ITAT Delhi: Assessee wins electricity duty appeal, Revenue loses TDS appeal

The ITAT Delhi allowed the Assessee's appeal regarding the disallowance of electricity duty under Section 43B and dismissed the Revenue's appeal concerning the disallowance of TDS on wheeling/transmission charges under Section 40(a)(ia) for Assessment Year 2014-15.

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Issues:
1. Disallowance of Electricity Duty under Section 43B of the Income Tax Act.
2. Disallowance of expenses on account of failure to deduct TDS on wheeling/transmission charges under Section 40(a)(ia) of the Income Tax Act.

Issue 1: Disallowance of Electricity Duty under Section 43B:
The case involved an appeal against the order of the Commissioner of Income Tax (A), Meerut for Assessment Year 2014-15. The Assessee, a subsidiary of U. P. Power Corporation Ltd., declared a loss in its return of income. The Assessing Officer disallowed an amount of Rs. 2,08,76,00,000 as electricity duty unpaid before filing the return. The Assessee contended that electricity duty is collected on behalf of the government and is not covered under Section 43B. The CIT(A) upheld the AO's order. The Assessee relied on a Kerala High Court decision and a previous ITAT ruling in its favor for A.Y. 2015-16. The ITAT observed that the Assessee collected the duty as an agent of the government and allowed the appeal, citing the principle laid down in the Kerala High Court decision. The Tribunal emphasized the rule of consistency and set aside the CIT(A)'s order, allowing the Assessee's appeal.

Issue 2: Disallowance of TDS on Wheeling/Transmission Charges under Section 40(a)(ia):
The AO disallowed expenses of Rs. 9,86,28,93,000 for failure to deduct TDS on wheeling/transmission charges under Section 40(a)(ia). The CIT(A) deleted the addition, stating that TDS provisions do not apply to these charges. The Revenue appealed against the CIT(A)'s decision. The Tribunal noted that the CIT(A) had correctly interpreted that TDS provisions are not applicable to wheeling/transmission charges. The Revenue failed to point out any error in the CIT(A)'s findings. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the disallowance.

In conclusion, the ITAT Delhi allowed the Assessee's appeal regarding the disallowance of electricity duty under Section 43B and dismissed the Revenue's appeal concerning the disallowance of TDS on wheeling/transmission charges under Section 40(a)(ia) for Assessment Year 2014-15.

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