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Income Tax Appellate Tribunal - Delhi

Dcit, New Delhi vs Bses Yamuna Power Ltd., New Delhi on 17 May, 2017

            IN THE INCOME TAX APPELLATE TRIBUNAL
                  DELHI BENCH: 'A', NEW DELHI

            BEFORE SH. C.M. GARG, JUDICIAL MEMBER
                              AND
              SH. O.P. KANT, ACCOUNTANT MEMBER

                         ITA No. 4046/Del/2014
                       Assessment Year: 2006-07

DCIT, Circle-3(1), New Delhi      Vs. BSES Yamuna Power Ltd.,
                                      Shakti    Kiran      Building,
                                      Karkardooma, New Delhi
PAN : AABCC8569N
        (Appellant)                              (Respondent)

             Appellant by       Sh. Ravi Jain, CIT(DR)
             Respondent by      Sh. Rohit Jain, Adv. & Ms. Deepashree
                                Rao, CA

                         Date of hearing                12.04.2017
                         Date of pronouncement          17.05.2017

                                ORDER


Per O.P. KANT, A.M.:

This appeal by the Revenue is directed against order dated 25/04/2014 of the Ld. Commissioner of Income-tax (Appeals)-VI, New Delhi (in short 'the CIT-A') for assessment year 2006-07, wherein the Ld. CIT-A has deleted the penalty of Rs.15,14,62,400/- levied by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961 (in short "the Act"). The grounds of appeal raised by the Revenue are as under:

"The DCIT, Circle - 3(1), New Delhi is hereby directed to file appeal in the above mentioned case before the ITAT, New Delhi on the following ground of appeal.

1) Whether on the facts and in circumstances of the case, the learned CIT(A) has erred in deleting the penalty amounting to Rs.15,14,62,400 imposed u/s 271(1)(c) when the use falls squarely within the ambit of Explanation 4 of Section 271(1)(c).

The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal."

2. The facts in brief of the case are that the assessee company was engaged in the business of distribution of electricity/power. For the relevant year, the assessee filed return of income declaring loss of Rs.57,84,42,538/-. The income of the assessee was assessed at nil in the assessment order passed under section 143(3) of the Act on 15/12/2008. On appeal, the Ld. CIT-A deleted the additions/disallowances except following additions/disallowances:

"i) Addition of Rs. 41,96,44,314 on account of allowing the lower depreciation @ 15% as against the claim of 80% on the assets under the head "energy meters".

ii) It was also mentioned in the assessment order that had the assessee Company been allowed depreciation on Energy Meters @ 80% then a disallowance of depreciation for a sum of Rs. 3,03,32,909 would have been made on the basis that in it's depreciation claim proportionate reduction was not made by the assessee Company from the block of Plant & Machinery relating to energy meters on account of grant-in-aid (on which higher depreciation @ 80% was claimed). However, since the depreciation on Energy Meters itself was restricted to 15% as per (i) above i.e. the rate applicable for normal Plant & Machinery, no actual addition was made in the order on this account."

3. The Assessing Officer treated the above two issues as concealment and furnishing of inaccurate particulars of income and levied penalty under section 271(1)(c) of the Act amounting to Rs.15,14,62,400/- in the order passed on 26/03/2013. The Ld. CIT-A deleted the penalty on the ground that income in the assessment order has been finally computed on the basis of 'book profit' under section 115JB of the Act and, therefore, no penalty under section 271(1)(c) of the Act could be levied on the additions made under normal provisions of the Act. Aggrieved, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above.

4. In the solitary ground, the Revenue has challenged deletion of penalty levied under section 271(1)(c) of the Act on the ground that same falls squarely within the ambit of Explanation-4 of section 271(1)(c) of the Act.

5. Before us, supporting the order of the Assessing Officer, the Ld. CIT(DR) submitted that the assessee was entitled for depreciation @ of 15% on energy meters as against depreciation @ of 80% claimed and thus, the assessee is liable for furnishing inaccurate particulars of income.

6. On the other hand, the Ld. counsel of the assessee submitted that in quantum appeal, the Tribunal has in principle held that the assessee is eligible to claim depreciation on energy meters @ of 80% and directed the Assessing Officer to allow the depreciation on the basis of expenditure on electronic meters reflected in the Audit Report. He further submitted that on the second issue of grant-in-aid the Tribunal directed the Assessing Officer to reduce grant-in-aid received by the assessee from the respective "cost of asset(s)" as reflected in the tax audit report of the assessee for the years and allow the claimed relief after affording opportunity of being heard. Accordingly, the Ld. counsel submitted that 4 ITA No. 4046/Del/2014 the additions/disallowances in respect of which penalty was levied, have already been either deleted or restored to the Assessing Officer for re- computation and, therefore, penalty levied on those additions/disallowances cannot survive.

7. We have heard the rival submissions and perused the relevant material on record. We find that the Assessing Officer levied penalty in respect to additions/disallowances sustained by the Ld. CIT-A in quantum appeal. On appeal filed by the assessee against the said additions/disallowances, the Tribunal in ITA No. 404/Del/2012 for assessment year 2006-07, has allowed the appeal of the assessee for statistical purposes. In the said appeal, the grounds of appeal raised by the assessee are reproduced as under:

"2. Depreciation on energy meters wrongly allowed at 15% as against 80% resulting in a disallowance of Rs.48,13,62,420.

The Ld. CIT (A) - VII has wrongly upheld that the "Energy Meters"

are eligible for depreciation @ 15 % as against the claims @ 80 %. In this regard he has ignored the facts that these meters are for measuring electric energy which has been specifically mentioned as eligible for 80% depreciation in the depreciation schedule of the Income Tax Rules, 1962. Further these meters also have the characteristics of energy saving devices which are subject to depreciation @ 80%.

In view of the above, depreciation allowed @ 15% as against the 80% claim on energy meters resulting in a disallowance of Rs. 48,13,62,420, is wrong, against the facts of the case and unsustainable in the eyes of law.

3. Grant in aid for fixed assets and disallowance of 1 depreciation to the tune of Rs 3,03,32,909.

The Ld. CIT (A) - VII had wrongly upheld that adjustment of grants in aid for fixed assets is to be made in the ratio of > addition to plant and machinery which is (subject to depreciation @ 15%) and 5 ITA No. 4046/Del/2014 addition to energy meters which is (subject to depreciation @ 80%) resulting in disallowance of depreciation to the tune of Rs. 3,03,32,909."

8. The ground No. 2 raised in ITA No.404/Del/2012 has been allowed for statistical purpose by the Tribunal as under:

"80. Ground No. 2: It is in relation to the depreciation on energy meters allowed at 15% as against 18% resulting in a disallowance of Rs.48,13,62,420. An identical issue under the similar set of facts has been decided hereinabove in ground no. 1 of the appeal for the assessment year 2005-06 preferred by the assessee. Following the same, it is held that the assessee is eligible to claim depreciation on energy meters @ 80% and accordingly direct the Assessing Officer to allow the same on the basis of the expenditure incurred on electronic meters/energy meters reflected in the audit report. The Ground No. 2 is accordingly allowed for statistical purposes."

9. The ground No. 3 raised in ITA No. 404/Del/2012 has also been allowed for statistical purpose by the Tribunal as under:

"81.2 Under similar set of facts and identical issue has been decided in favour of the assessee in the case of BSES Rajdhani Power Ltd. in the appeal preferred by the assessee for the assessment year 2006-07 hereinabove. Following the same, we while setting aside orders of the authorities below in this regard direct the Assessing Officer to reduce grant in aid received by the assessee from respective "cost of asset(s)" as reflected in the tax audit report of the assessee for the years as it has been rightly adjusted by the assessee and not against the meters and allow the claim relief after affording opportunity of being heard. The ground no. 3 is accordingly allowed for statistical purposes."

10. We find that issue in dispute in respect of which the penalty was levied by the Assessing Officer has already been restored to the file of the Assessing Officer for the re-computation of depreciation and there for penalty levied by the Assessing Officer in respect of those 6 ITA No. 4046/Del/2014 additions/disallowances cannot survive and the ground raised by the Revenue is rendered merely academic. Accordingly, the ground of appeal is dismissed.

11. In the result, appeal filed by the Revenue is dismissed.

The decision is pronounced in the open court on 17th May, 2017.

            Sd/-                                        Sd/-
      (C.M. GARG)                                   (O.P. KANT)
  JUDICIAL MEMBER                              ACCOUNTANT MEMBER
Dated: 17th May, 2017.
RK/-(D.T.D)

Copy forwarded to:
1.    Appellant
2.    Respondent
3.    CIT
4.    CIT(A)
5.    DR
                                               Asst. Registrar, ITAT, New Delhi