PURVANCHAL VIDYUT VITRAN NIGAM LTD.,VARANASI V. DY./ACIT, RANGE - 2, VARANASI

ITA 35/VNS/2023

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The case involves Purvanchal Vidyut Vitran Nigam Limited, an electricity distribution company and a subsidiary of Uttar Pradesh Power Corporation Limited, which appealed against the order of the Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre, Delhi. The appeal pertained to the Assessment Year 2017-18 and challenged the disallowances and additions made by the Assessing Officer under various sections of the Income Tax Act, including section 40(a)(ia) concerning non-deduction of tax at source on interest payments, additions on sundry liabilities, employee benefit expenses, and rejection of revised claim of depreciation. The Tribunal found that the issues raised required further examination and thus restored them to the Assessing Officer for a detailed review.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31141 (ITAT-VARANASI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 10-04-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMALENDU NATH MISHRA
• Assessee Lawyers: O.P. SHUKLA; ABDESH DUBEY; ADVOCATES
• Keywords: Set aside; Depreciation; Principle of natural justice
• Section: 194A; 37; 43B; 40(a)(ia)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH, VARANASI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA No. 35/VNS/2023 Assessment Year 2017-18 Purvanchal Vidyut Vitran Nigam Limited, Vidyut Nagar P.O., DLW, Bhikharipur, Varanasi PAN : AADCP4092M vs. DY./ACIT, Range-2 Varanasi (Appellant) (Respondent) For Assessee : Shri O.P. Shukla & Shri Abdesh Dubey, Advocates For Revenue : Shri Amalendu Nath Mishra, CIT-DR Date of Hearing : 10-09-2024 Date of Pronouncement : 22-10-2024 O R D E R PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dt. 14-02-2023 passed by the Ld. Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟] and it relates to Assessment Year (AY.) 2017-18. The assessee is contesting the decision rendered by the Ld.CIT(A) on the following four issues: 2 ITA No. 35/VNS/2023 a. Addition made u/s. 40(a)(ia) of the Act; b. Addition on sundry liabilities; c. Addition of Employee Benefit Expenses; d. Rejection of revised claim of depreciation; 2. The assessee-company is anelectricity distribution company. It is asubsidiary of M/s. Uttar Pradesh Power Corporation Limited, which belongs to Governmentof Uttar Pradesh. 3. The first issue relates to disallowance u/s. 40(a)(ia) of the Act. The AO noticed that the assessee has paid interest of Rs.2398.33 lakhs to its customers. It was noticed that the assessee has not deducted tax at source on the interest amount so paid in accordance with the provisions of section 194A of the Act. Accordingly, the AO disallowed 30% of the interest expenditure mentioned above u/s. 40(a)(ia) of the Act. The Ld.CIT(A) confirmed the same. 3.1. The Ld.AR submitted that the assessee has paid interest to its customers on the deposit amount paid by them. He submitted that majority portion of the interest payment does not require deduction of tax at source u/s. 194A of the Act, since they are within the threshold limit prescribed in the above said section. He further submitted that the department has not treated the assessee as „assessee in default‟ u/s. 201(1) of the Act and hence, the disallowance u/s. 40(a)(ia) of the Act should not be made as per 2nd proviso to that section. 3.2. The Ld.DR, on the contrary, submitted that the above said submissions made by the assessee require verification at the end of the AO. 3 ITA No. 35/VNS/2023 3.3. We heard rival contentions and perused the record. We notice that the assessee is making above said submissions for the first time and we are of the view that the same requires examination at the end of the AO. Accordingly,in the interest of natural justice, we are of the view that the assessee may be provided with one more opportunity to furnish details in support of above said claim. Accordingly, we set aside the order passed by the Ld.CIT(A) on this issue and restore the same to the file of the AO for examining it afresh. 4. The next issue relates to assessment of “various liabilities” outstanding at the year end in the Balance sheet. The AO noticed that the assessee has disclosed various liabilities in the Balance Sheet. Hence, the AO asked the assessee to provide details thereof and also to show that the said expenses claimed against those liabilities are allowable as deduction and also not hit by sec.43B of the Act. Since the information furnished by the assessee was not complete, the AO assessed various liabilities aggregating to Rs. 157.04 crores as income of the assessee. The Ld.CIT(A) also confirmed the same. 4.1. We heard the parties and perused the record. The above said addition made by the AO is on the reasoning that the assessee has failed to provide the details relating to the said liabilities and also on account of failure of the assessee to show that these liabilities are not covered by the provisions of section 43B of the Act. Since the assessee is a Government of Uttar Pradesh undertaking, we are of the view that,in the interest of natural justice, the assessee may be provided with one more opportunity to present the relevant details relating to the liabilities before the AO. Accordingly, we set aside the order passed by the Ld.CIT(A) on this issue and restore the same to the file of the AO for examining it afresh. 4 ITA No. 35/VNS/2023 5. The next issue relates to disallowance of Employees Benefit Expenses. The AO noticed that the assessee has debited expenses of trust to the tune of Rs.18,27,81,000/- under Employees Benefit Expenses. Since the assessee did not furnish any explanation with regard to the eligibility to claim above said amount as deduction u/s. 37 of the Act, the AO disallowed the same and the Ld.CIT(A) also confirmed the same. 5.1. We heard the parties and perused the record. We notice that the tax authorities have disallowed the said amount only for the reason that the details relating to the same were not furnished by the assessee. Accordingly we are of the view that, in the interest of natural justice, the assessee may be provided with one more opportunity to present the relevant details relating to its claim before the AO. Accordingly, we set aside the order passed by the Ld.CIT(A) on this issue and restore the same to the file of the AO for examining it afresh. 6. The last issue relates to rejection of revised claim of depreciation. During the course of assessment proceedings, the assessee filed revised return of income, wherein the assessee had enhanced its claim for depreciation. The AO disallowed the same for want of details. The Ld.CIT(A) also confirmed the same. 6.1. We heard the parties and perused the record. As noticed in the previous issue, this disallowance has been made by the AO for want of details. Accordingly we are of the view that, in the interest of natural justice, the assessee may be provided with one more opportunity to present the relevant details relating to its claim before the AO. Accordingly, 5 ITA No. 35/VNS/2023 we set aside the order passed by the Ld.CIT(A) on this issue and restore the same to the file of the AO for examining it afresh. 7. In the result, the appeal filed by the assessee is treated as allowed for statistical purposes. Order pronounced on 22-10-2024 by way of proper mentioning in the Notice Board. Sd/- Sd/- [AMIT SHUKLA] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Varanasi, Dated: 22-10-2024 TNMM Copy to : 1. The Appellant 2. The Respondent 3. The Pr. CIT, concerned 4. D.R. ITAT, Varanasi 5. Guard File. //By Order// //True Copy // Dy./Asst. Registrar, ITAT, Varanasi "