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TMI Blog2019 (8) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... fatty acids, toilet soaps, refined glycerin, industrial oxygen and power generation. The assessee is also having biomass cogeneration captive power plant of 6MW capacity. Surplus power after meeting the captive requirements are sold to AP Transco. JOCIL is having four wind energy generators in Tamil Nadu of 6.3MW. The assessing officer (AO) found that the assessee company, during the F.Y. 2006-07, relevant to the A.Y. 2007-08, transferred an amount of Rs. 76,08,678/- (pertaining to power division) to the 'Contingent Sales Account' by not including the same in total Sales of Trading and Profit & Loss A/c and reduced the debtors to that extent in the Balance Sheet with a journal entry on 31.03.2007 narrating that the same was not recognized as income. The Assessing Officer (AO) treated the same as income and made the addition of Rs. 76,08,678/-, being the difference between the amount not included in the total sales and kept in contingent sales account. The findings of the AO which is made available in page No.5 of the assessment order are extracted for the sake of clarity which reads as under : "During the course of reopened assessment proceedings, on verification of reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for the energy during the financial year 2003-04 worked out to Rs. 3.48/unit. For power purchases from 1.4.2004, as per the terms of the PPA, the price will be decided by Andhra Pradesh Electricity Regulation Commission (APERC). Since APERC is empowered to fix the selling price (As per Article No.2 of agreement), it has decided two part pricing, comprises variable cost and fixed cost which vary from period to period. Based on it, the selling price applicable from 1.4.2004 worked out to Rs. 2.76/unit as against Rs. 3.48/unit existed on 31.3.2004. In view of this abnormally low price fixed by APERC, Bio mass Energy Developers Association(BEDA) on behalf of its members approached A.P. High Court and obtained a direction by interim order dt.20.8.2004 for payment of price fixed by APERC plus 50% of the difference between the price fixed by APERC (which vary period to period depending on variable and fixed costs) and price prevailing on 31.3.2004, provisionally subject to the final orders. After setting up of Appellate Tribunal for Electricity (ATE), New Delhi, the High Court directed BEDA to file the appeal before the Tribunal. The Tribunal allowed the appeal filed by BEDA but APE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gives a favourable order. Therefore the chances of getting the escalated price are not completely closed and not ceased to exist. From the above, it is crystal clear that the assessee company has an established right to raise the bill on APTRANSCO by virtue of Government Orders and the pending tariff dispute before the ATE. This clearly establishes that the assessee has an absolute right to receive the amount paid. The bills were raised with 5% escalation in price, towards the power supplied to APTRANSCO, as per the APERC Order. The APTRANSCO, however, is disputing the assessee's claim of billing with escalated prices. In such a situation, the assessee company has reduced the difference amounts from the total sales and transferred to Contingent Sales account and reduced the sundry debtors to that effect with a single entry on 31st March, 2007 with a reason that the income was not recognized as income. Mere withholding a part of the invoice by APTRANSCO will not in any way remove the right of entitlement of the assessee, which was declared by the APERC. The argument of the assessee cannot be accepted as reducing the turnover in the Profit & Loss A/c. will have the same impa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 78/- pertaining to power division was transferred to contingent sale account but not routed through total sales account or trading and Profit & Loss account. The Assessing Officer for various reasons including the reason that the department preferred appeal against the order of Hon'ble ITAT for the A.Y.2009-10 wherein on identical issue the appellant was given relief, treated the said amount as not contingent sales and included in the total sales and worked out eligible deduction u/s. 801A of the IT Act. Aggrieved by this, the appellant filed the above grounds of appeal. It can be seen that the substantial ground is only one i.e. whether the disputed sale price is to be treated as contingent sale price or not. This matter was also in litigation even In the earlier years. The identical issue was decided by the Hon'ble ITAT in the assessee's case vide ITA No. 696/Vizag/2013 dated 27-05-2016 for the AY 2009-10 wherein, the Hon'ble ITAT held that disputed sale price cannot be treated as income at Para 16 of pages 23 & 24 of the order which is reproduced as under: "16. Considering the facts and circumstances of this case and also respectfully following the decision of Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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