MADHYA GUJARAT VIJ CO. LTD.,VADODARA V. THE DY.CIT, CIRCLE-2(1)(2), VADODARA

ITA 109/AHD/2025

AI Insights

Madhya Gujarat Vij Co. Ltd., a subsidiary of Gujarat Urja Vikas Nigam, engaged in electricity distribution, filed appeals against the orders of the National Faceless Appeal Centre (NFAC), Delhi, for the assessment years 2017-18 and 2021-22. The primary issues revolved around the additions made to the company's income under various heads such as interest accrued but not due, government grants, and subsidies. The CIT(A) had dismissed the initial appeals on grounds of delay and other procedural issues, which the Tribunal found to be incorrectly calculated or inadequately addressed. The Tribunal directed a re-examination of these issues, emphasizing adherence to principles of natural justice and proper procedural compliance.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396939 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRATHVI RAJ MEENA
• Keywords: Set aside; Depreciation; Tax effect; Principle of natural justice; Wholly owned subsidiary
• Section: 143(3); 142(1); 263; 115JB

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member Madhya Gujarat Vij Co. Ltd. 4th Floor, Sardar Patel Vidyut Bhavan, Race Course Circle, Baroda-390007 PAN: AADCM7439H (Appellant) Vs The Dy. CIT, Circle-2(1)(2), Aayakar Bhavan, Race Course Circle, Vadodara Gujarat-390007 (Respondent) Assessee by: Shri M.K. Patel on behalf of Shri Parin Shah A.R. Revenue by: Shri Prathvi Raj Meena, CIT-D.R. Date of hearing : 16-04-2025 Date of pronouncement : 30-05-2025 आदेश/ORDER Per Suchitra Kamble, Judicial Member: These two appeals are filed against the order dated 07- 11-2024 & 01-11-2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment years 2017-18 & 2021- 22. 2. The grounds of appeals are as under:- ITA No. 109/Ahd/2025 A.Y. 2017-18 ITA Nos. 109 & 110/Ahd/2025 Assessment Year 2017-18 & 2021-22 I.T.A Nos. 109 & 110/Ahd/2025 Madhya Gujarat Vij Co. Ltd., A.Y. 2017-18 & 2021-22 2 “1. The learned Commissioner of Income Tax (Appeals), NFAC erred in law and on facts has confirmed the additions of 17,91,17,390/- on account of interest accrued but not due on Loans from PFC on the ground that the same have remained unpaid at the end of the year totally ignoring the fact that the same were not payable as on the close of the year. 2. The learned Commissioner of Income Tax (Appeals), NFAC erred in law and on facts has confirmed the additions of 195,68,27,264/- being the Government Grants, Subsidies & Consumers Contribution transferred to Profit & Loss Account during the year merely following the orders of earlier years. 3. The appellant craves leave to add to, alter, delete or modify any of the above grounds of appeal either before or at the time of hearing of this appeal. Total Tax Effect 39,31,27,726/- ITA No. 110/Ahd/2025 A.Y. 2021-22 “1.0 The learned Commissioner of Income Tax (Appeals), NFAC erred in law and on facts has confirmed the additions of \u00011,61,31,26,000/- on account of Capital Grants & Subsidies and Consumers' Contribution on the ground that the appellant should transfer 15% of the total Grants/subsidies/consumer contribution received during the year as against 5.28% offered by the appellant. The learned Commissioner (Appeals) erred in law and on facts in not considering that the facts of the year under consideration were totally different from that of all the earlier years where similar additions were made. 1.1 The learned Commissioner of Income Tax (Appeals) NFAC erred in law and on facts has not given any Findings whatsoever on the similar additions as above made under section 115JB of the IT Act. 2.0 The learned Commissioner of Income Tax (Appeals) NFAC erred in law and on facts has confirmed the additions of the Interest income amounting to 2,62,08,000/- treating the same as income from other sources. 3.0 The learned Commissioner of Income Tax (Appeals) NFAC erred in law and on facts has dismissed the ground relating to erroneous computation of total income by considering the I.T.A Nos. 109 & 110/Ahd/2025 Madhya Gujarat Vij Co. Ltd., A.Y. 2017-18 & 2021-22 3 Returned income Intimation as per passed under section 143(1) of the Ad holding that the same is outside of his jurisdiction. The learned Commissioner (Appeals) ought to appreciated that the said Income itself formed base of the total income computed in the impugned assessment order. 4.0 The appellant craves leave to add to alter delete or modify any of the above grounds of appeal either before or at the time of hearing of this appeal.” 3. Firstly we are taking up ITA 109/Ahd/2025. The assessee is a company wholly owned subsidiary of Gujarat Urja Vikas Nigam and engaged in the business of distribution of electricity. For the relevant assessment year 2017-18, the assessee filed return of income on 31-10-2017 declaring total income at Rs. 1,16,38,85,400/- u/s. 115JB of the Income Tax Act, 1961. The return was selected for scrutiny and notice u/s. 142(1) and 143(2) of the Act were issued. The Assessing Officer made addition on/or disallowances thereby enhancing the total income before set of unabsorbed business losses and depreciation and completed the assessment vide order dated 19-12-2019. Subsequently, the Pr. CIT passed an order u/s. 263 of the Act, 1961 on 31-03-2022 and set aside the assessment order dated 29-12-2019 and directed the Assessing Officer to pass an order after de-novo verification. The Assessing Officer completed the assessment u/s. 143(3) r.w.s. 263 r.w.s. 144B of the Income Tax Act, 1961 vide order dated 30-03-2023 assessing the total income at Rs. 3,36,54,10,621/-. I.T.A Nos. 109 & 110/Ahd/2025 Madhya Gujarat Vij Co. Ltd., A.Y. 2017-18 & 2021-22 4 4. Aggrieved by the same assessment order, the assessee filed appeal before CIT(A). The CIT(A) dismissed the appeal of the on the ground of delay. 5. The ld. A.R. submitted that the CIT(A) has dismissed the appeal on the ground of delay when there was delay at all as the assessment order was served on the assessee on 07-08-2023 and due date for filing of appeal was 15-09- 2023 prior to which the assessee filed appeal on 25-08- 2023. The ld. A.R. submitted that the CIT(A) held that the assessment order was issued on 30-03-2023 and hence actual due date of filing of appeal was 01-05-2023. The CIT(A) has wrongly calculated delay that of 115 days. The ld. A.R. submitted that the CIT(A) has totally ignored the assessee’s contentions and without deciding anything on record has dismissed the appeal only on the ground of delay. 6. The ld. D.R. relied upon the assessment order and the order of the CIT(A). 7. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the assessee was served assessment order on 07- 08-2023 and merely issuing the order on 30-03-2023 will not start the due date of filing of appeal, but the calculation of the due date for filing of appeal which was done by the assessee seems to be plausible. Hence, the CIT(A) was not right in dismissing the appeal on the ground of delay. The I.T.A Nos. 109 & 110/Ahd/2025 Madhya Gujarat Vij Co. Ltd., A.Y. 2017-18 & 2021-22 5 CIT(A) has not at all considered the appeal on merit and therefore it will be proper to remand back the matter to the file of CIT(A) for proper verification and adjudication of the issues on merit and as per Income Tax Act. The assessee be given opportunity of hearing by following principles of natural justice. 8. In the result, the appeal of the assessee being ITA No. 109/Ahd/2025 is partly allowed for statistical purposes. 9. As regards ITA No. 110/Ahd/2025, the assessee company filed return of income on 12-03-2022 declaring total income at Rs. nil after set of brought forward losses. The return was processed u/s. 143(1) of the Act on 22-09- 2022 and total income of Rs. 2,87,42,32,799/-. The case was selected for scrutiny for assessment year 2021-22 after taking cognizance of the details filed by the assessee. The Assessing Officer made addition of Rs.1,61,31,26,000/- in respect of variation of subsidy/grant and addition of Rs. 20,79,52,000/- as against variation in income from other sources. 10. Aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 11. The ld. A.R. has challenged the addition of 15% on account of capital grants in subsidy and consumer contribution transferred to profit and loss account during I.T.A Nos. 109 & 110/Ahd/2025 Madhya Gujarat Vij Co. Ltd., A.Y. 2017-18 & 2021-22 6 the year as against 5.28% offered by the assessee in respect of addition on account of income from other sources. 12. The ld. A.R. submitted that the CIT(A) ignored that fact that the Assessing Officer wrongly considered the return of income at Rs. 2,87,42,32,799/- making additions on account of contingent liability amounting to Rs. 2,56,57,44,365/-, provision for gratuity amounting to Rs. 30,14,35,050/- and provision for bonus amounting to Rs. 70,53,384/-. The CIT(A) dismissed these grounds thereby stating that this issue was not arisen out of the impugned order. The assessee has categorically taken this ground because the interest income amounting to Rs. 2,62,08,000/- treating the same as income from other sources and the facts of the present assessment order were totally different from that of earlier assessment years where similar additions were made and this difference was not taken into account by the Assessing Officer as well as the CIT(A). 13. The ld. D.R. relied upon the assessment order and the order of the CIT(A). 14. We have heard both the parties and perused the all the relevant materials available on record. It is pertinent to note that the assessee has given a bifurcation of the return of income but whether the same is related to the difference in respect of income from other sources or not has not been discussed by the CIT(A) in the order dated 01-11-2024. I.T.A Nos. 109 & 110/Ahd/2025 Madhya Gujarat Vij Co. Ltd., A.Y. 2017-18 & 2021-22 7 Therefore, this issue needs adjudication and hence the matter is remanded back to the file of the CIT(A) for deciding whether this issue arises from the same addition or not and decide as per the Income Tax provisions. The assessee be given opportunity of hearing by following principles of natural justice. 15. In the result, the appeal being ITA No. 110/Ahd/2025 for assessment year 2020-21 of the assessee is partly allowed for statistical purposes. 16. In the result, both the appeals are partly allowed for statistical purposes. Order pronounced in the open court on 30-05-2025 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 30/05/2025 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद "