2023 (1) TMI 821

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.... Limited (MSEDCL). 3. I note that the assessee is a firm engaged in the business of hotel and lodging. The assessee conducts its business under the name and style as "M/s. Hotel Rajdhani". The assessee filed its return of income declaring a total income of Rs.48,500/- and the CPC, Bangalore determined the same at Rs.3,91,250/- inter alia making addition on account of cash payment exceeding Rs.10,000/- u/s. 40A(3) of the Act. The CIT(A) confirmed the same. 4. The ld. AR, Shri Mahavir Atal submits that the MSEDCL is a Government authority and is covered by the exception under Rule 6DD(b) of the Income Tax Rules. In support of its contention, he drew my attention to the profile of MSEDCL at pages 1 and 2 of the paper book. He submits that th....

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....s. 40A(3) of the Act are not attracted to the cash payment made to MSEDCL. The relevant portion of the said order of Tribunal is reproduced here-in-below for ready reference : "6. Heard both the parties and perused the material available on record. We note that the bill dated 17-02-2018 issued by the SNDL to the assessee at page 24 of the paper book, wherein, it is reflected that it is a MSEDCL's franchisee. Further, the receipt dated 26-02-2018 issued by SNDL is at page 25 of the paper book, on perusal of the same it is reflected that SNDL, Nagpur is a distribution franchisee of MSEDCL. On an examination of both the bill and receipt placed on record by the assessee clearly shows that SNDL is a franchisee for distribution of electricity o....

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.... maintaining the wire business for supply of such power. 8. The MSEDCL entered into an agreement with Spanco, in turn the Spanco forms Spanco Nagpur Discon Limited (SNDL) to look after power distribution in Nagpur city. MSEDCL signed an agreement between Spanco and SNDL. The said agreement entered by the MSEDCL is to supply reliable power to Nagpur city and Spanco Limited is answerable for its obligations for MSEDCL. Therefore, it is clear from the profile of MSEDCL and its agreement with SNDL as a franchise supplying power to the end consumers in the Nagpur city. Further, as already discussed above, the receipt raised by the SNDL at page 25 of the paper book clearly discloses that SNDL as franchise for MSEDCL for distribution of electric....

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....se of carrying on commercial activities. The State, is itself envisaged as having the right to carry on trade or business as mentioned in Article 19(1)(g) of the Constitution of India. The Hon'ble Supreme Court further observed that the circumstance that the Board under the Electricity Supply Act is required to carry on some activities of the nature of trade or commerce does not, therefore, give any indication that the Board must be excluded from the scope of the word "State" as used in Article 12. 10. Now, let us refer to the decision of Hon'ble High Court of Rajasthan at Jaipur Bench in the case of CIT Vs. Kalyan Prasad Gupta (supra) as relied on by the ld. AR, on careful reading of the same, we find that the Government of Rajasthan has....