Electricity undertaking takeover receipts and written down value computation upheld under income-tax treatment of consumers' contributions.

Amount received on takeover of an electricity undertaking was treated as part of the statutory price scheme for income-tax purposes, falling within the Explanation below section 32(1)(iii) and the expression "money payable" in section 41(2). The computation of written down value was also upheld where the assessing authority had excluded consumers' contributions only to the extent reflected in the assessment working, and the record did not support the Tribunal's alternative view. Both questions were answered against the assessee and the Revenue's computation was sustained.

---

---

Issues: (i) Whether the amount received under the proviso to section 7A(4) of the Indian Electricity Act, 1910, formed part of the price within the meaning of the Explanation below section 32(1)(iii) and the expression "money payable" in section 41(2) of the Income-tax Act, 1961. (ii) Whether the written down value was rightly reduced by the amount representing consumers' contributions while computing profits under section 41(2) of the Income-tax Act, 1961.

Issue (i): Whether the amount received under the proviso to section 7A(4) of the Indian Electricity Act, 1910, formed part of the price within the meaning of the Explanation below section 32(1)(iii) and the expression "money payable" in section 41(2) of the Income-tax Act, 1961.

Analysis: The first question was treated as concluded by earlier authority. The amount received on takeover of the electricity undertaking fell within the statutory scheme governing the computation of the amount payable and its treatment for income-tax purposes under the cited provisions.

Conclusion: The question was answered in favour of the Revenue.

Issue (ii): Whether the written down value was rightly reduced by the amount representing consumers' contributions while computing profits under section 41(2) of the Income-tax Act, 1961.

Analysis: The record showed that the assessing authority computed both actual cost and written down value without allowing for consumers' contributions and thereafter reduced those figures to the extent of the contribution-funded items. The Tribunal's view that the new definition of "actual cost" might have been applied was unsupported by the record, and the computation adopted was upheld.

Conclusion: The reduction in written down value was upheld and the question was answered in the affirmative against the assessee.

Final Conclusion: Both referred questions were decided against the assessee, with the computation made by the revenue authorities being sustained in full.

Ratio Decidendi: Where the record shows that acquisition cost and written down value were computed by excluding consumers' contributions only to the extent reflected in the assessment working, and no material supports an alternative computation, the Tribunal's finding on section 41(2) computation will not be disturbed.

---