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2024 (7) TMI 590

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....tablished in the year 1976, which is operating a largest hydro power plant in North Eastern Region. The Principal Commissioner of Income Tax, Shillong observed that Mercantile System had been followed by the Company, as per which, transactions are recorded, when they arise and the incomes are recorded in the books of the accounts, when it is earned, irrespective of the fact that it is received or accrued and therefore, Hybrid System of accounting, which is a mixture of Cash Basis and the Accrual Basis of Accounting, cannot be adopted by the Company as per the provisions of Section 145(1) of the Income Tax Act, 1961 (in short 'the Act, 1961'). 3.1. The Principal Commissioner of Income Tax, Shillong set aside the order of assessment under Section 263 of the Act, 1961 on 12.12.2018 for the year 2014-2015 for re-computing the income of the Company, as per which, the income was reassessed vide order dated 31.01.2019 after making an addition of Rs. 84,82,34.839/- and assessed under Section 154 of the Act, 1961 as Rs. 383,77,29,947/-. Aggrieved by the same, the Company filed an appeal before the Commissioner of Income Tax (A), Shillong, in which the order of re-assessment was upheld by a....

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....for interest on cash basis. 6. Learned counsel for the Company contended that there is no substantial question of law raised in this appeal, as the Issue No.3 pertains to a question of fact, which had already been decided by the Punjab and Haryana High Court in the case of The Commissioner of Income Tax, Hisar Vs. Dakshin Haryana Bijli Vitran Nigam Ltd., Hisar [ITA-209-2014 (O&M)] decided on 01.10.2014, by holding that as and when the assessee receives payment of surcharge, it would be obliged to pay tax on such amount and dismissed the appeal of the revenue and the Supreme Court also confirmed the order dated 01.10.2014 in Petition for Special Leave to Appeal (C) No.18187 of 2015 dated 17.07.2019. The relevant paragraphs of the judgment of the Punjab and Haryana High Court are extracted below: "We have duly considered the arguments but are unable to accept the contentions advanced by counsel for the appellant. Admittedly, Rs. 2,25,18,23,535/- was added by the assessing officer as reflecting levy of surcharge on delayed payment of bills. Admittedly, this amount has neither been paid nor recovered by the assessee. Admittedly, the surcharge is a disputable item and may at any ti....

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.... there is a corresponding liability of the other party to pass on the benefits of duty free import to the assessee even without any imports having been made; and the probability or improbability of realisation of the benefits by the Assessee considered from a realistic and practical point of view (the assessee may not have made imports), it is quite clear that in fact no real income but only hypothetical income had accrued to the assessee and Section 28(iv) of the Act would be inapplicable to the facts and circumstances of the case. Essentially, the Assessing Officer is required to be pragmatic and not pedantic. 28. Secondly, as noted by the Tribunal, a consistent view has been taken in favour of the assessee on the questions raised, starting with the assessment year 1992-93, that the benefits under the advance licences or under the duty entitlement pass book do not represent the real income of the assessee. Consequently, there is no reason for us to take a different view unless there are very convincing reasons, none of which have been pointed out by the learned counsel for the Revenue. 29. In Radhasoami Satsang Saomi Bagh v. Commissioner of Income Tax, (1992) 193 ITR 321 (SC)....

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....s, the Revenue accepted the order of the Tribunal in favour of the assessee and did not pursue the matter any further but in respect of some assessment years the matter was taken up in appeal before the Bombay High Court but without any success. That being so, the Revenue cannot be allowed to flip-flop on the issue and it ought let the matter rest rather than spend the tax payers' money in pursuing litigation for the sake of it. 32. Thirdly, the real question concerning us is the year in which the assessee is required to pay tax. There is no dispute that in the subsequent accounting year, the assessee did make imports and did derive benefits under the advance licence and the duty entitlement pass book and paid tax thereon. Therefore, it is not as if the Revenue has been deprived of any tax. We are told that the rate of tax remained the same in the present assessment year as well as in the subsequent assessment year. Therefore, the dispute raised by the Revenue is entirely academic or at best may have a minor tax effect. There was, therefore, no need for the Revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also tha....

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....n so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including,- (i) an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment; or (ii) an order modifying the order under section 92CA; or (iii) an order cancelling the order under section 92CA and directing a fresh order under the said section]. Explanation 1.- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988] by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer [or the Transfer Pric....

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....ub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation - In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." "143 (3) - On the day specified in the notice issued under sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment." 11. Moreover, learned co....