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2012 (8) TMI 591 - AT - Income TaxDis-allowance u/s 40(a)(ia) - non-deduction of TDS from wheeling and transmission charges - applicability of Section 194J or 194C - Held that:- Applicability of Section 194J and also Section 194C was examined in the case of Jaipur Vidyut Vitaran Nigam Ltd (2009 (4) TMI 489 - ITAT JAIPUR-A) wherein it was held that such payments by the assessee are not liable for deduction of tax either u/s 194J or 194C. It is clear that all the parties involved with generation, transmission and distribution of electricity are to comply with the direction of State Load Dispatch Centre and the Regulatory Commission for achieving the economy and efficiency in the operation of power system and therefore question of any person rendering service to another does not arise. Since there are no major difference between the terms of the agreement and facts considered in that case and the terms of contract in the present case and there being no contrary decision brought on record, contentions of the department that these charges should be held liable for deduction of tax under either of the sections 194C/194J are rejected - Decided in favor of assessee Depreciation - reduction - receipt of contribution/grant subsidies towards cost of capital asset - Revenue contended that contribution should be reduced from the cost of the assets for the purpose of computing allowable depreciation in accordance with the provisions of Explanation 10 to sec. 43(1) - Held that:- Applying the provisions of Explanation 10 to Section 43(1), we decline to interfere in the dis-allowance sustained by the CIT(A) - Decided against assessee. Alleged Understatement of revenue - income offered on estimated basis pertaining to the remaining days of March for which the bills were issued in April - Held that:- CIT(A) rightly observed that there was no case that the revenue pertaining to the electricity supplied in March 2007, was not accounted for by the appellant in the year under consideration or in subsequent year. In absence of the issue of bills, the appellant offered the revenue on estimate basis in accounts for the electricity supplied in March 2007. Also, this practice was being followed by the appellant regularly and prior period income / expenses were being accounted for regularly. Such estimation was based on scientific basis i.e. based on actual bill/ consumption of power by the consumer in the past. Appellant has also explained that as per binding nature of accounting policies and principals under ESSAR 1985, it was mandatory to recognize revenue only when the right to collect the revenue arose. Thus, the estimation of revenue was not arbitrary - Decided in favor of assessee assessee remained liable to refund the security deposit of Rs.50.60 lakhs to its customers and hence the AO was not justified in considering the unpaid security deposit of Rs.50.60 lakhs the
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