TaxTMI 
TaxTMI 
2022 (11) TMI 872
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....overnment is not to be disallowed under section 43B of Income Tax Act, 1961. 2. That a plain reading of section 43B implies that any duty or cess payable but not actually paid is to be disallowed and no exception is made in this provision when such payment is to be made as agent to the principal. 3. That, in the alternative, such duty or collected by the assessee but not paid to State Government is chargeable to tax as the assessee becomes beneficiary of such amount." 3. Brief facts of the case are that the assessee is a State-owned limited company engaged in the business of power supply. NIL income was declared in the return of income filed on 12.03.2014. Case selected for scrutiny through CASS followed by serving of notices u/s. 143(2) & 142(1) of the Act. After considering the submissions by the assessee on the information called for u/s. 142(1) of the Act, certain disallowances/additions were made which included disallowance u/s. 43B of the Act at Rs. 44 Cr. for non-payment of the said sum on or before the due date of filing return of income, disallowance of interest paid on consumer security deposit of Rs. 16.62 Cr for non-deduction of tax at source, thus,....
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.... observing as follows: "Decision as regards addition of Rs. 44,00,00,000 under Section 43B on account of non-payment of Electricity Duty Payable to the Government, on or before the due date of filing the ITR. The AO added back the rounded amount of Rs. 44,00,00,000/- on account of outstanding electricity duty payable to the government by invoking Section 43(B). The amount is reflected in item 2.8 of the Notes on Account of the 9th Annual Report and Accounts 2011-12. However, the actual amount, as per submission of the detailed working by the appellant before the AO bearing no. APDCL/CGM (F&A)/INCOME TAX/2011-12/38/25 dated 27/02/2015 was Rs. 43,99,81,071/-. The workings were as under: Particulars Amount (in Rs.) Electricity Duty Payable 39,01,45,428 Add:- Addition during the year 34,44,06,102 Total:- 73,45.51.530 Less: Electricity duty adjusted 29,45,70,459 Total Electricity Duty Payable as per audited accounts (**) 43,99,81,071 (**) (Electricity Duty collected during the year adjusted and transferred to Pension Trust as per GOA notification) Be that as it may, I have not found any adverse comments of the C....
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....he maintained those accounts on mercantile business. The question that falls for determination by us is whether Section 43B applies to the electricity duty collected by the assessee company from the consumers of electricity in terms of provisions of the Bengal Electricity Act, 1935. On a reading of the provisions of the Bengal Electricity Duty Act, it is quite clear that the primary liability to pay electricity duty to the State Government is that of the consumers of energy. The licensee/assessee merely acts as a collecting agent for the State Government. The licensee is obliged to collect the electricity duty from the consumers and pay the same to the State Government. The licensee merely acts as a conduit. The electricity duty is not chargeable to the licensee. If the intention of the legislature was to impose primary and absolute liability for electricity duty on the licensee, the proviso to Section 5(1) of the Act would not have been there. The said proviso exempts the licensee from paying any duty in respect of any energy supplied by the licensee for which it has been unable to recover its dues. In our view, the first charge created by Section 5(1) of the Act on the a....
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....s. Devatha Chandraiah (1985) 154 ITR 893. Though this said case deals with sales tax, the principle laid down in that case supports our view. The mischief that Section 43B of the Income Tax Act intended to present, is taken care of by the provisions of the Bengal Electricity Duty Act itself." 8. The above finding of ld. CIT(A) placing reliance on the decision of Hon'ble Jurisdictional High Court in the case of CESC Ltd. (supra) stands uncontroverted by the ld. D/R and we, therefore, respectfully following the ratio laid down by the Hon'ble Court, are of the considered view that since the alleged amount is not a sum payable by the assessee as a primary liability by way of tax, duty, cess or fee but the said amount i.e. the electricity duty is collected by the assessee company from the consumers to be passed on to the State Govt. and the said amount is not claimed as an expenditure in the profit and loss account. We, therefore, fail to find any infirmity in the finding of the ld. CIT(A) and, therefore, dismiss ground nos. 1, 2 & 3 raised by the Revenue. 9. Now, we take up the Cross Objection filed by the assessee. As far as ground no. 2 is concerned, the same has been f....
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.... Ground no. 2 raised by the assessee in the Cross Objection relates to the disallowance u/s. 40(a)(ia) of the Act at Rs. 16.62 Cr. confirmed by the ld. CIT(A) which was made by the ld. AO for non-deduction of tax at source on the said amount. We notice that the assessee is a State-owned power distribution company. Undisputedly it has around 20 lakh customers spread across the vast area including Guwahati and adjoining areas. Security deposits are taken from the customers at the time of giving electricity connection and interest on such deposits is paid by the company. During the year expenditure of Rs. 16.62 Cr. is claimed on account of interest paid on such consumer security deposits. ld. AO while examining the records found these transactions and noticed that the said amount can call for a disallowance u/s. 40(a)(ia) of the Act if tax deductible on such interest payment is not deducted by the assessee. Before the ld. AO such details could not be filed and this resulted in the said the disallowance. Before the ld. CIT(A) the assessee filed certain details showing that out of the said the disallowance a sum of Rs. 48,60,850/- was eligible for deduction of tax at source and a list s....