PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD.,MEERUT V. DCIT, CIRCLE- 2, MEERUT

ITA 1084/DEL/2018

AI Insights

The case involves Paschimanchal Vidyut Vitran Nigam, a government company and subsidiary of U.P. Power Corporation Ltd., engaged in power distribution, appealing against the order of the CIT(A), Meerut, for A.Y. 2012-13. The primary issues in the appeal were the disallowance of electricity duty under Section 43B and the disallowance of interest on a loan from HUDCO, which was taken by the holding company UPPCL but utilized by the assessee. The Tribunal found in favor of the assessee regarding the electricity duty, referencing a co-ordinate bench decision for A.Y. 2015-16, but upheld the disallowance of interest on the grounds that the loan was taken by UPPCL, not the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669494 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Other Referred Cases: Kerala State Electricity Board vs. DCIT [2010] 329 ITR 91 (Kerala)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MONICA SINGH
• Assessee Lawyers: MAKING FOLLOWING; WAY OF TAX DUTY OR
• Keywords: Set aside; Business expenditure; Rule of consistency; TDS
• Section: 143(3); 43B; 40(a)(ia)

Judgement Text

"ITA No. 1084/DEL/2018 (A.Y. 2012-13) Paschimanchal Vidyut Vitran NigamVs.The Dy. C.I.T Page 1 of 13 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘F’ BENCH, NEW DELHI BEFORE Ms. MADHUMITA ROY, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 1084/DEL/2018 (A.Y. 2012-13) Paschimanchal Vidyut Vitran Nigam Vs. The Dy. C.I.T C/o Adv Vinod Kumar Goel Circle – 2 200, Western Kutchery Road Meerut Meerut. PAN – AAECP 5610 N (Applicant) (Respondent) Assessee By : None Department By : Ms. Monica Singh, CIT- DR Date of Hearing : 15.05.2025 Date of Pronouncement : 15.05.2025 ORDER PER NAVEEN CHANDRA, A.M:- This appeal by the assessee is directed against the order of the ld. CIT(A), Meerut dated 29.11.2017 for A.Y 2012-13. ITA No. 1084/DEL/2018 Paschimanchal Vidyut Vitran [A.Y 2012-13] Page 2 of 13 2. The grounds raised by the assessee read as under: “1. That A.O. as well as CIT(A) has not considered that disallowance Electricity Duty payable U/s 43B of Rs. 55,85,45,000/- is arbitrary, unjust and not according to law. The AO totally ignored the fact that the Electricity Duty is not covered under the provisions of Section 43B as it is not a tax, duty or cess imposed on the assessee. 2. That A.O. as well as CIT(A) has not considered that loan amount of Rs. 168,34,93,366/- from HUDCO taken by UPPCL (holding company) on behalf of the assessee, is utilsed by the assessee not by UPPCL. Hence the addition in nature of non business expenditure of interest paid on loan from HUDCO of Rs. 87,72,46,251/-is arbitrary, unjust and not according to law. 3. That A.O. as well as CIT(A) has not considered the case laws, hence addition made by A.O. and confirmed by CIT(A) is bad in law. 4. That the assessee has right to add, modify or delete any ground during the appeal proceeding.” 3. None appeared for and on behalf of the assessee in the last three occasion and none appeared today also. So we decided to adjudicate the issues with the assistance of the ld. DR. We have carefully perused the relevant material on record. ITA No. 1084/DEL/2018 Paschimanchal Vidyut Vitran [A.Y 2012-13] Page 3 of 13 4. Briefly stated, the facts of the case are that the assessee company is a government company and a subsidiary company of U.P. Power Corporation Ltd. and is engaged in the business of power distribution. The assessee supplies electricity to its various consumers spread over 11 districts. 5. The assessee company has filed its return showing loss of Rs. 21,69,02,82,395/- on 30.09.2012 which was processed under section 143(1) of the income tax act, 1961. Later on, the case was selected for scrutiny and accordingly, statutory notice u/s 143(2) of the Income-tax Act, 1961 [the Act, for short] was issued on 19.08.2013 and duly served upon the assessee. The Assessing Officer completed the assessment u/s 143(3) of the Act and computed total income of the assessee by making following additions: Income declared by the assessee (-) 21,69,02,82,395/- Add: addition on A/c non deduction of TDS U/s 40(a)(ia) of the I.T. Act 1961. (+) 2,85,37,28,766/- Add: disallowance U/s 43B of the I.T. Act : (+) 55,85,45,000/- Add: addition on A/c of interest paid. (+) 87,72,46,251/- Total income (-) 17,40,07,62,378/- ITA No. 1084/DEL/2018 Paschimanchal Vidyut Vitran [A.Y 2012-13] Page 4 of 13 6. Aggrieved, the assessee went in appeal before the ld. CIT(A) but was not successful. 7. Now the assessee is further aggrieved and is in appeal before us. 8. Before us, the assessee furnished written submissions stating that Ground No. 1 pertaining to disallowance of electricity duty payable u/s 43B of the Income-tax Act, 1961 [the Act, for short] is squarely covered in favour of the assessee and against the Revenue by the order of the co- ordinate bench of the Tribunal in assessee’s own case for A.Y 2014-15 order dated 02.11.2020. The assessee has furnished a copy of the Tribunal order [supra] which is on record. 9. We have heard the rival submissions and have perused the relevant material on record. We find force in the contention of the assessee that the case of the assessee is squarely covered in its favour vide order dated 02.11.2020. The co-ordinate bench at Para 9 of its order has discussed this issue and has come to a finding which reads as under: ITA No. 1084/DEL/2018 Paschimanchal Vidyut Vitran [A.Y 2012-13] Page 5 of 13 “9. We have heard the rival submissions and perused the materials available on record. The issue in the present ground is with respect to disallowance u/s 43B. We find that identical issue arose in Assessee’s own case in A.Y. 2015-16 and the Co-ordinate Bench of the Tribunal decided the issue by observing as under: 14. “We have heard the rival submissions and perused the material available on record. We find that the section 4 and 5 of the Electricity Duly Act 1963 reads as under: \"(4) Every consumer belonging to any of the classes specified in column (2) of the Schedule shall pay every month to the Government in the prescribed manner a duty calculated at the rate specified against that class in column(3) thereof: Provided that in cases where the supply of energy to a consumer is regulated by an agreement entered into between the Government or the licensee and the consumer it shall be competent hr the government either to reduce the rate at which duty is leviable on such consumer or to exempt such consumer from payment of duty under this section subject to, such terms and conditions as maybe imposed by the Government. (5) Every licensee shall collect and pay to the Government at the time and in the manner prescribed, the Electricity Duty payable u/s.4 of this Act on the units of energy consumed by every c supplied by him the . duty so payable shall amount recoverable by the licensee in be a debt due by him ITA No. 1084/DEL/2018 Paschimanchal Vidyut Vitran [A.Y 2012-13] Page 6 of 13 16. Thus, as per section 4 of the such Act the duty is levied on the consumer of electricity specified in column 2 of the schedule and u/s.5 of the Act, the assessee is oblige to collect from the consumers above mentioned duty and pay to the Government at the time and in the manner as prescribed by the rules, thus we find that the Electricity Duty collected on behalf of the Government of Uttar Pradesh as their agent and credited to the State Government Account periodically as directed by the State Government. Sometimes, the duties also adjusted against the subsidy received by the assessee from the Government of Uttar Pradesh. Thus, the amount so collected as electricity Duty is not air tax payable by the assessee but the same is amount collected by the assessee as the agent of State of Uttar Pradesh, therefore, this does not amounts any sum payable by the assessee by way of tax duty or fee by whatever name called under any the tithe being in force as- provided u/s.43B(a) of the Act. We further find that the issue is squarely covered in favour of the assessee by the decision of Honble Kerala High Court in the case of Kerala State Electricity Board vs. DCIT [2010J 329 ITR 91 (Kerala) wherein the Hon’ble Kerala High Court has held in para 23 to 27 as under: … “23. Coming to the next question of whether Section 43B of the Act … We are therefore of the opinion that Section 43B cannot be invoked in making the assessment of the liability of the appellant ITA No. 1084/DEL/2018 Paschimanchal Vidyut Vitran [A.Y 2012-13] Page 7 of 13 under the Income Tax Act with regard to the amounts collected by the appellant pursuant to the obligation cast on the appellant under Section 5 of the Electricity Duty Act, 1963.” 17. Thus, in the light of above decision, we find that the assessee has collected amount as agent on behalf of State of Uttar Pradesh pursuant to the statutory obligation to collect such an amount only as agent of the Government of Uttar Pradesh, as per provisions of Section 4 & 5 the Electricity Duty Act, 1963, therefore, the same is not covered under Clause u/s. 43B(a) of the Act as the any sum payable by the assessee by way of tax duty which means the tax is the indicative of nature of liability. Therefore, the obligation of the assessee being an agent of Uttar Pradesh Government the amount collected by duty is in the fudiciary capacity, therefore, respectfully following the principle laid down in the aforesaid decision, we allow the appeal of the assessee on this ground.” 10. Before us, no distinguishing feature in the facts of the case under the year under consideration and that of A.Y. 2015-16 has been pointed out by the Revenue but however Revenue has placed reliance on the decisions of Hon’ble Gujarat High Court cited herein above. It is a settled legal position that the rule of consistency is required to be followed by the Income-tax authorities and that in the absence of any difference in the facts and circumstances of the case for the assessment year under consideration, the Assessing Officer is not ITA No. 1084/DEL/2018 Paschimanchal Vidyut Vitran [A.Y 2012-13] Page 8 of 13 justified in disallowing the claim. Further, Revenue has also not placed any material on record to demonstrate that the order of the Co- ordinate Bench of Tribunal passed in the case of assessee for A.Y. 2015-16 has been stayed/ set aside or overruled by higher judicial forum. In such a situation, following the rule of consistency and following the order of the Tribunal in the assessee’s own case for A.Y. 2015-16 and for similar reasons hold that AO was not justified in disallowing the expenditure by invoking the provisions u/s 43B. We therefore, set aside the order of CIT(A) and thus the ground of appeal of the assessee is allowed. 10. Respectfully following the same, we allow Ground No. 1. 11. The other remaining ground taken by the assessee relates to the loan amount of Rs. 1,68,34,93,366/- from HUDCO taken by UPPCL. Facts, in brief, are that the assessee has paid an interest of Rs. 87,72,46,251/- on the loan amount of Rs. 1,68,34,93,366/- from HUDCO which was taken by the holding company UPPCL on behalf of the assessee. The Assessing Officer was of the view that as the loan funds were utilized by the holding company only, the same payment of interest is not allowable at the end of the assessee. 12. When the aggrieved assessee went in appeal before the ld. CIT(A), the ld. CIT(A) came to hold as under: ITA No. 1084/DEL/2018 Paschimanchal Vidyut Vitran [A.Y 2012-13] Page 9 of 13 I have examined the facts of the matter and considered the legal position, it is not in dispute that impugned loan on which the assessee is claiming interest deduction has been taken by UPPCL from HUDCO and not the Assessee. Thus, any payment of interest has to be borne by UPPCL and not the assessee. The AO has correctly disallowed the interest. Thers is nothing to controvert that fact that loan was taken by UPPCL and not the assessee. Therefore, question of claiming interest liability is completely misplaced and does not call for any intervention in the matter. Thus, I go along with the AO and confirm the disallowance of interest amounting to Rs.87,72,46,251/-. 13. Now the further aggrieved assessee is in appeal before us. 14. Before us, the assessee has furnished written submissions wherein it was stated that during the A.Y 2012-13 (FY 2011-12), the assessee's holding company has entered into 2 loan agreements with HUDCO for the loan amount of Rs. 350.00 Crores and Rs. 375.00 Crores, totaling to Rs. 725.00 Crores. The above loan was sanctioned under the Scheme for \"Infrastructure Improvements of Distribution Networks and Sub-Stations Through Renewal and Upgradation of Transformers and Renovation of LT/Aerial Bunch Cable Lines and discharge of power purchase liability in Uttar Pradesh by M/s Uttar Pradesh Power Corporation Limited\". This loan ITA No. 1084/DEL/2018 Paschimanchal Vidyut Vitran [A.Y 2012-13] Page 10 of 13 is sanctioned under the scheme of Central and State Government and the same is backed by the guarantee of Uttar Pradesh Government. 15. The distribution of electricity, construction of New Lines, Station and Sub-Stations, in a particular area is undertaken by the respective DICOM of the region, under the guidance, scheme and funds provided by its Holding company, i.e. UPPCL. The Holding company, le. UPPCL, as per the policy of Government (State or Central), undertake funds or take loan of behalf of all the DISCOM for the development of power quality in the state, and after that transfer the same to the respective DISCOM, under whom the targets region falls. 16. The assessee continued in its written submission by saying that in the same manner, during the FY 2011-12 (AY 2012-13), the loan taken by the UPPCL is Rs. 725.00 crores, out of which 168.35 Crores (Rs. 102.62 Crores under Scheme No 19913 and Rs. 65.73 Crores under Scheme 20022) has been transferred to PVVNL for the improvements of Distribution Networks and Sub-Stations Through Renewal and Upgradation of Transformers and ITA No. 1084/DEL/2018 Paschimanchal Vidyut Vitran [A.Y 2012-13] Page 11 of 13 Renovation of LT/Aerial Bunch Cable Lines and discharge of power purchase liability 17. The ld. counsel for the assessee concluded by saying that the assessee has been assessed since A.Y 2008-09 and assessment for A.Y 2017-18 has also been completed. 18. Per contra, the ld. DR relied upon the orders of the authorities below. 19. We have heard the rival submissions and have perused the relevant material on record. We find that the CIT(A) has sustained the disallowance of interest on loan on the ground that impugned loan on which the assessee is claiming interest deduction has been taken by UPPCL from HUDCO and not the Assessee and therefore any payment of interest has to be borne by UPPCL and not the assessee. We are of the considered view that that there is no reason to interfere with the reasoning of the CIT(A). Accordingly, the addition is sustained. The ground no 2 is dismissed. ITA No. 1084/DEL/2018 Paschimanchal Vidyut Vitran [A.Y 2012-13] Page 12 of 13 20. In the result, appeal of assessee in ITA No. 1084/DEL/2018 is partly allowed. Order pronounced in open court on 15.05.2025. Sd/- Sd/- [MADHUMITA ROY] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 23rd June, 2025. VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) Asst. Registrar, 5. DR ITAT, New Delhi ITA No. 1084/DEL/2018 Paschimanchal Vidyut Vitran [A.Y 2012-13] Page 13 of 13 Sl No. PARTICULARS DATES 1. Date of dictation of Tribunal Order . 2. Date on which the typed draft Tribunal Order is placed before the Dictation Member 3. Date on which the typed draft Tribunal Order is placed before the other Member 4. Date on which the approved draft Tribunal Order comes to the Sr. P.S./P.S. 5. Date on which the fair Tribunal Order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr. P.S./P.S 7. Date on which the final Tribunal Order is uploaded by the Sr. P.S./P.S. on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal Order 9. Date of killing off the disposed of files on the judiSIS portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes for xerox 12. The date on which the file goes for endorsement 13. The date on which the file goes to the Superintendent for checking 14. The date on which the file goes to the Assistant Registrar for signature on the Tribunal order 15. Date on which the file goes to the dispatch section 16. Date of Dispatch of the Order "