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2013 (1) TMI 136 - HC - Income TaxComputation of profit u/s 80IA - Whether reimbursement of tax paid by the assessee could be treated as part of the income for the purpose of deduction u/s 80IA or 80IB - Assessee is engaged in generation of electricity – Bulk Power Supply Agreement between assessee and State Electricity Boards - Notification dated 30.3.1992 provides the basis for working of the tariff for sale of electricity - Assessee had received was the price for the sale of energy on the tariff fixed by the Government in its notification and one of the components of the sale price was arrived at based on the grossed up tax or the actual tax assessed whichever is less Held that:- Tax reimbursement is nothing but a component of price. The clause 6 of the agreement specifies the tax liability of assessee in respect of the income on generation of power, mining of lignite from Mine II for the purpose of generation of power, the amount of grossed up tax that is payable by assessee on the income streams mentioned at items (i) and (ii) were to be borne by the recipients. viz, the State Electricity Boards The tax component is very much part of the sale of electricity from the Thermal Power Generating Stations and the mere fact that a component of the tariff makes a reference to the tax liability with reference to income streams mentioned in clause 6, it does not make such a component as not income to be excluded in considering the relief under Section 80IA/80IB. Therefore, the Commissioner committed serious error in dissecting the tariff to come to the conclusion that the tax component specified as part of the tariff is reimbursement of the liability of the assessee and hence it would not form part of the income. There will be no ground to sustain the plea of the Revenue that the relief to be granted u/s 80IA calls for exclusion of the tax component in the sale price of electricity. In favour of assessee
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