Commissioner Of Income Taxiii, ... vs Vbc Ferro Alloys Limited, ...
2022 Latest Caselaw 4806 Tel

Citation : 2022 Latest Caselaw 4806 Tel
Judgement Date : 21 September, 2022

Telangana High Court

Commissioner Of Income Taxiii, ... vs Vbc Ferro Alloys Limited, ... on 21 September, 2022

Bench: Ujjal Bhuyan, C.V. Bhaskar Reddy

          THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN
                                             AND
             THE HON'BLE SRI JUSTICE C.V.BHASKAR REDDY
                                  I.T.T.A.No. 64 of 2004
JUDGMENT: (Per the Hon'ble the Chief Justice Ujjal Bhuyan)

        Heard Mr. J.V.Prasad, learned Standing Counsel for the

Income Tax Department appearing for the appellant and

Mr. Challa Gunaranjan, learned counsel for the respondent-

assessee.

2. This appeal has been preferred by the revenue as the

appellant under Section 260-A of the Income Tax Act, 1961 (briefly

'the Act' hereinafter) assailing the legality and validity of the order

dated 30.05.2002 passed by the Income Tax Appellate Tribunal,

Hyderabad Bench 'A', Hyderabad (Tribunal) in I.T.A.

No. 643/Hyd/2001 for the assessment year 1996-97.

3. Though the appeal was admitted on 01.04.2004, substantial

questions of law were not framed as required under Section 260-A

of the Act. However, from the memo of appeal, we find that the

following two questions have been proposed as substantial ::2::

questions of law:

(A) In the facts and circumstances of the case, whether the Appellate Tribunal is justified in holding that the additional charges and interest payable to the A.P.State Electricity Board for the delayed payment of consumption charges does not fall within the purview of fee and hence it is deductable as expenditure notwithstanding non-remittance of the same before the date stipulated U/s.43B of the I.T.Act ?

(B) Whether the Appellate Tribunal is justified in holding that the assessee is entitled to grant of deduction of the expenditure in spite of the same not having been recorded in the books of accounts much less claimed as a deduction in the return under the I.T.Act ?

4. As per the first question, decision of the Tribunal that

additional charges and interest paid to the Andhra Pradesh State

Electricity Board for delayed payment of consumption charges

does not fall within the purview of fee and hence, it is deductible as

expenditure, is questioned. It is questioned on the ground that it ::3::

is covered under Section 43B of the Act. Since there was non-

payment within the stipulated period, it was not a deductable item.

5. On the other hand, second question pertains to entitlement

of the assessee to deduction of the expenditure incurred in spite of

the same not being recorded in the books of account as well as not

claimed as a deduction in the income tax return filed under the Act.

The second question has been raised on the ground that the said

deduction was not so claimed by the assessee either in the income

tax return filed or during the assessment proceedings before the

assessing officer.

6. It is not necessary for us to traverse through the orders

passed by the revenue authorities inasmuch as both the questions

are covered by decisions of the Supreme Court as well as of this

Court.

7. Insofar the first question is concerned, the same is squarely

covered by a decision of this Court reported in CIT v. Andhra ::4::

Ferro Alloys (P) Ltd1. In the said decision, a Division Bench of

this Court had examined the contours of Section 43B of the Act

and thereafter, held as follows:

Section 43B of the Act does not specifically mention about the electricity charges. The proviso to the Section says that an assessee has to pay the actual liability on or before the due date applicable in this case for furnishing the return of income. In the instant case, the assessee challenging the balance electricity charges of Rs.52,23,790/-, filed a writ petition before this Court against the APSEB and this Court granted interim stay and the writ petition is pending. As such, the assessee has shown the said amount as liability. In this view of the matter, we are of the considered opinion that the assessee has to pay the disputed electricity charges of Rs.52,23,790/- to the APSEB as it obtained stay from this Court, and as such, the provisions of Section 43B of the Act would not attract to such unpaid electricity charges. Further, non-payment of such disputed electricity charges to the APSEB cannot be termed as 'fees' and that the Revenue has to give deduction to the said amount.

2012 (349) ITR 255 ::5::

The Tribunal while allowing the Appeal held that the electricity charges partake the nature of statutory liability and accordingly will have to be allowed as deduction irrespective of whether or not the same has been paid and notwithstanding that the assessee has disputed any liability to pay any part of such charges. Section 43B of the Act does not speak about the electricity charges. Nowhere it is mentioned in the Section or proviso to it that unpaid electricity charges are not deductable. The Revenue cannot interpret the provisions of Section 43B of the Act in its favour, since the provisions of Section do not incorporate the electricity charges. Therefore, we are of the considered opinion that such electricity charges are in the nature of statutory liability and the Revenue has to allow them as deduction irrespective of whether or not the same has been paid and notwithstanding that the assessee has disputed any liability to pay any part of such charges."

8. Regarding the second question, the issue was settled by the

Supreme Court in National Thermal Power Company Limited

v. Commissioner of Income Tax2, which was explained by the

Supreme Court in Goetze (India) Ltd. V. Commissioner of

(1997) 7 SCC 489 = 1998 (229) ITR 383 ::6::

Income Tax3. This issue cropped up again before the Supreme

Court in Wipro Finance Limited v. CIT4 wherein it has been

clarified that there is no bar for an assessee to set up a fresh claim

before the Tribunal though such a bar may operate against the

revenue.

9. In view of the above, both the questions proposed as

substantial questions of law are answered against the revenue and in