TMI Blog2023 (10) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... roved Equity. The balance additional profits from overachievement, after adjustments for any amounts recoverable by the Company through future tariffs are required to be transferred to the contingency reserve account or as directed by DERC for utilization in future tariff determinations. This issue is covered in favour of the assessee by the decision in assessee s own case [ 2020 (3) TMI 719 - DELHI HIGH COURT]. MAT Computation - Addition being interest liability on additional consumer security deposits under the normal provisions of the Act as well as in the computation of book profit u/s 115JB - HELD THAT:- As seen that the interest is payable by the assessee as a discharge of its statutory obligation. Further, the Hon'ble Delhi High Court pursuant to the Writ had passed an interim order by directing the petitioner (i.e. assessee ) to continue to refund the security deposit and pay interest to consumer in accordance with law. The assessee herein had merely discharge its statutory obligation in consonance with the provisions of section 47 of the Electricity Act, 2003 and in consonance with the directions of the Hon'ble Delhi High Court. This certainly would become ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. The only purpose of making this recovery is to ensure collection of electricity dues in time and hence this receipt is also having possible nexus with the profit derived by the eligible unit and consequentially eligible for deduction u/s 80IA. Deduction u/s 80IA for late payment of surcharge collected and rebate on power purchase - Both these receipts, as their names suggest, are having first degree nexus with the profits by the eligible unit and accordingly would be eligible for deduction u/s 80IA - CIT(A) had rightly granted relief in this regard, which, in our considered opinion, does not call for any interference. Accordingly, ground raised by the revenue is dismissed. - Shri Kul Bharat, Judicial Member And Shri M. Balaganesh, Accountant Member For the Assessee : Ms. Shashi M. Kapila, Adv, Sh. Pravesh Sharma, Adv And Shri R. R. Maurya, Adv For the Revenue : Sh. Subhra Jyoti Chakraborty, CIT DR ORDER PER BENCH 1. The appeal in ITA Nos. 4097 4098/Del/2017 filed by the assessee and ITA Nos. 4453 4454/Del/2017 filed by the Revenue for AYs 2011-12 2012-13, arises out of the order of the Commissioner of Income Tax (Appeals)-15, New De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etlights received from MCD: 1557.85 Miscellaneous income relating to meters 227.80 Miscellaneous income which is integral part of Distribution business: 331.56 Total 2499.84 4. The assessee has raised an additional ground for AY 2011-12 by way of application under Rule 11 of ITAT Rules praying for its admission on 03.06.2019. The additional ground raised is as under:- That on the facts and in the circumstances of the case, the ld Assessing Officer erred in law in taxing book profits of Rs. 303.91 Crores under Section 115JB of the Act. 5. We have heard the rival submissions and perused the materials available on record. The ld DR vehemently adjudicated to the admission of the additional grounds and argued that the same was not raised by the assessee before the lower authorities and hence should not be admitted at this second appellate stage. The ld DR also placed reliance on the submissions of the ld AO dated 17.09.2019 addressed to the bench already which is the part of the records. We have gone through the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of distribution of electricity in the North Delhi Districts of the National Capital, set up in terms of Delhi Electricity Reforms Rules [Transfer Scheme] Rules 2001. 6. As the appellant company is governed by the Electricity Act, 2003, therefore, the provisions of the said Act prevail wherever they are inconsistent with the provisions of the Companies Act, 1956. We find that in the Return of Income, the assessee has declared total income as per the book profit u/s 115JB of the Act. We are of the considered view that the additional ground raised by the assessee is well taken and requires no verification of any facts, whatsoever. The same is, accordingly, admitted. 7. In so far as the question of applicability of provisions of section 115JB of the appellant company is concerned, it has been answered by the Hon'ble Kerala High Court in the case of Kerala State Electricity Board 329 ITR 91 in favour of the assessee and against the revenue. The Hon'ble High Court has held as under: Section on 115JB of the Income-tax Act, 1961 creates a legal fiction regarding the total income of assessees which are companies. The book profit of the company is deemed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplains the purpose in introducing section 1153A which was to tax zero-tax companies. The CBDT understood that companies engaged in the business of generation and distribution of electricity and enterprises engaged in developing, maintaining and operating infrastructure facilities, as a matter of policy, are not brought within the purview of section 1153A for the reason that such a policy would promote the infrastructural development of the country. Such an understanding of the CBDT is binding on the Department. Section 1153B, which is substantially similar to section 1153A cannot have a different purpose and need not be interpreted in a manner different from the understanding of the CBDT of section 1153A. Where the computation provision could not be applied in a particular case, it is indicative of the fact that the charging section also would not apply. The Electricity Board or bodies similar to it, which are totally owned by the Government, either State or Central, have no shareholders. Profit, if at all, made would be for the benefit of entire body politic of the State. Therefore the enquiry as to the mischief sought to be remedied by the amendment becomes irrelevant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee by the decision of the Hon ble jurisdictional High Court in assessee s own case in ITA 186/2020 dated 11.03.2020 relevant operative portion of the said order of the jurisdictional High Court is reproduced herein:- 4. We have given thoughtful consideration to the submissions advanced by the learned counsel for the Revenue. The questions of law that have been urged for our consideration as also the gounds of challenge made out in the memorandum of appeal are relating only to (i) additions made on account of derecognised revenue and (ii) for deleting the disallowance deduction made under Section 80 IA of the Act. No other ground has been urged and we have therefore proceeded to consider the merits of the submissions with respect to the aforenoted issues only. The first addition relating to recognition of the revenue is on account of efficiency gain. The learned Tribunal after considering the facts of the case have applied the ratio of the decision of the Supreme Court in Poona Electric Supply Company Limited vs. CIT (1965) 57 ITR 521, wherein the Apex Court has deliberated upon the concept of commercial profits viz-a-viz clear profits. On the basis of this principle, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided that the Commission shall be guided by the following parameters, namely:- the financial principles and their application provided in the Sixth Schedule to the Act, 1948 read with sections 57 and 57- A of the said Act, the factors which would encourage efficiency, economic use of the resources, good performance, optimum investments and other matters which the Commission considers appropriate keeping in view the salient objects and purposes of the provisions of this Act, and the interest of the consumers. 18. In exercise of the powers conferred by Section 12 and other applicable provisions of the Act, the GNCTD issued Notification No. F.11(119/(8)/2001- Power in the month of November 2001. In this Notification vide paragraph 8, the Government considered the necessity of effective reorganization of the DVB and the sale of 51% equity shares in the distribution companies. The assessee is one of the entities, who participated in the bid, became successful for the lowest annual target loss was awarded 51% of equity. Vide para 12, this Notification prescribes that in the years between 2002-03 and 2006-07 in the event of actual AT C loss of a distribution licensee for any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt of AT and C loss reduction up to minimum level with respect to bid level, and 50% of the additional revenue beyond minimum level has been considered as additional revenue for the purpose of ARR determination and balance 50% of the savings beyond minimum level has been approved to be retained by the assessee. 21. Basing on this, we are convinced that the assessee is under statutory obligation to meet the targets of reduction of A TC losses and when the AT C loss level reached by the assessee in that particular year is better i.e. lower than the level prescribed in the bid, the assessee shall be entitled to 50% of the additional revenue resulting from such purpose. This 50% becomes the regular taxable income of the assessee and insofar as this income is concerned, for this Asstt. Year 2006-07 also, there is no dispute. The balance 50% of this additional revenue, which is mandatory to be counted for the purpose of tariff fixation, which is called as the efficiency gain' will be taken into consideration by the DERC while permitting the tariff of the future years to be determined so as to see that the assessee would earn at least 16% return on the issued and paid up capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a statutory obligation to set apart 50% of the excess amount generated due to the overreaching of the targets for the purpose of the consideration of the DERC to fix the future tariffs either to give relief to the consumers or otherwise. A reading of the statute, notification and the orders of the DERC clearly indicates that the assessee is not free to use this efficiency gain amount the way it likes. Whether or not a separate account is opened, when this amount is separately shown under this head in the books, it makes little difference in so far as the application of the ratio of Puna Electricity Supply Co. Ltd. (supra) is concerned. Crux of the matter is that the assessee in both the cases has no right to appropriate the efficiency gain' amount and such amount is at the disposal of the DERC though not physically but in respect of utilization thereof. We, therefore, are convinced that the ratio of Puna Electricity Supply Co. Ltd (supra) is squarely applicable to the case of the assessee before us and on that score, we allow the contention of the assessee that they have rightly reduced the efficiency gain amount their profit and loss account. 5. We feel that in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'consumer security deposit' received by the erstwhile DVB in excess of the 'consumer security deposit' transferred to it by way of the transfer scheme i.e. Rs. 5244 lakhs (Rs. 6244 lakhs reduced by Rs. 1000 lakhs). Thereafter, the assessee company agitated the issue before the Delhi Electricity Regulatory Commission (DERC), which by its order dated 24.4.2007 upheld the contention of the assessee company and asked the Government of NCT of Delhi (GNCTD) to direct the Delhi Power Company Limited (DPCL, a new avatar of erstwhile DVB) to transfer such excess amount of 'consumer security deposit' to the assessee company; and till the time such direction is issued, to transfer an amount equivalent to 6 per cent on an annual basis, being a specified rate in the supply code, on such excess amount of security deposit, to the assessee company Note: As per clause 16(vi) of the Delhi Electric Supply Code and Performance Standards Regulations, 2007 issued by DERC, through a notification in the official gazette, which came into force from 18.4.2007 interest @ 6 per cent is payable on consumer security deposit received from all consumers. The GNCTD refused to honour the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit, refuse to give the supply of electricity or to provide the line or plant or meter for the period during which the failure continues. (2) Where any person has not given such security as is mentioned in sub- section (1) or the security given by any person has become invalid or insufficient, the distribution licensee may, by notice, require that person, within thirty days after the service of the notice, to give him reasonable security for the payment of all monies which may become due to him in respect of the supply of electricity or provision of such line or plant or meter. (3) If the person referred to in sub-section (2) fails to give such security, the distribution licensee may, if he thinks fit, discontinue the supply of electricity for the period during which the failure continues. (4) The distribution licensee shall pay interest equivalent to the bank rate or more, as may be specified by the concerned State Commission, on the security referred to in sub-section (1) and refund such security on the request of the person who gave such security. (5) A distribution licensee shall not be entitled to require security in pursuance of clause (a) of sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PSC and the court may order the waiver of such charges. Also company itself waive off LPSC in suitable cases ; b) The collection drive undertaken by the assessee company for recovery of old outstanding electricity bills by getting the LPSC waived off. 22. Under these circumstances, the assessee company thought it fit as a measure of prudence to recognize revenue on account of late payment of surcharge on receipt basis which was in consonance with revenue recognition prescribed in accounting standard 9 issued by ICAI. Further, the ld AR also submitted that this contention of the assessee was accepted by the ld AO for all the earlier years and also for the subsequent years. Only for the year under consideration i.e. AY 2011-12, the ld AO had taken a divergent stand. In any event, we find that the similar issue was adjudicated by the coordinate bench of Delhi Tribunal in the case of ACIT Vs. Dakhin Haryana Bijli Vitran Nigam Ltd in ITA 1388/Del/2011 for AY 2007-08 dated 27.06.2012 wherein, this tribunal by placing reliance on the order passed for AY 2006-07 and 2008-09 had held that there is nothing wrong in this revenue getting recognized in the books of account on receipt basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IA of the Act on account of late payment of surcharge collected in the sum of Rs. 17,43,87,000/-. 30. We have heard the rival submissions and perused the materials available on record. We find that that the said late payment of surcharge collected by the assessee pertains to the eligible unit of the assessee. We have already narrated the purpose behind the collection of late payment of surcharge by the assessee. The only purpose of making this recovery is to ensure collection of electricity dues in time and hence this receipt is also having possible nexus with the profit derived by the eligible unit and consequentially eligible for deduction u/s 80IA of the Act. We do not find any infirmity in the order of the ld CIT(A) granting relief in this regard. Accordingly, grounds raised by the revenue are dismissed. 31. The additional ground for AY 2012-13 and original grounds raised by the assessee for AY 2012-13 are identical to those raised in AY 2011-12. Hence, the decision rendered in AY 2011-12 shall apply mutatis mutandis for grounds raised for AY 2012-13 except with variance in figures and in view of identical facts. 32. The only issue raised by the revenue in AY 2012-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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