THE YEAR UNDER CONSIDERATION. SIMILARLY, THE INCOME ARISING IN THE PERIOD UNDER CONSIDERATION ON CERTAIN ACCOUNTS WAS NOT BOOKED BY THE ASSESSEE CLA IMING THAT IT WAS FOLLOWING THE CASH SYSTEM OF ACCOUNTING IN RESPECT THEREOF. T HE ASSESEE IS TO ACCOUNT FOR THE RECEIPTS AND EXPENDITURE WHICH ARE RELATABLE TO THE PREVIOUS YEAR WHILE PREPARING ITS ACCOUNTS FOR THE YEAR UNDER CONSIDERA TION. THE CLAIM OF THE ASSESSE IS THAT IN THE UNDER STATEMENT OF SURPLUS WORKED OU T BY THE AUDITORS OF RS. 53.56 CRORES THE FIGURE OF THE EARLIER YEAS ARE ALSO INCL UDED AS SIMILAR STATEMENT WAS BEING PREPARED FROM YEAR TO YEAR. DURING THE COURSE OF HEARING IT WAS PUT TO BOTH THE AUTHORIZED REPRESENTATIVES THAT THE SAID FACT N EEDS VERIFICATION AND BOTH THE AUTHORIZED REPRESENTATIVES FAIRLY AGREED FOR THE VE RIFICATION EXERCISE TO BE CARRIED BY THE ASSESSING OFFICER. IN THE TOTALITY OF THE FA CTS AND THE CIRCUMSTANCES WE REMIT THIS ISSUE BACK OT THE FILE OF THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE AND WHEREIN THE FIGURES OF THE EARLIER YEA RS, IF INCLUDED INTEREST HE SAID STATEMENT UNDER ANY OF THE HEADS OF INCOME/EXPENDIT URE, THE SAME IS TO BE IGNORED IN ORDER TO COMPUTE THE SURPLUS WHICH IS TO BE INCLUDED IN THE HANDS OF THE ASSESSEE IN LINE WITH THE OBSERVATIONS OF THE A UDITORS WHILE PREPARING THE ACCOUNTS OF THE ASSESSEE. THE GROUND NO. 4 RAISED B Y THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 26. THE ISSUE ARISING IN THE PRESENT APPEAL IS IDE NTICAL TO THE ISSUE RAISED BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASS ESSMENT YEAR 2006-07 & 2007- 08 AND IN LINE WITH THE ORDER OF THE TRIBUNAL WE SE T ASIDE THE PRESENT ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME IN LINE WITH OUR DIRECTIONS. 27. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES . 28. NOW WE SHALL DEAL WITH REVENUES APPEAL IN ITA NO. 817/CHD/2016 IN WHICH REVENUE HAS RAISED THE FOLLOWING GROUND: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 411.89 CRORES MADE ON ACCOUNT OF SUBSIDY PAYABLE BY THE GOVT. 29. THE SOLITARY GROUND TAKEN BY THE DEPARTMENT CON CERNS THE DELETION OF ADDITION OF RS. 411 CRORES ON ACCOUNT OF SUBSIDY. 30. THE ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE GROUNDS THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTS AND HOWEVER FOR SUBSIDY 6 RECEIVED FROM THE GOVERNMENT THE ASSESSEE IS FOLLOW ING CASH BASIS WHICH CANNOT BE ALLOWED. 31. THE LD. CIT(A) HAS DELETED THE ADDITION HOLDIN G AS UNDER : I HAVE GONE THROUGH THE FACTS ON RECORD AND ALSO PERUSED THE ASSESSMENT ORDER AND SUBMISSIONS FILED BY THE ID. COUNSEL FOR THE AS SESSEE AND ALSO THE RELEVANT TARIFF ORDER VIDE WHICH THE BALANCE SUBSIDY OF 411. 89 CRORES HAS BEEN TAKEN. THIS ORDER OF REGULATORY COMMISSION PLACED IN THE ASSESS MENT RECORDS IS DATED 03.07.2008 AND AS ON 31.03.2008 THE ASSESSEE COULD NOT BE SUPPOSED TO ANTICIPATE THE FIGURE. FROM THE FACTS OF THE CASE I T ALSO TRANSPIRES THAT THERE IS NO OTHER METHOD TO ACCOUNTING FOR THE INCOME FROM SUBS IDY AND BY ADOPTING THE METHOD OF ACCOUNTING THE NORMS OF MERCANTILE SYSTEM HAVE BEEN DULY CARRIED OUT AS THE DETERMINING FACTOR IN THE AMOUNT OF SUBS IDY IS THE ORDER OF THE REGULATORY AUTHORITY WHICH GO ON CHANGING FROM TIME TO TIME. THE FACT REMAINS THE AMOUNT OF ACCRUAL OF INCOME WOULD GO ON CHANGIN G FROM ONE ORDER OF THE REGULATORY AUTHORITY TO OTHER AND THE EFFECT TO THE CHANGED AMOUNT CAN ONLY BE GIVEN AFTER RECEIPT OF THE ORDER. IT WAS HELD IN TH E CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06 BY THE HON'BLE TRIBUNAL. 32. BEFORE US, THE LD. DR ARGUED THAT THE MIXED AC COUNTING POLICY OF THE ASSESSEE CANNOT BE ACCEPTED AND THE SUBSIDY HAS TO BE RIGHTLY TAXED IN THE YEAR IT IS ACCRUED. 33. LD. AR SUBMITTED THAT THE SUBSIDY IS RECEIVED F ROM THE STATE GOVT.FOR PROVIDING FREE ELECTRICITY TO AGRICULTURAL CONSUMER S AND SCHEDULE CASTES. THE PROCEDURE IS THAT ESTIMATES ARE DRAWN IN WHICH THE TENTATIVE AMOUNT OF SUBSIDY IS WORKED OUT ON THE BASIS OF ESTIMATED SUPPLY AND RATES IN FORCE AS DETERMINED BY THE REGULATORY AUTHORITY. THE TENTATIVE AMOUNT S O DETERMINED BY THE BOARD IS SUBJECT TO SCRUTINY BY THE PUNJAB STATE ELECTRICITY REGULATORY AUTHORITY COMMISSION AND THE ESTIMATES ARE REVISED ON THE BAS IS OF RATES DETERMINED ON THE BASIS OF REPORT OF THE REGULATORY AUTHORITY. IN THE MIDDLE OF THE YEAR THE FIGURES AS TO SUPPLY AND RATES ARE REVISED AND THE CLAIM IS LODGED ACCORDINGLY. NORMALLY, THE EFFECT TO THE REVISED ESTIMATES IS GI VEN BY THE AUTHORITY AFTER THE CLOSE OF THE ACCOUNTING PERIOD AND THE EFFECT AS TO THE SAME IS GIVEN IN THE YEAR IN WHICH THE AMOUNT IS COMMUNICATED BY THE REG ULATORY AUTHORITY. THE FIGURE INTIMATED IS EITHER MORE OR LESS THAN THE RE VISED ESTIMATES SO SUBMITTED. THE PROCESS GOES ON AND IN THE THIRD YEAR THE FIGUR E IS TRUED UP. IN SUCH CIRCUMSTANCES THE ASSESSEEE DOES NOT HAVE ANY OTHER ALTERNATIVE EXCEPT TO ACCOUNT FOR THE SUBSIDY IN THE YEAR WHEN THE ESTIMA TES ARE DRAWN, RESULTS OF THE REVISED FIGURES ARE PROVIDED BY THE REGULATORY AUTH ORITY AND THEN WHEN THE FIGURES ARE TRUED UP ON THE BASIS OF ACTUAL CONSUMP TION AND AMOUNT WORKED OUT ON THE BASIS OF ORDERS ISSUED BY THE REGULATORY AUT HORITY FROM TIME TO TIME. IN THIS WAY THE AMOUNT OF SUBSIDY RECEIVED IS ACCOUNTED FOR FROM TIME TO TIME. 7 34. THE TOTAL AMOUNT OF SUBSIDY PAYABLE FOR THE YEA R 2007-08 WAS TAKEN INTO ACCOUNT AS DETERMINED BY PUNJAB STATE REGULATORY CO MMISSION IN THE TARIFF ORDER FOR EACH YEAR. THE TENTATIVE CONSUMPTION IS T AKEN INTO ACCOUNT ON THE BASIS OF WHICH THE AMOUNT OF SUBSIDY IS FIXED. THE SAME IS TRUED UP IN THE SUBSEQUENT YEAR ON THE BASIS OF ACTUAL CONSUMPTION AND EFFECT IS GIVEN IN THE BOOKS OF ACCOUNT ACCORDINGLY. 35. IN THE YEAR UNDER APPEAL SUCH COMPENSATION WAS FIXED AT RS. 2848.04 CRORES AND THE ENTIRE AMOUNT WAS RECEIVED IN THE YE AR. THE TOTAL AMOUNT OF SUBSIDY PAYABLE FOR THE YEAR 2007-08 WORKS OUT TO B E 3224.37 CRORES INCLUSIVE OF PAST SUBSIDY. BY ADDING THE AMOUNT OF INTEREST RS. 35.56 CRORES PAYABLE FOR THE DELAYED PAYMENT OF SUBSIDY DURING 2007-08, THE AMOU NT PAYABLE BY THE GOVERNMENT WORKS OUT TO RS. 3259.03 CRORES. AFTER A DJUSTMENT OF AMOUNT OF RS. 2848.04 CRORES PAID DURING 2007-08, THE BALANCE AMO UNT PAYABLE BY THE GOVERNMENT UPTO THE YEAR 2007-08 IS 411.89 CRORES W HICH WAS RECEIVED IN THE FINANCIAL YEAR 2008-09 AND WAS OFFERED FOR TAXATION IN THE RELEVANT YEAR WHEN THE AMOUNT WAS SO DETERMINED. FROM THIS DISCUSSION IT WOULD TRANSPIRE THAT FIGURE OF SUBSIDY RECEIVABLE CANNOT BE ACCOUNTED UNLESS AN D UNTIL THE SAME IS QUANTIFIED. THE RELEVANT FIGURES OF SUBSIDY WERE, A FTER REVISED ESTIMATES, DETERMINED VIDE ORDER DATED JULY 3, 2008 VIDE WHICH THE BALANCE SUBSIDY PAYABLE WAS INTIMATED AT RS. 411.89 CRORES. SINCE T HIS ORDER WAS ISSUED AFTER CLOSE OF THE FINANCIAL YEAR 2007-08 THE EFFECT THER ETO COULD NOT BE ANTICIPATED AS ON 31.03.2008. THE SUM DUE AT RS. 411.89 CRORES, AFTER MAKING AMENDMENT IN THE LATER PART OF THE TARIFF ORDER, WAS ACCOUNTED F OR IN FINANCIAL YEAR 2008-09, RELEVANT FOR THE ASSESSMENT YEAR 2009-10. INCIDENTA LLY, IT MAY BE SUBMITTED THAT THE FIGURE OF SUBSIDY PAYABLE FOR THE ASSESSMENT YE AR UNDER APPEAL WAS DETERMINED AT RS.,2578.13 CRORES AGAINST THE FIGURE OF 2848.04 CRORES. 36. THE ABOVE FIGURES ARE INDICATIVE OF THE TRUE ST ATE OF AFFAIRS AND IT WILL BE APPRECIATED THAT THAT THE AMOUNT OF SUBSIDY RECEIVA BLE CANNOT BE DETERMINED TILL THE FINAL TRUING UP IS MADE. 37. BASED ON THE FACTS PLACED BEFORE US AND HAVING GONE THROUGH THE SYSTEM OF RECEIPT OF SUBSIDY, KEEPING THE ENTIRE GAMUT OF FACTS AND LAW WE ARE OF THE CONSIDERED OPINION THAT THE IMPUGNED ADDITION WAS N OT CALLED FOR AND IS, THEREFORE, DELETED, WHEN EFFECTIVELY THE ASSESSED I NCOME WOULD NOT UNDERGO ANY CHANGE. SIMILAR VIEW WAS ALSO TAKEN IN THE CASE OF THE ASSESSEE FOR THE AY 8 2005-06 BY THIS TRIBUNAL AND HENCE NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT(A). 38. IN THE RESULT, GROUND RAISED BY THE REVENUE IS DISMISSED. 39. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED AND APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (B.R.R.KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 02/08/2017 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR