TaxTMI 
TaxTMI 
2020 (2) TMI 1483
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....SL) a wholly owned subsidiary of Reliance Infrastructure Ltd. (RInfra) is incorporated under the Companies Act, 1956 and having its registered office at 408, Old Village, Eksar Devidas Lane, Off SVP Road, Borivali (West), Mumbai - 400 103. 2. RInfra was originally in the business of distribution of electricity and has thereafter gone for vertical backward integration by setting up its own generation unit. The applicant-company was incorporated on September 18, 2008 with the object to carry on all or any of the business of production, manufacture, generation, conversion, transformation, processing, storing, supply, distribution of electricity, all forms of energy and any such products and by-products, etc. RInfra is a licensee for carrying ....
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.... deficit creates a situation where along with the current financial year annual revenue requirement ; the required tariff increase sometimes is very high. MERC often disregards the actual and factual position of the annual revenue requirements in order not to burden the consumers with high increase in the tariff. The amount which MERC allows but does not consider to be included in the tariff determination is considered as "Regulatory asset", i. e., deferred recovery in the revenue gap. The right to recover the said amount accrues only when MERC approves the same. This amount is charged and recovered from consumers in terms of the MERC tariff order permitting to recover in a given time frame subsequently. 4. RInfra submits the annual revenu....
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....n (GTD) undertaking to AEML. The amount representing RAUA (including any carrying cost, taxes or other ancillary/incidental amounts) will post transfer of the GTD undertaking by RInfra to AEML, continue to belong to RInfra but, will be recovered by AEML and paid over/passed on to RInfra to whom the amounts would belong as the said amount is actually incurred by RInfra in the past and disallowed by Maharashtra Electricity Regulatory Commission (MERC). 7. RInfra's various appeals are pending before the Appellate Tribunal for Electricity and the Supreme Court of India in respect of disallowances made by MERC on various issues/the revenue requirement filed by RInfra for tariff determination. The issues pending adjudication once approved fu....
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....amount received by AEML ought to be paid over/passed on to RInfra as per the agreement entered into by AEML and RInfra. 10. As AEML is only acting as a trustee of RInfra, for collection of its income which will be of RInfra as it has the right to recover the amount collected by AEML from its consumers. Alternatively, if RAUA recovered by AEML is treated as income in the hands of AEML, then the amount of recovered RAUA passed on/paid to RInfra ought to be allowed as business expenditure incurred by AEML for its business of distribution of electricity. Submissions of the Revenue 11. The Revenue in its report dated July 10, 2019 at para 2.5.4, has observed as under : "In the instant case of issue covered under RAUA is with respect to the ....
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....he affirmative and consequently the second does not arise. 13. It is further mentioned that the payments received by RInfra will not be covered by the deduction under section 80-IA in the hands of RInfra and therefore diversion of income to RInfra is in the interests of the Revenue. It is further observed that since RInfra has performed all functions, owned all assets and incurred all risks in respect of RAUA during the relevant period of functioning of RInfra and AEML had no role to play, the profit should also be attributed to RInfra. Decision 14. In determining whether there has been diversion of income by over- riding title, it is the nature of the obligation which is the decisive fact. There is a difference between an amount which a....