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TMI Blog2017 (4) TMI 1352X X X X Extracts X X X X X X X X Extracts X X X X ..... 725/Mum./2011 Assessee's Appeal - A.Y. 2006-07 2. The assessee has raised three grounds. 3. Ground no.3 is general, hence, no separate adjudication is required. 4. In ground no.1, assessee has challenged the validity of re-assessment proceedings. However, at the time of hearing, learned Counsel for the assessee did not press the ground. Hence, ground no.1 is dismissed as "not pressed". 5. In ground no.2, along with sub-grounds no.2.1 to 2.4, assessee has challenged disallowance of interest and finance expenses of Rs. 418,24,48,398. 6. Brief facts are, the assessee company was formed vide notification no.398 dated 4th June 2005, as per Maharashtra Electricity Reform Transfer Scheme 2005. As per the above referred Scheme, Undertakings of Maharashtra State Electricity Board (MSEB) were transferred to and vested in four companies viz. Maharashtra State Electricity Generation Co. Ltd., Maharashtra State Power Transmission Co. Ltd., Maharashtra State Power Distribution Co., and the assessee. The assessee is wholly owned by Government of Maharashtra and in turn it holds shares of other three companies referred to above. During the assessment proceedings, for the impugned assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme would be provisional for a period of one year from the date of its notification. Further, by virtue of Government of Maharashtra letter no.Reform-2006/C.R.-STI/NRG-3 dated 2nd June 2006, the period of one year was extended beyond 5th June 2006 and untill final orders by the Government of Maharashtra. He submitted, on 31st March 2016, the Government of Maharashtra brought an amendment to the transfer scheme by providing that the loans of the erstwhile MSEB are not to be transferred to the assessee company and the same will be taken over by the Government of Maharashtra w.e.f. 6th June 2005. The learned Authorised Representative submitted, in view of taking over of the loan liability along with interest accrued thereon by the Government of Maharashtra from 6th June 2005, the claim of deduction of interest and finance charges by the assessee is no longer enforceable, since, the very liability in respect of which deduction was claimed has ceased to exist with retrospective effect. The learned Authorised Representative submitted, in view of such changed scenario, during the assessment proceedings for the assessment year 2014-15, the assessee submitted detailed note bringing to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Government from 5th June 2005. Thus, as could be seen, as per above notification dated 31st March 2016, the loan liabilities of erstwhile MSEB which was transferred to the assessee under the transfer scheme of 2005, was taken over by the State Government with retrospective effect from June, 2005. That being the case, the liability accruing to the assessee on account of State Government loan to MSEB which stood transferred to assessee no longer remains liability of the assessee with retrospective effect. As a consequence, the interest on such loan liability is also not payable by the assessee. Therefore, by virtue of changed scenario arising out of the taking over of the loan liability of erstwhile MSEB by the State Government, the assessee is not entitled to claim the deduction of interest expenditure. In fact, during the scrutiny assessment proceedings for assessment year 2014-15, on the basis of notification dated 31st March 2016, of the State Government taking over the loan liability the assessee voluntarily came forward and filed revised computation of income before the Assessing Officer withdrawing its claim of interest expenditure both under the normal provisions and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome twice. 14. Learned Departmental Representative relied upon the observations of the learned Commissioner (Appeals). 15. We have heard the rival contentions and perused the material available on record. It is the specific pleading of the assessee before us that out of the total deduction claimed on account of interest expenditure amounting to Rs. 418,24,48,398, an amount of Rs. 59,49,98,586 was offered as income in the year 2007-08 and the Assessing Officer has assessed such income in the said assessment year which has been confirmed by the learned Commissioner (Appeals). In our view, if the amount in question has been offered as income in assessment year 2007-08 by the assessee and has been assessed to tax in the said assessment year, then, such amount has to be reduced from the interest expenditure claimed and considered for disallowance in the impugned assessment year, since, the same income cannot be assessed twice at the hands of the assessee. We, therefore, restore the issue to the file of the Assessing Officer with a direction to verify assessee's claim and if upon such verification it is found that the amount of Rs. 59,49,98,586 forming part of the interest expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 72A(4). 23. Learned Authorised Representative submitted, the contention of the learned Departmental Representative that the demerger is not final is not correct since conditions specified in Explanation-4 to section-2(19AA), have been fulfilled. The learned Authorised Representative submitted, in assessment year 2007-08, the learned Commissioner (Appeals) while deciding the issue in dispute has examined the issue in detail and found that the assessee has fulfilled the conditions of demerger. He also noted that in case of other three companies formed on demerger of MSEB, the Assessing Officer assessee had made similar disallowance of brought forward loss and unabsorbed depreciation in assessment year 2006-07. However, while deciding the respective appeals relating to those three companies it was held by him that they have fulfilled the terms and conditions for claiming set-off of brought forward loss and unabsorbed depreciation inherited from MSEB. 24. Learned Authorised Representative submitted, the decision of the learned Commissioner (Appeals) in case of other three companies were challenged by the Department before the Tribunal, however, the Tribunal being satisfied t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merger as provided under section 2(19AA) along with the Explanation-4 to the said provision, it appears that the conditions specified therein have been fulfilled. Further, CBDT notification no.1195(E) dated 26th December 2000, clarifies that the conditions of Explanation-4 to section 2(19AA) would stand satisfied if the splitting up or re-construction is effected through a notification in the official gazette by the Central or the State Government and secondly asset of split up or re-construction authority or body are transferred to one or more resulting companies on a going concern basis. In our view, the conditions of Explanation-4 to section 2(19AA) are satisfied in case of present assessee. Moreover, the learned Commissioner (Appeals) has granted relief to the assessee with a rider that only the finally assessed loss / depreciation of MSEB should be allowed to be set-off in case of assessee. In our view, the aforesaid direction of the learned Commissioner (Appeals) safeguards the interest of Revenue. Therefore, we do not find any infirmity in the order of the learned Commissioner (Appeals) on this issue. 27. In the result, Revenue's appeal is dismissed. ITA no.2493/Mum./2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the rental income in question was offered in assessment year 2006-07, the learned Authorised Representative drew our attention to the Profit & Loss account for assessment year 2007-08, as well as the details of rental income as provided under Schedule-0. Referring to the reconciliation of rental income shown / disclosed in assessment year 2006-07 and 2007-08, at Page-123 of the paper book, he submitted, the amount was definitely offered as income in assessment year 2006-07. To further establish this fact, the learned Authorised Representative drew our attention to the revised computation of income for assessment year 2006-07, a copy of which is at Page-120 of the paper book. He, therefore, submitted, the assessee having already offered the rental income of Rs. 31,49,55,816, in assessment year 2006-07, assessing the same income again in assessment year 2007-08, would result in assessment of the same income twice. 34. The learned Departmental Representative opposing the contention of the assessee submitted that the issue raised by the assessee does not emanate from the assessment order. He submitted, the facts submitted by the assessee require examination of record which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim with reference to these documents. In the aforesaid view of the matter, we direct the Assessing Officer to verify assessee's claim by examining the facts and material brought on record and if upon such verification it is found that the rental income of Rs. 31,49,55,816 has already been offered by the assessee in assessment year 2006-07, the said amount should be excluded from the income of the assessee in the impugned assessment year. Ground no.2, is allowed for statistical purpose. 36. In ground no.3, assessee has challenged the addition of interest income of Rs. 59,49,98,586. 37. We have heard the rival contentions and perused the material available on record. While deciding the taxability of the aforesaid amount as raised in ground 2.5 of ITA no.7725/Mum./2011, for assessment year 2006-07, we have restored the issue back to the file of the Assessing Officer for verification with a direction to allow the deduction in assessment year 2006-07, if it is found that it was offered as income in the impugned assessment year. Following our decision therein, we restore the issue to the file of the Assessing Officer for similar verification. If the amount in question is allowed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence to the audited Profit & Loss account, logically, he should also have allowed assessee's claim of prior period expenditure. In view of the aforesaid, we do not find any infirmity in the order of the learned Commissioner (Appeals) on this issue. Ground no.1 is dismissed. 44. Ground no.2, relates to allowance of assessee's claim of set-off of brought forward loss and unabsorbed depreciation of erstwhile MSEB. 45. This issue is identical to the issue raised by the Department in ground no.1 of Department's appeal in ITA no.7830/Mum./2011, for the assessment year 2006-07. Following our decision in Para-25 & 26, we dismiss ground no.2 raised by the Revenue. 46. In the result, Revenue's appeal is dismissed. ITA no.7726/Mum./2011 Assessee's Appeal - A.Y. 2007-08 47. This appeal arises out of order passed by the learned Commissioner (Appeals) rejecting assessee's application for rectification under section 154 of the Act. 48. Brief facts are, subsequent to the disposal of assessee's appeal by the learned Commissioner (Appeals) against the assessment order passed for the assessment year 2007-08, the assessee on 29th September 2010, filed an application for rectification of mist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2009-10 62. Ground no.1, raised by the assessee relates to disallowance of interest expenditure of Rs. 337,14,05,846. 63. This ground is similar to grounds no.2.1 to 2.4 of ITA no.7725/ Mum./2011 for assessment year 2006-07. Following our decision in Para-11 to 16, we uphold the disallowance of interest expenditure for the reasons stated therein. Ground no.2, raised by the assessee is dismissed. 64. In the result, assessee's appeal is dismissed. ITA no.334/Mum./2013 Revenue's Appeal - A.Y. 2009-10 65. The solitary issue raised by the Revenue is regarding allowance of assessee's claim of set-off of brought forward loss and unabsorbed depreciation of erstwhile MSEB. 66. This ground is similar to ground no.2 of ITA no.7830/Mum./2011 for assessment year 2006-07. Following our decision in Para-25 and 26, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised by the Revenue. 67. In the result, Revenue's appeal is dismissed. ITA no.6178/Mum./2013 Assessee's Appeal - A.Y. 2010-11 68. The only ground raised by the assessee is challenging the disallowance of interest expenditure of Rs. 288,41,95,617. 69. This issue is identical to the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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