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The Income- Tax Act, 1995
Section 36(2) in The Income- Tax Act, 1995
Section 40(a) in The Income- Tax Act, 1995
Section 69A in The Income- Tax Act, 1995
Rajasthan R.S.S. & Ginning Mills ... vs Dy. Commnr. Of Income Tax, Jaipur on 29 April,
2014

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Income Tax Appellate Tribunal -

Gauhati
Tripura State Electricity ... vs Deputy Commissioner Of Income ... on 18 October,
2019
IN THE INCOME TAX APPELLATE TRIBUNAL
GAUHATI BENCH, GUWAHATI

BEFORE SH. S.S.GODARA, JUDICIAL MEMBER AND

DR. A.L. SAINI, ACCOUNTANT MEMBER

ITA Nos. 30, 31 & 32/GAU/2015

[Assessment Years: 2007-08, 2008-09 & 2009-10]
Tripura State Electricity Dy. Commissioner of Income
Corporation Ltd. vs Tax
PAN: AACCT 2964 M Circle-Agartala.
(Appellant) (Respondent)

ITA No. 167/GAU/2016

[Assessment Year: 2012-13]
Tripura State Electricity Dy. Commissioner of Income
Corporation Ltd. vs Tax
PAN: AACCT 2964 M Circle-Agartala.
(Appellant) (Respondent)

ITA Nos. 242 & 243/GAU/2017

[Assessment Years: 2008-09 & 2009-10]
Tripura State Electricity Income Tax Officer
Corporation Ltd. vs Ward-Udaipur.
PAN: AACCT 2964 M
(Appellant) (Respondent)

ITA Nos. 63 & 64/GAU/2018

[Assessment Years: 2010-11 & 2011-12]
 Tripura State Electricity Dy. Commissioner of Income
Corporation Ltd. vs Tax
PAN: AACCT 2964 M Circle-Agartala
(Appellant) (Respondent)

Appellant by S/Sh. Ramesh Goenka and Sh. Amit Goenka

Advocates
Respondent by Sh./Sh. A. K. Bhardwaj, Jayanta Mridha &
Amitava Sen, JCITs
Date of Hearing 11.07.2019, 18.10.2019
Date of Pronouncement 18.10.2019

ORDER

PER SH. S.S.GODARA, JUDICIAL MEMBER The instant batch of eight cases
pertains to a single assessee M/s. Tripura State Electricity Corporation Limited.
Its former three appeals ITA Nos. 30, 31 & 32/GAU/2015 arise against the
Commissioner of Income Tax (Appeals)-Shillong's common order dated
30.01.2015 passed in case nos.

ITA Nos. 30, 31 & 32/GAU/2015 167/GAU/2016 242 & 243/GAU/2017 63 &
64/GAU/2018 AYs: 2007-08, 2008-09 & 2009-10 2012-13 2008-09 & 2009-10
2010-11 & 2011-12 Tripura State Electricity Corporation Ltd.

AGT-15, 17 & 16/2013-14, involving proceedings u/s 143(3) of the Income Tax
Act, 1961 (in short "Act"). Its appeals ITA Nos. 242 & 243/GAU/2017 are directed
against the very CIT(A)'s separate orders; both dated 26.10.2017 passed in case
nos. CIT(A)/SHG/10322 & 10328/2016-17 involving proceedings u/s 154 of the
Act.

2. The assessee's last three appeals ITA Nos. 63 & 64/GAU/2018 and ITA No.
167/GAU/2018 for Assessment Years 2010-11 to 2012-13 are directed against
the very CIT(A)'s separate orders dated 04.12.2017 except in last assessment
year involving order dated 23.09.2016, in proceedings u/s 143(3) of the Act,
respectively.

Heard both the parties. Case files perused.

3. It transpires at the outset that the assessee's appeals ITA Nos. 63 &
64/GAU/2018 for AYs 2010-11 & 2011-12 suffer from 41 days delay each in filing
stated to be attributable to various official commitments of its staff members
in election duties and other administrative functions. The Revenue is fair
enough in not disputing the said solemn averments. We therefore condone the
impugned delay of 41 days in filing of both these appeals. The same are now
taken for adjudication on merits.

4. It emerges during the course of hearing that many of the issues raised in
these appeals are identical. We therefore proceed assessment year-wise for
the sake of convenience and brevity.

Assessment Year 2007-08 ITA No. 30/GAU/2015

5. The assessee's first substantive grievance raised in the instant appeal seeks
to reverse both the lower authorities' action disallowing its expenditure claim
on consultancy amounting to Rs. 6,77,877/- to the tune of Rs. 1,89,532/-. The
CIT(A)'s detailed discussion to this effect reads as under:
Page | 2 ITA Nos. 30, 31 & 32/GAU/2015 167/GAU/2016 242 & 243/GAU/2017 63
& 64/GAU/2018 AYs: 2007-08, 2008-09 & 2009-10 2012-13 2008-09 & 2009-10
2010-11 & 2011-12 Tripura State Electricity Corporation Ltd.

"In respect of balance amount of Rs. 1,89,532/-, the position obtaining is that
no details were filed before the Assessing Officer and none have been filed
even in the appellate proceedings. It. is not possible to accede to the request of
the appellant to remand the matter to the Assessing Officer for verification of
evidence, when, no such evidence(s) have been filed in the first place. The
appellant has furnished the Ledger Account copy in respect of Consultancy
Fee, along with written submission as reproduced above. A copy of the bare
ledger Account and a submission couched in generalities is insufficient in
establishing the claim of the appellant. The disallowance was made by the
Assessing Officer is justified since the details of the individual payments made
by the appellant were not filed, as a result of which, he was unable to examine
whether they were liable for TDS or not. Even if said ledger account is
perused, it is obvious that the entries therein were required to be explained
along with supporting documents. For instance, in the said ledger account
comprising 27 entries, there are payments made to entities such as Shri P.R.
Mukhopadhyay. In the absence of further details, it can only be speculated
that he was a Consultant. There are orphan entries in respect of minor
cash/cheque payments, outstanding consultancy fees and payment of TVAT.
There is an entry regarding refund of advance taken by staff amounting to Rs.
5,800/-, whose presence in this ledger is inexplicable. The consequences of
providing sketchy, unexplained details, both at the assessment and appellate
stages, are to be borne by the appellant itself. In other words, on the basis of
the ledger account alone, the appellant cannot be seen to aver that the
Assessing Officer has made the disallowances on such items that did not fall
within the ambit of section 40(a)(ia) of the Act. In an identical vein, the
appellant has claimed that 'certain payments' were made to hotels and circuit
house that were wrongly disallowed by the Assessing Officer without
furnishing further details. Here, it was incumbent on the appellant to furnish
the supporting details as to what kind of payment/reimbursement/billing
modalities were entered into with the Consultants. If the hotel bills raised
were towards the reimbursement of actual expenses incurred by Consultants,
then there might not be any element of profit involved. This would be distinct
from cases where the hotel bills are raised for the gross amount inclusive of
professional fees as well as reimbursement of actual expenses. It was entirely
upto the appellant to provide the details which are entirely within its
knowledge. Faced with such factual inadequacy, there would be no question
of considering any remand or verification at the end of the Assessing Officer.
Where a claim has been succinctly and clearly made in appellate proceedings
and the only matter that remains is a simple verification of a document or a
plain fact, the ground can be decided with a direction to the Assessing Officer
to verify the said factual claim. In essence, the decision is to be given by the
Appellate Commissioner and merely a routine check is to be made by the
Assessing Officer. The appellant has had sufficient time to collect the
underlying facts, but it has not done so. Thus, it cannot possibly seek any
relief on the basis of general submissions and a copy of ledger account which
continues to confuse rather than throw any light on the various expenditures
claimed. In effect, the compliance deficiency has persisted beyond the
assessment stage as well and the submissions made now fail to improve its
position. On the basis of insufficient facts and explanation preferred by the
appellant, an open- ended exercise by the Assessing Officer would not be
consistent with the appellate powers that are statutorily available. After
careful consideration of all aspects, there is no option but to uphold the
disallowance of Rs. 1,89,532/- out of Rs. 6,77,877/- made by the Assessing
Officer under section 40(a)(ia) of the Act. The same is confirmed and the
appeal taken in this regard and this extent stands dismissed."
Page | 3 ITA Nos. 30, 31 & 32/GAU/2015 167/GAU/2016 242 & 243/GAU/2017 63
& 64/GAU/2018 AYs: 2007-08, 2008-09 & 2009-10 2012-13 2008-09 & 2009-10
2010-11 & 2011-12 Tripura State Electricity Corporation Ltd.

6. Mr. Goenka vehemently submits during the course of hearing that both the
lower authorities have erred in disallowing assessee's impugned expenditure
claim(s) on account of non-deduction of TDS. His case is that the assessee had
not availed any technical services from its payees. The fact remains that this
taxpayer has not tendered any details of the actual nature of expenditure. We
therefore find no reason to disagree with the lower authorities' conclusion
quoting assessee's failure in filing the relevant details. Coupled with this, the
fact also remains that the legislature has itself amended Section 40(a)(ia) vide
the Finance Act, 2014 w.e.f. 01.04.2015 restricting a disallowance made u/s
40(a)(ia) from 100% to 30% only. This tribunal's order in ITA No. 767/Kol/2016
Dipak Parui vs. JCIT decided on 20.07.2018 holds the above proviso inserted in
the Act to be a curative one having retrospective effect. We therefore, direct
the Assessing Officer to restrict the impugned disallowance to the extent of
30% only. Necessary computation to follow. This first substantive ground is
taken as partly accepted in foregoing terms.

7. Next comes Section 69A unexplained money addition of Rs. 48,05,504/-

made by the Assessing Officer and confirmed in the CIT(A)'s detailed
discussion as under:
"8.1 The Assessing Officer found that the closing cash-in-hand as per Schedule-
7 of its balance sheet (at 31.03.2007) was shown at Rs. 59,08,962/-. Inexplicably,
the opening cash (at 01.04.20107) was reflected at Rs. 1,07,14,466/-. The
aforesaid discrepancy was brought to light since scrutiny proceedings for
assessment years 2007-2008 and 2008-2009 were conducted simultaneously by
the Assessing Officer. When asked to explain the difference amounting to Rs.
48,05,504/-, no satisfactory response was tendered. The Assessing Officer
concluded that the appellant had understated the cash balance as at March
31,2007, by a sum of Rs. 48,05,504/-. Resultantly the same was added back to
the total income under section 69A of the Act. Per contra, the appellant has
submitted as under:
(a) The assessing officer has observed that as on 31.03.2007 the cash balance
was Rs.5908962/- as per Schedule - 7 of the audited accounts. However, the
opening cash balance as on 01.04.2007 has been shown at Rs.10714466/- in the
accounts for the financial year 2007-2008. He, therefore, concluded that there
was understatement of cash of Rs. 4805504/- as on 31.03.2007. He, therefore,
added this amount of Page | 4 ITA Nos. 30, 31 & 32/GAU/2015 167/GAU/2016
242 & 243/GAU/2017 63 & 64/GAU/2018 AYs: 2007-08, 2008-09 & 2009-10 2012-13
2008-09 & 2009-10 2010-11 & 2011-12 Tripura State Electricity Corporation Ltd.
Rs.48055041- in the total income of the appellant treating it as unexplained
money U/s.69A of the Act.
(b) It is respectfully submitted that there was some mistake in compilation of
our accounts. Our corporation during the previous year relevant to the
assessment year under appeal had 9 circles and 21 divisions. We had over 4
lakhs consumers. Because of shortage of qualified and experienced accounts
staff, the work of compilation of accounts was out sourced to a C. A. firm. The
accounts could only be compiled and audited on 06.10.2010 i.e. after more
than 3 1 2 years of the close of accounting year. Hence, there was no way to
notice such mistake.
(c) Because of mistake in compilation of our accounts, the cash balance as on
31.03.2007 was taken at a lower figure as pointed out by the assessing officer
but at the same time certain liabilities were also omitted. Omission of both
assets and liabilities does not give rise to any income.
(d) As it appears, the assessing officer has treated the difference between the
closing cash balance as on 31.03.2007 and opening balance as on 01.04.2007 as
unexplained money U/s.69A of the Income Tax Act, 1961. If only the cash
balance is taken at a higher figure as on 01.04.2007 without taking into
account the corresponding liabilities, the balance sheet of the appellant will
never tally. No enquiry what-so-ever was made by the assessing officer on this
aspect of the matter. We, therefore, request you to kindly direct the assessing
officer to verify this aspect of the matter and decide the case accordingly.

8.2 The matter has been considered. There is little doubt that the explanation
given is misconceived. The appellant has not disputed that the closing cash
balance was understated vis-a-vis the opening balance on the first day of the
next accounting year. It has been admitted that there was a 'mistake' in
drawing up its accounts (which were audited). No specific reasoning or
explanation has been furnished for this accounting impossibility. A weak
explanation is sought to be canvassed that the same occurred as it had a large
number of subordinate offices, consumers and that the accounts were
compiled after the passage of several months after the end of the relevant
financial year. The fact that the appellant had a large number of offices, etc., is
not an exceptional factor for this year and the belated compilation of accounts
ought to have ensured that such errors were noticed and eliminated. Be that
as it may, the reasons for the error are irrelevant. Moreover, the fact that the
closing and corresponding opening balances were hugely differing, is far too
much of a glaring, ex facie discrepancy to be overlooked. The appellant has
suggested that there is an equivalent liability that has not been incorporated
in the balance sheet. However, the said liability has not been identified. Thus,
the hypothetical liability, if any, is also undisclosed. Book keeping necessarily
involves a double entry. By stating that there is a corresponding entry (which
is itself missing) the appellant's arguments are theoretical and devoid of any
force. The onus was entirely on the appellant to lead credible evidence to
explain the aforesaid as the affairs are entirely within his knowledge. The
same cannot be erroneously explained by stating that there ought to be a
corresponding equivalent liability which would make the said discrepancy
tax-neutral due to an unidentified, self-cancelling entry. The argument of the
appellant is contrary to fundamental principles of taxation and accountancy.
The Page | 5 ITA Nos. 30, 31 & 32/GAU/2015 167/GAU/2016 242 & 243/GAU/2017
63 & 64/GAU/2018 AYs: 2007-08, 2008-09 & 2009-10 2012-13 2008-09 & 2009-10
2010-11 & 2011-12 Tripura State Electricity Corporation Ltd.

same is rejected as insufficient and illusory. Resultantly, the addition made by

the Assessing Officer is upheld. The ground of appeal fails and is, therefore,
dismissed."

8. It emerges from the above extracted lower appellate discussion that the
dispute between the parties is that of reconciliation of assessee's closing &
opening cash in hand as per Schedule-7 of its balance sheet as on 31.03.2007
and 01.04.2008 with corresponding sums of Rs. 59,08,962/- and 1,07,14,466/-;
respectively. The assessee has further pleaded that there is a lack of
reconciliation in accounts pertaining to 4 lakh consumers and 9 circles with
21 divisions. This assessee is a public sector power utility company wherein
the main source of cash in hand is that of consumer payments by way of
power charges only. We therefore deem it appropriate that larger interest of
justice will be met in case the Assessing Officer re- examines the entire issue
afresh as per law within three effective opportunities of hearing. The assessee
shall place on record all necessary particulars within the very number of
opportunities. This issue is accepted for statistical purposes. The assessee's
first appeal ITA No. 30/GAU/2015 is partly allowed in above terms.

Assessment Year 2008-09 ITA No. 31/GAU/2015

9. The assessee's first substantive grievance raised in the instant appeal seeks
to delete bad debt disallowance of Rs. 41,92,370/- made in the course of
assessment as confirmed the lower appellate proceedings. The CIT(A)'s
detailed discussion to this effect reads as under:
"12.1 During the course of assessment proceedings, the Assessing Officer
found that a sum of Rs. 41,92,370/- has been claimed as bad debts and was
incorporated in Schedule-18 to the accounts as Administrative, Selling and
Distribution expenses. A query was raised by the Assessing Officer in respect
of the names/addresses of the debtors concerned, the financial year in which
the amounts were earlier included as taxable receipts and the governing
Resolution of the Board of Directors. In response thereto, the appellant
admitted before the Assessing Officer that no Board Resolution was passed
prior to the write-off. Moreover, no details as sought for in respect of the bad
debts were produced, despite the appellant conveying that the same will be
filed "within a few days". In this situation, the Assessing Officer concluded that
the claim of bad debts could not be allowed in the absence of the underlying
factual details and the absence of Page | 6 ITA Nos. 30, 31 & 32/GAU/2015
167/GAU/2016 242 & 243/GAU/2017 63 & 64/GAU/2018 AYs: 2007-08, 2008-09 &
2009-10 2012-13 2008-09 & 2009-10 2010-11 & 2011-12 Tripura State Electricity
Corporation Ltd.

a Board Resolution for writing them off. Hence, a sum of Rs. 41,92,370/-
claimed as bad debts was disallowed by the Assessing Officer and added back
to the total income.

12.2 On the other hand, the appellant stated that the bad debts claimed was
allowable in terms of section 36(l)(vii) read with section 36(2) of the Act, as all
the conditions stipulated were fulfilled. It was submitted that a sum of Rs.
35,88,392/- was due from industrial consumers whose names along with the
amount written-off was furnished. The balance written-off was said to be
attributable to a 'large number' of rural consumers to whom electricity was
supplied under the Rajiv Gandhi Gramin Vidyut Yojana (RGGVY) Scheme and
"other poor consumers". The appellant referred to the decision of the Hon'ble
Supreme Court in T.R.F. Ltd vs CIT reported in 323 ITR 397 in support of the
claim.

12.3 The matter has been considered. Firstly, there is no dispute that an
opportunity was given by the Assessing Officer to produce the supporting
factual details, but it was not availed of. Here, the appellant has prayed that
the additional evidence ought to be admitted for reasons mentioned as
recorded in para (4.3) of this appellate order (supra) for the preceding
assessment year. However, what has been filed at this stage is merely a list of
ten consumers and the amount written-off vis-à-vis each one of them with a
common remark that "service connection disconnected permanently". This
aggregates Rs. 35,88,392/-. For the remaining amount, even the basic details
have not been furnished by the appellant, such as the names or the amounts
written-off. These were not produced before the Assessing Officer as well. The
assertion that these were pursuant to a government scheme or related to poor
consumers is irrelevant.

12.4 For a permissible write-off of bad debts, a number of statutory

conditionalities have to be fulfilled. Some of them are laid down in section
36(2) of the Act. The most important of them is the requirement that the debt
sought to be written off was taken into account in computing the taxable
income of the assessee. This is necessary for ensuring that a double benefit is
not availed of, which would arise if the amount of bad debt was not made part
of the taxable income prior to write-off. Without these crucial details as
required by law, a claim of bad debt cannot possibly be entertained. The
position that emerges is that for no debt sought to be expensed, the appellant
has produced details which- establish that the amount was made part of the
taxable receipts at any point of time earlier than the proposed write off.

12.5 As far as the decision of the Hon'ble Supreme Court in T.R.F. Ltd vs
Commissioner of Income Tax [2010] reported in 323 ITR 397 is concerned,
there is no dispute that the same is the final authority for the proposition that
it is no longer necessary for the assessee to establish that a debt has become
irrecoverable. However, the operation of this decision of the Hon'ble Apex
Court cannot be so interpreted to mean that the other statutory conditions
specified in section 36(2) of the Act are inapplicable. In fact, even the Hon'ble
Supreme Court observed that the assessee was obliged to debit the bad debt
account and credit the customer's account, thus closing the account of the
customer.(In the case of companies, the provision is deducted from the
Sundry Debtors). As recorded by the Assessing Officer, even the Board
Resolution to this effect was never passed, implying that the impugned
amount has been straightaway debited to the Profit & Loss account.

Page | 7 ITA Nos. 30, 31 & 32/GAU/2015 167/GAU/2016 242 & 243/GAU/2017 63
& 64/GAU/2018 AYs: 2007-08, 2008-09 & 2009-10 2012-13 2008-09 & 2009-10
2010-11 & 2011-12 Tripura State Electricity Corporation Ltd.

12.6 In the instant case, the assessee has requested that the details could not
be produced before the Assessing Officer at the time of scrutiny assessment
proceedings for reasons already reproduced earlier at para 4.3 ante. However,
it is necessary to examine what details has the appellant filed during the
course of the appellate proceedings. As mentioned, other than the names and
amount of ten debtors, no other particulars have been furnished. Thus, even if
it is to be taken that the supporting evidences in respect of bad debt could not
be produced before the Assessing Officer, the position remains largely the
same in these appellate proceedings. The name, address, amount and the
assessment year in which these amounts were earlier included in the taxable
income are sine qua non prior to a consideration of appellant's claim. If the
appellant has been unsuccessful in producing the details even at this stage,
there would be no basis to seek verification by the Assessing Officer. Its prayer
for admitting additional evidence is rendered otiose. The request of the
appellant could have been considered if the full particulars of the bad debts
been furnished since in such an event, the ground of appeal can be decided
with a direction to Assessing Officer for a simple verification. Thus, in their
absence, even this is not possible in face of the utter failure on the part of the
appellant to support its claim. The extent of its continuing default can be
easily gauged by the fact that in respect of bad debts amounting to Rs.
6,03,978/- the appellant has been unable to state (even now) the names of the
beneficiaries, other than its assertion that they were rural consumers covered
by RGGVY. In other words, the only underlying detail which has been
forthcoming is that a sum of Rs. 35,88,392/- related to industrial consumers
and the balance was attributable to rural ones. Its further assertion that the
impugned amount was written-off as the service connection to such
customers was permanently disabled may be true, but this fact, per se, does
not improve the case of the appellant nor do they obliterate the requirements
of law. Thus, the very basis of the claim of bad debts amounting to Rs.
41,92,370/- suffers from crippling deficiencies. It is worth mentioning that
when the appellant itself has sought a tax benefit of an exact figure, i.e. Rs.
41,92,370/- as bad debt and has very precisely quantified the amounts in
respect of industrial/rural consumers, there is no conceivable reason as to
why it persistently has not been able to demonstrate that the write-off amount
was included as taxable receipts in an earlier year(s) on due basis.
12.7 Under the circumstances, no case has been made out by the appellant
which would require an interference with the disallowance of the impugned
amount made by the Assessing Officer. The same is sustained. The ground of
appeal fails and is, therefore, dismissed."

10. Suffice to say, there is no dispute between the parties about allowability of
a bad debts claim under the provisions of the Act per se since the issue herein
is that of factual aspects only. The Assessing Officer as well as the CIT(A) hold
that the assessee had not placed on record the relevant details of the
beneficiaries/consumers covered under the power dues waiver schemes as
well as about non-production of the Board's resolution to this effect. The
assessee's case on the other hand is that it had no other source except that of
providing power services to the consumers in whose cases it Page | 8 ITA Nos.
30, 31 & 32/GAU/2015 167/GAU/2016 242 & 243/GAU/2017 63 & 64/GAU/2018
AYs: 2007-08, 2008-09 & 2009-10 2012-13 2008-09 & 2009-10 2010-11 & 2011-12
Tripura State Electricity Corporation Ltd.

had written off all the outstanding dues in case of lakhs of consumers. We
therefore deem it appropriate that the instant factual issue also requires
necessary verification at least on test check basis. The Assessing Officer is
directed to examine the same afresh within three effective opportunities of
hearing as per law.

11. Next comes leave encashment disallowance of Rs. 5,55,20,105/- made in

both the lower proceedings for lack of actual payment u/s 43B(f) of the Act.
Hon'ble Calcutta high court has admittedly quashed the foregoing statutory
provision itself in Exide Industries Ltd. vs. U.O.I. 292 ITR 470 (Cal). Hon'ble
Apex Court admitted the Revenue's SLP (Civil) No. 22889/2008 on 08.05.2009
and stayed operation of above high court's judgement. The said case is stated
to be pending till date. We therefore restore this issue back to the Assessing
Officer to decide afresh as per their lordships' final call on the issue. This
second substantive ground is taken as accepted for statistical purposes.

12. The assessee's third substantive grievance seeks to delete the consultancy
fee, security service charges and donation disallowances made to the
Administrative Staff College of India payments involving figures of Rs.
75,000/-, 1,14,000/- and 11,20,000/-; respectively. Learned lower authorities
hold that the assessee had not deducted TDS on the former two payments. Mr.
Goenka's only plea during the course of hearing is that the assessee had
deducted TDS involving the former two claims as on 04.04.2008 and
12.05.2008 i.e. in next financial year 2008-09 respectively. We therefore deem
it appropriate to restore the issue back to the Assessing Officer for fresh
necessary factual verification as per law.

13. Coming to the third issue of Administrative Staff College of India donation,
Mr. Bhardwaj invited our attention to assessee's bills dated 30.09.2004 and
21.10.2005 involving sums of Rs. 8.4 lakhs and 2.8 lakhs; respectively totalling
to Rs. 11.20 lakhs. His case is that these payments Page | 9 ITA Nos. 30, 31 &
32/GAU/2015 167/GAU/2016 242 & 243/GAU/2017 63 & 64/GAU/2018 AYs:
2007-08, 2008-09 & 2009-10 2012-13 2008-09 & 2009-10 2010-11 & 2011-12
Tripura State Electricity Corporation Ltd.

relate to earlier assessment years not allowable in the impugned assessment

year going by the mercantile system of accounting. We find no merit in the
Revenue's plea in principle. There is no denial of the fact about the assessee
having not claimed the impugned expenditure in the said earlier assessment
years. The very claim is being denied in the year of payment as well. Hon'ble
Gujarat High Court's judgement in PCIT vs. Adani Enterprise Limited (ITA
No.566 of 2016) holds that such an expenditure claim is a revenue neutral
instance in case the assessee concerned is assessed at the same rate both in
the years of accrual and in the year of payment. We therefore decline the
Revenue's foregoing technical argument.

14. Mr. Goenka at this stage submitted that the assessee's payee also enjoys
Section 197(1) exemption as per ADIT(Exemp)-2, Hyderabad's order dated
21.04.2005 and the relevant certificate to this effect which was placed before
the CIT(A) could not be factually verified. We therefore deem it appropriate to
send the instant issue back to the Assessing Officer for afresh factual
verification as per law within three effective opportunities of hearing.

15. The assessee's next substantive grievance is that the Assessing Officer as
well as the CIT(A) have erred in making Section 69A unexplained income
addition of Rs. 95,21,925/- of the unaccounted opening balance in its books.
Both the learned representatives state that the instant issue is very much
identical to the assessee's latter substantive grievance raised in AY 2007-08
sent back to the Assessing Officer. We follow suit herein and direct the
Assessing Officer to finalize the fresh factual reconciliation as per law. This
appeal ITA No. 31/GAU/2015 is allowed for statistical purposes.

16. We stay in AY 2008-09 and notice that the assessee's latter appeal ITA
242/GAU/2017 involving rectification proceedings challenges both the
authorities' action making Section 115JB MAT adjustment of its leave
encashment. Suffice to say, we have already restored the said main issue back
to the Assessing Officer in foregoing paragraphs. We therefore restore Page |
10 ITA Nos. 30, 31 & 32/GAU/2015 167/GAU/2016 242 & 243/GAU/2017 63 &
64/GAU/2018 AYs: 2007-08, 2008-09 & 2009-10 2012-13 2008-09 & 2009-10
2010-11 & 2011-12 Tripura State Electricity Corporation Ltd.

the instant lis itself back to the Assessing Officer with liberty to the assessee to
raise all factual/legal pleas. ITA No. 242/GAU/2017 is also allowed for statistical
purposes.

Assessment Year 2009-10 ITA No. 32/GAU/2015

17. The assessee's former two substantive grounds challenge both the lower
authorities' identical action disallowing/adding leave encashment u/s 43B(f) of
Rs. 3,10,30,538/- for lack of actual payment and alleged unreconciliation
difference of Rs. 30,20,101/- in various grants received from the state
government under different schemes; respectively are restored back to the
Assessing Officer in view of our discussion on the very issues in preceding
assessment years. These two substantive grounds are therefore accepted for
statistical purposes.

18. Next comes the third issue of allowability of the alleged penalty amount of
Rs. 1,11,37,453/- imposed under the Tripura Value Added Tax Act, 2004 read
with the Tripura Value Added Tax Rules, 2005. Both the lower authorities hold
the same to be not allowable being to a penalty imposed for non-compliance
of a fiscal statute as per Section 37(1) of the Act that the same is opposed to
public policy. We find from the perusal of the CIT(A)'s detailed discussion in
page 33 para 26.4 that the said issue of correctness of TVAT is yet to attain
finality since the taxpayers revision petition is stated to be pending. Nor there
is adjudication either in assessment order or the CIT(A)'s order as to whether
the amount in question represents a penalty per se or it is a mere penal action
for nomenclature purposes. We therefore restore the instant issue back to the
Assessing Officer for afresh adjudication as per law after taking into
consideration all these factual and legal aspects. This appeal ITA No.
32/GAU/2015 is allowed for statistical purposes.

Page | 11 ITA Nos. 30, 31 & 32/GAU/2015 167/GAU/2016 242 & 243/GAU/2017 63
& 64/GAU/2018 AYs: 2007-08, 2008-09 & 2009-10 2012-13 2008-09 & 2009-10
2010-11 & 2011-12 Tripura State Electricity Corporation Ltd.

19. Continuing with AY 2009-10 involving assessee's latter appeal ITA No.
243/GAU/2017, we notice that the sole issue raised herein of Section 115JB MAT
adjustment relating to leave encashment deserves to be restored back to the
Assessing Officer in view of our findings on the main issue. This appeal ITA
No. 243/GAU/2017 also follows suit therefore.

Assessment Year 2010-11 ITA No. 63/GAU/2018

20. The assessee's three substantive grounds raised in the instant appeal
challenging correctness of both the lower authorities' action making additions
of unexplained liabilities for expenditure and miscellaneous expenditure
involving sums of Rs. 6,88,50,090/- and 1,20,29,699/- as well as sundry
creditors' liability of Rs. 13,20,42,370/-; respectively deserve to be restored
back to the Assessing Officer since the same involve reconciliation of the
corresponding details involving various operational circles and divisions
throughout the Tripura state. Mr. Bhardwaj invited our attention to the
CIT(A)'s findings in para 8 page 5 that the corresponding grounds had not
been pressed during the lower appellate proceedings. We find that there is no
formal concession to this effect coming from the assessee side as approved by
its Board of Directors. We therefore deem it appropriate to restore all these
issues back to the Assessing Officer to finalize consequential factual
verification as per law within three effective opportunities of hearing. This
appeal ITA No. 63/GAU/2018 is accepted for statistical purposes.

Assessment Year 2011-12 ITA No. 64/GAU/2018

21. It transpires during the course of hearing that the assessee's four
substantive grounds involving disallowances/additions of miscellaneous
expenditure, excess liability in respect of sundry creditors, leave encashment
and sundry debtors, balance sheet of Rs. 1,37,02,519/-, 44,55,332/-, 1,30,91,074/-
and 8,82,316/-; respectively deserve to be Page | 12 ITA Nos. 30, 31 &
32/GAU/2015 167/GAU/2016 242 & 243/GAU/2017 63 & 64/GAU/2018 AYs:
2007-08, 2008-09 & 2009-10 2012-13 2008-09 & 2009-10 2010-11 & 2011-12
Tripura State Electricity Corporation Ltd.

restored back to the Assessing Officer in view of our foregoing discussion on

the very substantive grounds in earlier assessment years. We order
accordingly. This appeal ITA No. 64/GAU/2018 is accepted for statistical
purposes.

Assessment Year 2012-13 ITA No. 167/GAU/2016

22. The assessee's three substantive grounds raised in the instant appeal
challenge correctness of both the lower authorities' action disallowing non-
reversal of excess provision of interest, unpaid statutory liability in the nature
of statutory liabilities u/s 43B and depreciation disallowance of Rs.
18,84,00,000/-. There can hardly be any dispute that the assessee's former two
substantive grounds require reconciliation of the excess provision made in
earlier assessment years not reversed in the relevant previous year and
unpaid statutory liability (supra). We find that neither of the lower authority
has indicated any excessive components in assessee's earlier assessment
years' interest provision and also there is no material in the respective orders
as to what kind of liability had remained unpaid u/s 43B of the Act. We thus
direct the Assessing Officer to finalize consequential factual verification.

23. Coming to the assessee's depreciation claim disallowance of Rs.

18,84,00,000/-, both the lower authorities invoke Section 43(1) explanation 10
that the assessee had acquired the corresponding assets through government
grants subsidies and therefore, it is not entitled for the impugned relief. The
assessee on the other hand pleads that it had received total capital grant from
the Tripura State of Rs. 19,14,90,000/- in AY 2012- 13 for the purpose of
investment in capital asset. It emerges that there is no clarity on the issue
regarding the actual grants received/utilized for the purpose of cost of
acquisition of the assets in issue. We therefore deem it appropriate to restore
all these issues back to the Assessing Officer for a Page | 13 ITA Nos. 30, 31 &
32/GAU/2015 167/GAU/2016 242 & 243/GAU/2017 63 & 64/GAU/2018 AYs:
2007-08, 2008-09 & 2009-10 2012-13 2008-09 & 2009-10 2010-11 & 2011-12
Tripura State Electricity Corporation Ltd.

fresh factual verification as per law. ITA No. 167/GAU/2016 is allowed for
statistical purposes.

24. To sum up, ITA No. 30/GAU/2015 is partly allowed and ITA Nos. 31/GAU
/2015, 32/GAU/2015, 167/GAU/2016, 242/GAU/2017, 243/GAU/2017, 63/GAU/2018
& 64/GAU/2018 are allowed for statistical purposes. A copy of this order be
placed in the respective case files.

Order pronounced in accordance with Rule 34(3) of the ITAT Rules by putting
on notice board on 18.10.2019.
Sd/-
Sd/-
 (A.L. SAINI)
(S.S.GODARA)
ACCOUNTANT MEMBER JUDICIAL
MEMBER
Date:- 18.10.2019
Bidhan

Copy forwarded to:

1. Tripura State Electricity Corporation Ltd., Vidyut Bhawan, North

Banamalipur, Agartala, Tripura.

2. DCIT, Circle-Agartala, Agartala.

3. ITO, Ward-Udaipur, Agartala.

4. CIT(Appeals), Shillong.

5. CIT-

6. DR: ITAT- Gauhati Bench.

Sr. PS/H.O.O./D.D.O.

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