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10-04-2019, Noida Power Company, Section 115JB, 194J, 14A, Tribunal Delhi
This appeal is filed by the assessee against the order dated 31/3/2016 passed by CIT(A)-1, Noida for Assessment Year 2011-12.
2. The assessee is a company engaged in the business of distribution of power in the Greater Noida area. On 29.09.2011, the assessee filed its income declaring NIL income after set off of brought forward losses of Rs. 20,78,56,147/- and brought forward depreciation of Rs. 36,90,610/- and Book Profit u/s 115JB at Rs. 27,33,44,869/-. The case was processed u/s 143(!). Thereafter, the case was selected for compulsory Scrutiny and notice u/s 143(2) dated 20.09.2012. Thereafter, the assessee e-filed revised return on 31.03.2013 showing NIL income after set off of brought forward losses of Rs. 16,47,92,260/- and brought forward depreciation of Rs. 36,90,610/- and Book Profit u/s 115JB at Rs. 27,33,44,869/-. The reason for filing revised return was stated that company has filed revised return claiming further deduction on account of power purchase price not debited to Profit and Loss account which was less claimed in the Original Return. Notice u/s 142(1) dated 06.11.2013 along with questionnaire was issued and served upon the assessee. In response, Company Secretary and CA attended on behalf of the assessee from time to time and furnished the details / explanation as called for during the course of assessment proceedings. The books of accounts and bills/vouchers were also produced and verified by the Assessing Officer. The Assessing Officer completed the assessment on 21.03.2013 and made addition of Rs. 8,02,20,769/- regarding power purchase price not debited to P & L account by the Assessee. The Assessing Officer further made addition of Rs. 16,84,82,870/- towards on account of set-off of brought forward business losses & unabsorbed Dep. as well as disallowance u/s 14A amounting to Rs. 53,624/- and disallowance of transmission charges u/s 40(a)(ia) amounting to Rs. 18,41,83,032/-. Being aggrieved by the Assessment Order the assessee filed appeal before the CIT(A). The CIT(A) by following earlier years order dismissed the appeal of the assessee
3. At the time of hearing, the Ld. AR submitted that Ground No. 1 & 2 are general in nature. As Ground No. 3 (a), 3(b), 3(c), 4(a), 4(b), the Ld. AR submitted that the same are not pressed/withdrawn. The reasons for not pressing these ground has been submitted by the Ld. AR are here in below:
“i) Noida Power Company Limited entered into an agreement with Uttar Pradesh State Electricity Board [now known as Uttar Pradesh Power Corporation Limited (UPPCL)] to purchase power. UPPCL raised invoices on the assessee for supply of power at marginal cost being a higher rate. The assessee disputed the rate before the appropriate forum formed for this purpose. For income tax purpose, following mercantile system of accounting, the assessee claimed power purchase cost at the rates billed by UPPCL. However, in its books of accounts the assessee debited the power purchase cost at the rate provisionally determined by Uttar Pradesh Electricity Regulatory Commission (UPERC) which was lower than the invoice amount.
The Assessing Officer allowed the power purchase cost at the rates at which power purchase was debited in the profit and loss account and not the invoiced amount as claimed by the assessee. The assessee contested the action of the Assessing Officer and hence these grounds of appeal.
ii) As stated above, the assessee challenged the rates at which UPPCL raised the invoices and the matter travelled before the UPERC for determination of the final rate.
iii) UPERC decided the rate issue in favour of the assessee and UPPCL did not file any appeal against the same, the issue has attained finality. Therefore, the present grounds 3(a) to 4(b) claiming billed amount have become academic and infructuous for the year.
iv) It may not be out of place to mention that recently, the appeal of UPPCL in the earlier years on the rate issue which travelled to Supreme Court has been dismissed on the grounds of non-prosecution.
v) Without prejudice t the above, the assessee craves liberty to revive the appeal in the event the Hon’ble Supreme Court decides to re-consider the rate issue on merits for the earlier years.” Therefore, Ground No. 1 to 4(b) are dismissed.
4 Remaining grounds of appeal contested before us are as under:-
“5(a) That the Learned CIT(Appeals) erred in not adjudicating Ground No. 3 taken by the appellant before him relating to allowing setoff of brought forward business loss and depreciation allowance while calculating the total income taxable.
5(b) That on facts and circumstances of the case Assessing Officer erred in not allowing setoff of brought forward business loss and depreciation allowance while calculating the total income taxable under the provisions of the Act other than section 115JB thereof in the impugned order under appeal.
6(a) That on the facts and in the circumstances of the case, the Learned CIT(Appeals) without application of mind erred in confirming the action of Assessing Officer in disallowing additional sum of Rs. 53,624 u/s 14 r.w. Rule 8D on the wrong pretext that the issue has been decided against the appellant by Hon’ble ITAT.
6(b) That the Learned CIT(Appeals) erred in conf rming the action of the Assessing Officer in invoking the provisions of Rule 8D of the Income-tax Rules, 1962 for arriving at the amount disallowable u/s. 14A of the Act without satisfying the pre-conditions for application of the said provisions.
7(a) That on the facts and in the circumstances of the case, the learned CIT (Appeals) erred in holding that the appellant is liable to deduct tax at source under section 194J of the Act on the transmission/wheeling charges purportedly amounting to Rs. 18,41,83,032 and accordingly disallowance was warranted u/s 4o(a)(ia) of the Act.
7(b) Tha the Learned CIT(A) erred in confirming the action of the Assessing Officer in disallowing the transmission/wheeling charges u/s 40a(ia) of the Act without appreciating the fact that the appellant has not been held as assesse in default u/s 201(1)/ 20i(iA) of the Act for the year under consideration.
7(c) Without prejudice to the above, the CIT(A) failed to appreciate that out of the said amount of Rs. 18,41,83,032, the sum of Rs. 9,70,000 and Rs. 61,86,000 respectively are paid on account of application fees and operating charges which in any event, cannot be covered within the purview of section 194J of the Act.