9911796707
TMI Blog2023 (7) TMI 1571X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 3,89,16,24,122/- as on 31.03.2015 including the above referred sale amount of Rs. 87,42,34,784/-, but the said net fund of R. 3,89, 16,24, 122/- was transferred to NTPC Ltd. 3. In the year under consideration, the assessee has earned revenue of Rs. 87,42,34,784/- from the sale of fly ash, cenosphere and the assessee incurred expenditure of Rs. 45,26,29,998/- on account of fly ash products. Hence an amount of Rs. 42, 16,04,786/- has remained under assessed. 4. The Assessing officer failed to verify these facts in his assessment order dated 23.12.2017 passed u/s 143(3) of I.T. Act, 1961 for A.Y. 2015-16. By not considering the matter during assessment proceedings and by not adding back Rs. 42, 16,04,786/- on account of net receipt on fly ash and cenosphere to the income, the scrutiny assessment order apparently has become erroneous in sofar as it is prejudicial to the interest of revenue, in terms of explanation 2 of section 263 of the Income Tax Act, 1961, which is reiterated an under: "Explanation 2: For the purposes of this section, it is declared that order passed by the Assessing Officer shall be deemed to be erroneous in so as it is prejudicial to the interests of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he original assessment to be prejudicial to the interest of the revenue on account of sale of fly ash and cenosphere. It is pertinent to mention that a notification dated 3rd November, 2009 has been issued by the Ministry of Environment and Forests (MOEF) on utilization of fly ash. The said notification is very specific sofar transfer of proceeds of the fly ash is concerned. For which it may be relevant to refer to para 6 of the said notification which reads as under: - "(6) The amount collected from sale of fly ash and fly ash based products by coal and/or lignite based thermal power stations or their subsidiary or sister concern units, as applicable should be kept in a separate account head and shall be utilized only for development of infrastructure or facilities, promotion and facilitation activities for use of fly ash until 100 percent fly ash utilization level is achieved; thereafter as long as 100% fly ash utilization levels are maintained, the thermal power station would be free to utilize the amount collected for other development programmes also and in case, there is a reduction in the fly ash utilization levels in the subsequent year(s), the use of financial return f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the experts to provide for the protection and improvement of environment and for matters connected with it. This is a conscious and deliberate decision of the Legislature and, thus, when in clear and articulate language they have specifically enumerated in The Environment (Protection) Act, then the overriding mandate of the section cannot be ignored. Accordingly, based on the provisions of the said Act and the prudential norms issued by it from time to time in exercise of the power vested in it no adverse inference should be drawn in the name of the NVVN. In view of the said notification, it can be concluded that sofar proceeds of the fly ash are concerned it gets transferred by overriding effect. Therefore sale proceeds are not chargeable to Income tax as the same do not belong to NVVN because it has to be used for the purposes specified thereunder. The purposes specified are not being owned by NVVN and the fund will be used in making contribution to development of infrastructure or facilities and promotion or facilitation activities for fly ash utilization or such other facility not owned by it. Moreover the amount collected is a liability being collected as a trustee in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) earned as income from sale of fly ash, cenosphere which was not shown as taxable income. The AO, while framing the assessment order, should have properly verified the issue and the net amount as mentioned above should have been brought within the tax net." 3. In view of the above, the ld. PCIT held that the assessment order passed by the ACIT is erroneous and prejudicial to the interest of the revenue and hence directed the AO to make proper verification of the issue. 4. Aggrieved, the order of the ld. PCIT, the assessee filed appeal before us. 5. Heard the arguments of both the parties and perused the material available on record 6. It is important to understand that the nature of business and source of income of the assessee which is as under: NTPC Vidyut Vyapar Nigam Ltd. (A wholly owned subsidiary of NTPC) NVVN'S NATURE OF BUSINESS AND SOURCES OF INCOME NTPC Vidyut Vyapar Nigam Limited (NVVN) was incorporated on 1 November 2002 as a Government Company and the Certificate for Commencement of Business was received on 26th November 2002. Since, there is a gap in between demand and supply of electricity, a new concept of trading of power started in the market to brid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Utilization Fund (Amount in Rs.) As at 31.03.2015 31.03.2014 Ay per last financial statements 3,26,23,01,631 2,34,93,34,677 Add: Transfer from sales (Note 18) 87,42,34,784 1,22,55,13,224 Add: Transfer from other Income (Note 19) (Net of tax) 20,77,17,705 - Transfer from reserve and surplus (Note 3) (Net of tax) - 17,01,18,785 Less: Utilized during the year Capital expenditure (Note 10) - 49,15,087 Cost of fly ash/ash products (Note 21) 2,23,11,593 2,89,05,770 Employee benefits expense (Note 22) 4,02,19,471 5,73,27,339 Administration & other expenses (Note 24) 4,28,91,315 5,13,13,853 Fly ash utilization expenses incurred by holding company 34,72,07,619 34,02,03,007 45,26,29,998 48,26,65,056 Net Fly ash utilization fund 3,89,16,24,122 3,26,23,01,631 Less: Fly Ash Fund Transferred to NTPC Limited 3,89,16,24,122 - Total - 3,25,23,01,631 a. The Company sells fly ash and cenosphere given free of cost by its holding company NTPC Limited. As per the gazette notification dated 3rd November 2009 issued by Ministry of Environment and Forests (MoEF), Government of India, the amounts collected from sale of fly ash and fly as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt in a separate account head and shall be utilized only for development of infrastructure or facilities, promotion and facilitation activities for use of fly ash until 100 percent fly ash utilization level is achieved; thereafter as long as 100% fly ash utilization levels are maintained, the thermal power station would be free to utilize the amount collected for other development programmes also and in case, there is a reduction in the fly ash utilization levels in the subsequent years, the use of financial return from fly ash shall get restricted to development of infrastructure or facilities and promotion or facilitation activities for fly ash utilization until 100 percent fly ash utilization level is again achieved and maintained." 9. On going through the entire facts, we find that the amount collected from sale of fly ash and fly ash based products by coal and/or lignite based thermal power stations or their subsidiary or sister concern units, as applicable should be kept in a separate account head and shall be utilized only for development of infrastructure or facilities, promotion and facilitation activities for use of fly ash until 100 percent fly ash utilization level is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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