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Government considered your proposal and has decided to permit special appropriation under Para XVII(2)(c)(vi) of the Sixth Schedule to the Electricity (Supply) Act, 1948 to BSES Ltd. at the rate of 3 paise per unit (ppu) until such time BSES Ltd. collects Rs. 100 crores for its project of 500 MW Power Station at Dahanu in Thane District subject to the following condition:
That the BSES Ltd. will collect 3 ppu from its consumers only.
Permission for special appropriation to BSES Ltd. should also be subject to the following conditions:
i. BSES Ltd. should take full responsibility for any consequences in the event of such an action being challenged in the Court of Law and also to refund the amount collected if any Court were to pass such an order.
ii. BSES Ltd. should deduct from the capital base the amount so collected. In the event of take over of the undertaking, the amount collected by special appropriation by the BSES Ltd. will be deducted from the amount payable to the BSES Ltd.

5. Pursuant to the abovementioned developments, the assessee company, during the. previous year relevant to the AY 90-91 and also during the previous year relevant to the AY under appeal charged 3 paise per unit of electricity supplied to the consumer and the additional amount thus collected was transferred to the Special Appropriation Account created for financing the new project at Dahanu. The assessee claimed that the aforesaid income was not liable to the charge of income-tax as it was diverted by overriding title to special reserve fund for a special purpose as directed by the Government of Maharashtra. For the AY 90-91, the AO and the CIT(A) rejected the assessee's claim and the matter thus traveled before the Tribunal. Apart from the Bombay High Court decision in the case of SOCL (supra), the assessee also relied on the Bombay High Court decision in the case of Amalgamaged Electric Co. Ltd. (AECL) v. CIT 97 ITR 334. As a matter of fact, the Bombay High Court, in the case of Somaiya Orgeno Chemicals Ltd., has also referred to the earlier decision in the case of Amalgamaged Electric Co. Ltd. We find that while deciding this issue for the AY 91-92, the Tribunal has taken note of the facts and the ratio of the Bombay High Court in the case of Somaiya Orgeno Chemicals Ltd., which is apparent from the following discussion contained at Para 5 of the order:

Shri Dastur further argued that the mere fact that the assessee was the owner of the reserve fund did not mean that the same was its taxable income. In this connection, Shri Dastur placed strong reliance on the decision of the Hon'ble Bombay High Court in the case of SOCL (216 ITR 291) wherein their Lordships after considering the decision of the Bombay High Court in the case of CWT v. Bombay Suburban Electric Supply Ltd. (BSES Ltd.) 105 ITR 384, had held that the title to the fund was not conclusive in deciding whether the amount which was deposited in that fund constitutes a diversion of the amount deposited in that account at source or not. What was necessary was to see whether there was a diversion fat source and whether the assessee had lost domain and control over the amount so diverted. The assessee was under a statutory obligation to set aside Rs. 6 per kilo litre for the storage fund There was, therefore, a clear diversion at source of this amount In any event the assessee had lost domain over this amount of Rs. 6 per kilo litre. In the above case the assessee company became obliged under the statutory provision to set apart Rs. 6 per kilo litre out of its receipts for setting up of a storage tank under statutory order The High Court has held that the above amount was not part of taxable receipts. The fact that the assessee was the owner of the above fund did not make any difference. Relying strongly on the above decision, Shri Dastur has submitted that the lower authorities were not justified in treating the receipts in question as taxable receipts merely by holding that the assessee had ownership of the receipt. It was emphasized that domain over the fund was not with the assessee.