TMI Blog2012 (8) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 / expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4C of the Income- tax Act, 1961. 1:2 Without prejudice the foregoing, on the facts and in the circumstances of the case and in law the Commissioner of Income-tax (Appeals) erred in confirming the disallowance of the entire transmission and wheeling charges by applying the provisions of section 40(a)(ia) of the Act, for the alleged non deduction of tax at source, without appreciating that disallowance under section 40(a)(ia) of the Act can be made only on the amounts which are payable i.e. outstanding as on 31st March and not the amounts which have already been actually paid during the year. 1: 3 The Appellant submits that the provisions of section 40 (a) (ia) of the Income-tax Act, 1961 have no application to the amount of wheeling and transmission charges paid by the Appellant to the recipients during the year under consideration and hence the Assessing Officer be directed to delete the disallowance so made by him. 2: 0 Re.: General: 2: 1 The Appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal. ASSESSEE S GROUNDS IN A.Y. 2008-09: 1 : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation basis pertaining to the remaining days of March for which the bills were issued in April. 1(ii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the action of the Assessing Officer in taxing the revenue of Rs.36.95 crores pertaining to energy supplied in the month of march, 2007 but bills for which were issued in April, 2007. 2(i) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the 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 income of the assessee . 2(ii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the security deposit of Rs.50.60 lakhs pertained to customers whose electricity supply had been disconnected prior to 2002-03 and as the security deposits had remained unclaimed for a long time, the liability towards those security deposits stood extinguished and hence was taxable in the hands of the assessee.. 2. The appellant craves, leave to add, amend, vary, omit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act and Ld. CIT(A) has held that such charges were liable for deduction of tax under section 194C of the Act and the assessee was not liable for deduction of tax either under section 194J and/or under section 194 I. 5. The assessee is assailing the order of Ld. CIT(A) on the ground that ld. CIT(A) has erred in holding that the tax was deductible tax at source even under section 194C of the Act. The revenue apart from supporting the order of Ld. CIT(A) on this issue, being respondent in assessee s appeals would also contend that Ld. CIT(A) should have held that the tax on such payment was deductible u/s. 194J/194 I of the Act. 6. It is also the case of the assessee that the Department has been taking contrary stand vis- -vis the issue of deduction of tax at source as at different times the Department has applied different sections to hold that wheeling and transmission charges are liable for deduction of tax under the various provisions of the Act. Ld. A.R has summarized that position in a chart which is placed at pages 13 to 14 of the paper book and it will be relevant to reproduce the said chart as under: Date Asst. Year involved Event S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile Maharashtra State Electricity Board (MSEB). Consequently on 6/6/2005 MSEB was demerged into four different companies as follows: a. Maharashtra State Power Generation Co. Ltd. - to be engaged in the generation of electricity; b. Maharashtra State Electricity Transmission Co. Ltd. - to be engaged in the business of transmission of electricity; c. Maharashtra State Electricity Distribution Co. Ltd. - to be engaged in the business of distribution of electricity; d. MSEB Holding Co. Ltd. - the holding Company to hold shares of all the aforesaid 3 companies on behalf of the Government of Maharashtra. On the same date i.e. on 6/6/2005 Maharashtra State Electricity Transmission Company Ltd. (MSETCL) was notified as STU. On 27/6/2006 Maharshtra Electricity Regulatory Commission (MERC) has passed an order in the matter of determination of transmission pricing frame work for the State of Maharashtra and other related matters. 6.2 On these facts Ld. A.R submitted that Section 194C could not be applied as wheeling and transmission charges paid by the assessee does not come within the ambit of carrying out any work . He submitted that work is defined in Explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is now a settled issue that electricity is goods but it is a matter of fact that it cannot be transported, therefore, transmission of electricity cannot fall within the purview of term work defined under section 194C of the Act. 6.4 To demonstrate that there is a sizable difference amongst words transport , transmit , transmission and carriage Ld. A.R referred to the following dictionaries: a. The Concise Oxford Dictionary of Current English: i. Transport- v. n. .v.tr. / tran sport,tra:n/ 1. take or carry ( a person, goods, troops, baggage, etc.) from one place to another . 2. hist. take ( a criminal) to a penal colony; deport. 3. (as transported adj.) (usu. foll. by with) affected with strong emotion. .n. / transo:t, tra:n/ 1. a a system of conveying people, goods, etc. from place to place. b. esp. Brit. The means of this (our transport has arrived). 2 a ship, aircraft, etc. used to carry soldiers, stores, etc. 3 (esp. in pl.) vehement emotion (transports of joy) 4 hist. a transported convict. [Middle English from Old French transporter or Latin transportare ( As TRANS, portare carry )] (refer page No. 89 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carry cart, conduct, convey, fetch, remove, ship, take, transfer, truck, banish, expel; beatify, delight, enrapture, enravish, entrance, ravish * n. carriage, conveyance, movement, transportation, transporting, beatification, beatitude, bliss, ecstasy, felicity, happiness, rapture, ravishment, frenzy, passion, vehemence, warmth. ( refer page No. 102 to 103 of the compilation) f. The Random House Dictionary of the English Language: i. Transmission - 1. the act of process of transmitting , 2. the fact of being transmitted 3. something that is transmitted 4. a. transference of force between machines or mechanisms, often with change of torque and speed. b. a compact, enclosed unit of gears or the like for this purpose, as in an automobile. 5. Radio broadcasting of electromagnetic waves from the transmit station to the receiving station. ( refer page No. 104 to 105 of the compilation) ii. Transmit - v.t 1. to send or forward, as to a recipient or destination, dispatch, convey. 2. to communicate, as information etc. 3. to pass or spread (disease, infection, etc.) to another 4. to pass on (a genetic character) from parent to offspring 5. Physics. a. to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of the said contract. The transmission tariff and its terms and conditions are described in the notification issued by Maharashtra Electricity Regulatory Commission and reference in this regard was made to pages 35 to 38 of the paper book submitted for assessment year 2007-08. Thus it was submitted by Ld. A.R that requirement of section 194C of the Act being in pursuance of a contract for work between the parties is not satisfied, therefore, there was no liability to make payment under section 194C of the Act. He submitted that in any case, no payment has been made to MSETCL in the capacity of transmission company but payment is made to MSETCL being in the capacity of STU, therefore, the condition described of payment to contractor in the capacity of transmission company is not satisfied, therefore, also provisions of section 194C could not be applied. 6.7 Ld. A.R submitted that the case of the assessee is directly covered by the decision of Jaipur Bench of ITAT in the case of Jaipur Vidyut Vitaran Nigam Ltd. vs. DCIT, 123 TTJ 888(Jp) (Trib). He submitted that various clauses of the Bulk Power Transission Agreement entered into by the assessee with the MSETCL are simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 23/BPLR/2010 b. Unreported decision of the Cuttack Bench of the ITAT in the case of GRIDCO Ltd. v/s. ACIT in ITA No. 404/CTK/2O11 6.9 Without prejudice to the above arguments Ld. AR referred to the decision of Hon ble Bombay High Court in the case of CIT vs. Kotak Securities Ltd., 245 CTR 3 (Bom) and referred to the following observations from the said decision: The object of introducing Section 40(a) (ia) as explained in the CBDT circular No.5 dated 15/7/2005 is to augment compliance of TDS provisions in the case of residents and curb bogus payments. However, since both the revenue and the assessee were under the bona fide belief for nearly a decade that tax was not deductible at source on payment of transaction charges, no fault can be found with the assessee in not deducting the tax at source in the assessment year in question and consequently disallowance made by the Assessing Officer under Section 40(a)(ia) of the Act in respect of the transaction charges cannot be sustained. He submitted that in the present case also right since inception, section 194C has not been invoked by the tax department, therefore, the assessee was of the view that no tax was required to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009-10 Total over MYT period MSETCL 1546.47 1647.47 1700.69 4894.51 TPC-Transmission 211.72 225.41 247.32 684.45 REL-Transmission 41.73 43.27 44.30 129.30 TTSC( InSTS) 1800.40 1916.15 1991.70 5708.26 To further support such contention Ld. AR referred to the copies of vouchers evidencing the one to one co-relation between the amounts collected by STU from four distribution licensees and the distribution of these amounts by the STU to the transmission utilities. Reference in this regard was made at page 173 to 213 of the paper book for assessment year 2007-08 and pages 152 to 157 of the paper book for assessment year 2008-09. 6.12 It was further argued that since recipients have already paid tax on the amount received from the assessee, therefore, there is no question of disallowance to be made under section 40(a)(ia) and for this purpose Ld. AR relied upon the decision of Hon ble Supreme Court in the case of Hindustan Coca Cola Beverages vs. CIT (2007) 293 ITR 226(SC). He submitted that though the said decision is in the context of TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deductee assessee (MSETCL) that as per the return of income filed by the deductee assessee, the taxes have been paid accordingly . In the said certificate it is also certified that the wheeling and transmission charges received or receivable have been considered for declaring total income. In view of above arguments Ld. A.R pleaded that the impugned disallowance was not called for under the provisions of section 40(a)(ia) of the Act as assessee did not have any obligation to deduct tax under any of the section viz. 194C, 194J or 194 I of the Act. 7. On the other hand, referring to the arguments submitted by Ld. AR with regard to non-applicability of the provisions of section 194C, it was submitted by Ld. DR that Explanation III to sub-section (2) of section 194C is an inclusive definition and not exhaustive. The word carriage in the phrase carriage of goods under clause (c) under the above Explanation is a verb and cannot be equated with goods carriage appearing under subsection (6) of section 194C of the Act where entire term goods carriage is noun. 7.1 Ld. DR pleaded that sub-section (6) of section 194C of the Act provides for situation where no deduction for ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the first agreement, whereas Power Grid Corporation of India Ltd was to present bill for energy transmitted and the transmission charges for the total regional transmission system was to be calculated on monthly basis which shall be leviable on the assessee as per the prescribed formula or as per Government of India notification issued from time to time. Reference in this regard was made to para A-4 of the second agreement. Thus Ld. DR pleaded that charges paid or payable by the assessee to MSETCL and Power Grid Corporation of India Ltd. are for carriage of goods as per the terms of contract with those two resident companies and the payments made or due to these resident companies is as per terms and conditions of the above two agreements. Therefore, Ld. DR submitted that Ld. CIT(A) has rightly held that section 194C is applicable on the aforementioned payments made by the assessee. 7.3 Distinguishing the decisions relied upon by Ld. AR it was submitted by Ld. DR that issue before the Tribunal in the case of Jaipur Vidyut Vitaran Nigam Ltd. (supra) was regarding applicability or otherwise of section 194J of the Act. He submitted that on appreciation of agreement and the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the year, Ld. DR submitted that Special Bench decision in the case of Merilyn Shipping Transport (supra) cannot be considered to be a good law as the said decision though has been rendered on 9/4/2012 but did not consider the decision of Bombay High Court in the case of M/s. Kotak Securities Ltd., 340 ITR 333(Bom) as the same was not placed before the Bench. He submitted that Hon ble Bombay High Court in the said case has upheld the applicability of section 40(a)(ia) of the Act on the amount paid during the year. Ld. D.R submitted that in the aforementioned decision the decision of Hon ble Bombay High Court has been followed by the D Bench of ITAT, Mumbai in its order dated 03/02/2012 in the case of DICGC Ltd., wherein addition made under section 40(a)(ia) had been confirmed on account of non-deduction of tax under section 194J of the Act on V-Sat charges paid during the year. Therefore, Ld. D.R pleaded that the said contention of the assessee should be rejected. 7.6 Referring to the Revenue s ground of appeal in respect of both the years wherein the grievance of the Revenue is that Ld. CIT(A) has erred in confirming addition under section 40(a)(ia) r.w.s. 194C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of section 194J of the Act, on the above transaction charges (Para 32 of the Judgment) v) The wheeling and transmission charges are also similar to interconnect/access port charges paid to BSNLIMTNL. The Hon ble Delhi High Court in the case of Bharati Cellular Ltd. had held that since there was no human intervention, Section 194J was not applicable to the interconnect charges/access/port charges paid to BSNL by Bharati Cellular Ltd. (Assessee). The Hon ble Supreme Court has vide its order in March, 2011 reported in 330 ITR 239 (SC), in the appeal filed by the Department against the above order of the Delhi High Court has observed that there was no expert evidence from the side of the department to show how the human intervention takes place, particularly during the process when calls takes place, and during the traffic of such calls, whether there is any manual intervention and on what basis was the capacity of each services provided fixed were inter connection agreement arrived at? According to the Supreme Court, these type of matters could not be decided without any technical assistance available on record, therefore it directed the A.O. (TDS) in each case to examine a te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and the terms of contract in the present case as well as in the facts of both the cases. It has been categorically held in the said case that there was no liability on the assessee to deduct tax on the payments of transmission/wheeling and SLDC charges u/s 194J. No contrary decision has been brought to our notice in which it has been held that tax on such charges is deductible under either of the sections viz 19C, 194J; 194 I of the Act.. 8.3 Moreover, it has been the case of the assessee that all these payments were required to be made as per the Electricity Act, 2003. All orders, pertaining to payment of impugned charges, are passed by State Authorities constituted under Electricity Act, 2003.It is observed that all these provisions of Electricity Act 2003 have been considered and discussed by the Co-ordinate Bench in the aforementioned case of Jaipur Vidyut Vitaran Nigam Ltd.(supra). Ld. A.R has demonstrated that the payments have been made by the assessee according to the orders of the State Electricity Commission and it has been shown that it is only reimbursement of the cost and the payments are made to State Transmission utility for onwards distribution to the Transmiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the maximum economy and efficiency in the operation of power system in the State. As per cls. 10 and 12 the tariff for transmission and wheeling and SLDC charges is to be as approved by the Regulatory Commission. From all these clauses it is clear that all the parties involved with generation, transmission and distribution of electricity are to comply with the direction of SLDC 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. The operation and maintenance of transmission lines by RVPNL and the use of these lines by assessee for transmitting energy does not result into any technical services being rendered to the assessee. The technical staff of RVPN by operating and maintaining its grid station and transmission lines simply discharge their function. They do not render any technical service to the assessee. 9.2 In above connection it is relevant to extract the relevant provisions of s. 194J which are as follows : 194J. Fees for professional or technical services. (1) Any person, not being an individual or an HUF, who is responsible for payi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnical is preceded by the word managerial and succeeded by the word consultancy . Since the expression technical services is in doubt and is unclear, the rule of noscitur a sociis is clearly applicable. The said rule is explained in Maxwell on The Interpretation of Statutes (Twelfth Edition) in the following words : Where two or more words which are susceptible of analogous meaning are coupled together, noscitur a sociis, they are understood to be used in their cognate sense. They take, as it were, their colour from each other, the meaning of the more general being restricted to a sense analogous to that of the less general. This would mean that the word technical would take colour from the words managerial and consultancy between which it is sandwiched. The word managerial has been defined in the Shorter Oxford English Dictionary, Fifth Edition as : Of pertaining to, or characteristic of a manager of or within an organization, business, establishment, etc. The word manager has been defined, inter alia, as" A person whose office it is to manage an organization, business establishment, or public institution, or part of one; a person with the primarily exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rendered qua interconnection/port access do not involve any human interface and, therefore, the same cannot be regarded as "technical services" as contemplated under s. 194J of the said Act. 20. Before concluding we would also like to point out that the interconnection/port access facility is only a facility to use the gateway and the network of MTNL/other companies. MTNL or other companies do not provide any assistance or aid or help to the respondents/assessee in managing, operating, setting up their infrastructure and networks. No doubt, the facility of interconnection and port access provided by MTNL/other companies is technical in the sense that it involves sophisticated technology. The facility may even be construed as a service in the broader sense such as a communication service . But, when we are required to interpret the expression technical service , the individual meaning of the words technical and service have to be shed. And, only the meaning of the whole expression technical services has to be seen. Moreover, the expression technical service is not to be construed in the abstract and general sense but in the narrower sense as circumscribed by the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the law or the rules : the arrest was a technical violation of the treaty. Having regard to the fact that the term is required to be understood in the context in which it is used, fee for technical services could only be meant to cover such things technical as are capable of being provided by way of service for a fee. The popular meaning associated with technical is involving or concerning applied and industrial science . 5. In the modern day world, almost every facet of one s life is linked to science and technology inasmuch as numerous things used or relied upon in everyday life is the result of scientific and technological development. Every instrument or gadget that is used to make life easier is the result of scientific invention or development and involves the use of technology. On that score, every provider of every instrument or facility used by a person cannot be regarded as providing technical service. When a person hires a taxi to move from one place to another, he uses a product of science and technology, viz., an automobile. It cannot on that ground be said that the taxi driver who controls the vehicle, and monitors its movement is rendering a technical s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the location of the base station. All that he wants is the facility of using the telephone when he wishes to, and being able to get connected to the person at the number to which he desires to be connected. What applies to cellular mobile telephone is also applicable in fixed telephone service. Neither service can be regarded as technical service for the purpose of s. 194J of the Act. 7. The use of the internet and the world wide web is increasing by leaps and bounds, and there are hundreds of thousands, if not millions, of subscribers to that facility. The internet is very much a product of technology, and without the sophisticated equipment installed by the internet service providers and the use of the telephone fixed or mobile through which the connection is established, the service cannot be provided. However, on that score, every subscriber of the internet service provider cannot be regarded as having entered into a contract for availing of technical services from the provider of the internet service, and such subscriber regarded as being obliged to deduct tax at source on the payment made to the internet service provider. 8. At the time the IT Act was enacted in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le due to which assessee acquired certain right which can be further used. Accordingly where the persons rendering certain services has only maintained machinery or converted yarn but that knowledge is not vested with the assessee by which itself it can do research work, the amount paid cannot be considered as fees for technical services within the meaning of s. 194J of the Act. 9.6 An analysis of above cases lays down the proposition that s. 194J would have application only when the technology or technical knowledge of a person is made available to others and not where by using technical systems, services are rendered to others. Rendering of services by allowing use of technical system is different than charging fees for rendering technical services. The applicability of s. 194J would come into effect only when by making payment of fee for technical services, assessee acquired certain skill/knowledge/intellect which can be further used by him for its own purpose/research. Where facility is provided by use of machine/robot, or where sophisticated equipments are installed and operated with a view to earn income by allowing the customers to avail of the benefit by use of such equip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ator and controller for optimum scheduling and dispatch of electricity, and supervision over the intra-State transmission system is statutory function which is also entrusted to RVPN and therefore, RVPN by discharging such statutory function do not provide any technical service. 9.9 We have also considered the other decisions relied by the learned Departmental Representative which are clearly distinguishable on facts. In the case of Singapore Airlines Ltd. vs. ITO (supra) the navigation charges paid was for getting the technical service like weather report, instruction over flights to fly over technical territories and such other technical services which are needed to fly the aircraft on the Indian territory. By giving these instructions and technical services to fly the aircraft the technical knowledge of a person was made available to the assessee and therefore it was held to be a payment for technical services which is not the facts of the present case. The case of Canara Bank vs. ITO (supra) in respect of payment of MICR charges to SBI which involved human skill and computerised machine and not simply making available the technical equipment working on its own and therefore h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual reimbursement, provision of deduction of tax at source would not apply as held in case of ITO vs. Dr. Willmar Schwabe India (P) Ltd. (supra) (paper book 109-110), headnote of which reads as under : "As agreed by and between the assessee company and ITCL, a vehicle was to be provided by the assessee company to the said consultant for attending to its work and thus, the assessee company was to bear the vehicle expenses actually incurred by the said party. Bills for such expenses incurred by the said consultant were separately raised by them on the assessee company in addition to bills for fees payable on account of technical services and since the amount of bills so raised was towards the actual expenses incurred by them, there was no element of any profit involved in the said bills. It was thus a clear case of reimbursement of actual expenses incurred by the assessee and the same, therefore, was not of the nature of payment covered by s. 194J, requiring the assessee to deduct tax at source therefrom. The CBDT Circular No. 715, dt. 8th Aug., 1995 [(1995) 127 CTR (St) 13], relied upon by the AO in support of his case on this issue was applicable only in the cases where bills a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 relating to disallowance on account of overstatement of revenue expenditure due to metering equipment amounting to Rs. 115.07 lacs was not pressed by the ld AR and hence, the same is dismissed being not pressed. 9. Ground no.2 of assessee s appeal for the AY 2008-09 relates to the amount of Rs. 247,12,96,468/- being part of depreciation claimed by the assessee. 9.1 It was observed that the assessee had received contribution/grant subsidies towards cost of capital asset aggregating to Rs. 2,16,986.07 lacs as on 31.3.2008 which consists the following items: i) Consumers contribution Rs.111899.47 lacs ii) Subsidies towards cost of capital asset Rs.1.00 lacs iii) Grants towards cost of capital asset Rs.105085.66 lacs Rs.216986.07 lacs The Assessing Officer required the assessee to explain as to why the abovementioned contribution should not 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) of the Act which described that where a portion of cost of an asset acquired by the assessee has been met directly or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards receipts from consumers relating to the prior periods. It was submitted that the basis accounting policies and principles, under the ESAAR 1985 were required to be mandatorily followed by the assessee. Accordingly, all prior period revenue or costs arising on account of a difference between the accounting estimate made for accrual and the actual values involved or on account of any other reasons, shall be accounted for prospectively and no retrospective relating of past year s figures shall be permitted. It was submitted that recognize revenue is a cumbersome job and vastness of area including the area effected by terrorism and also include activities of reading of meters of consumers, forwarding of reading reports to the circles for the preparation of bills. The revenue on account of bills issued is then accounted by the HO/Central Office, after the receipt of data from the respective circles which takes time and the billing of the consumers are done on periodical cycle wise billing and that period covers two months of a financial year that is the period of March 2007. The periodical cycle wise may contain the period from 15th March 2007 to 14th April 2007 and it was expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h to mention here that such estimation was based on scientific basis i.e. based on actual bill/ consumption of power by the consumer in the past. Thus, the estimation of revenue was not arbitrary. In the case of Bharat Earth Movers (supra) the Supreme Court has recognized the accounting of income/expenditure based on scientific method. It is also worth to mention here that the bills issued in the month of April were for the electricity supplied to the consumers in the month of March April. On the basis of bills so raised, there could not have been any mechanism to ascertain the amount pertaining to electricity supplied in the remaining particular days of March 2007 of the billing cycle of March April. Hence, the revenue pertaining to the period of March could have been accounted for only on the estimation basis. The appellant has already explained that the estimation was on scientific basis. The appellant has explained that the accounting policy was regularly followed and prior period income / expenses were being accounted for regularly. During the year the appellant offered revenue of Rs. 115.88 crore relating to prior period. Similarly, the appellant had accounted income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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