TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1821
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..../250/2024-25/1075317616(1) 31.03.2025 C.O. No. 31/VIZ/2025 ITA No. 340/VIZ/2025 (A.Y. 2018-19) ITBA/NFAC/S/250/2024-25/1075269651(1) 30.03.2025 C.O. No. 32/VIZ/2025 ITA No. 341/VIZ/2025 (A.Y. 2020-21) ITBA/NFAC/S/250/2024-25/1075269820(1) 30.03.2025 C.O. No. 33/VIZ/2025 ITA No. 342/VIZ/2025 (A.Y. 2021-22) ITBA/NFAC/S/250/2024-25/1075271355(1) 30.03.2025 C.O. No. 34/VIZ/2025 ITA No. 343/VIZ/2025 (A.Y. 2022-23) ITBA/NFAC/S/250/2024-25/1075270230(1) 30.03.2025 C.O. No. 35/VIZ/2025 2. First, we proceed to adjudicate the appeals of the revenue. Since the grounds raised by the Revenue for all these appeals are identical in nature, these appeals are clubbed and a consolidated order being passed. We now take up the appeal in ITA No. 335/VIZ/2025 for the A. Y.2015-16 as a lead appeal. ITA NO. 335/VIZ/2025 (A.Y. 2015-16) - Revenue Appeal. 3. Brief facts of the case are that the assessee company is engaged in the business of transmission of electrical energy and is also executing projects under Lift Irrigation Schemes (LIS) at various places in the erstwhile state of Andhra Pradesh. The Government of Andhra P....
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....nsidering the submissions and facts of the case, the Ld.AO observed that the submissions of the assessee are not tenable as the assessee is claiming TDS credit on the interest accrued on deposits - Government of Andhra Pradesh's LIS on one hand and on the other hand, the assessee has not offered the interest income of Rs. 94,66,04,854/- which is related to the TDS credit. The Ld.AO further observed that since the assessee is utilizing the TDS credit on interest accrued, the assessee has to offer corresponding receipts to tax. The interest of Rs. 94,66,04,854/- is nothing but the interest earned by the assessee on the deposits / investments made with the DISCOMS and the assessee instead of recognizing the same as its revenue by crediting it to profit and loss account, credited it to Government of Andhra Pradesh (in short GoAP) LIS Deposits accounts and shown it as liability is not in order. The Ld.AO observed that the assessee has even failed to prove the nexus between the untilized LIS funds and the interest earned on the fixed deposits. The Ld.AO further observed that on completion of the project, the assessee does not refund the amount to GoAP, if the estimated cost is more t....
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....d and an amount of Rs. 20.30 Crores incurred expenditure for restoring the lines which was damaged due to HUDHUD cyclone. Further, assessee submitted that Andhra Pradesh Electricity Regulatory Commission (APERC) in November 2014 gave permission to the assessee to utilize the contingency reserve fund of the company to meet the cyclone expenditure. Considering the submissions of the assessee, Ld. AO observing that assessee company charged Rs 20.30 Crores to Profit & Loss Account and accordingly, reduced its profit to that extent. Ld. AO disallowed Rs. 20,30,63,000/- and added back to the total income of assessee. 6. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) allowed the appeal of the assessee by following the decision of the jurisdictional Tribunal in the assessee's own case. 7. Aggrieved by the order of the Ld. CIT(A), the revenue is in appeal before the Tribunal by raising the following grounds of appeal: "1. The order of the Ld. CIT(A), NFAC, DELHI is illegal, perverse, irregular, and improper and the same is liable to be set-aside. 2. The Ld CIT(A), NFAC, DELHI ought to have s....
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....Tribunal in the assessee's own case vide order dated 25.02.2022. The Ld. AR further submitted before us a Reference to Relevant Paras i.e., Para No. 8 of the Tribunal order dated 25.02.2022 and prayed that considering the similarity of the issues, the ground raised by the revenue in the present appeal may be dismissed. 10. Per contra, The Ld. Departmental Representative [DR] heavily relied on the order of the Ld. AO and supported the decision taken by Ld. AO. However, the Ld. DR did not controvert to the submission of the Ld. AR that the issue involved in the present appeal is identical to that of the issue adjudicated by the Tribunal and therefore the same decision of the Tribunal may be applied to the grounds involved in the present case. 11. We have heard both the sides perused the material available on record as well as the orders of the Ld. Revenue Authorities. We have perused the order of this Tribunal in the assessee's own case vide order dated 25.02.2022 wherein identical issue was raised by the assessee and the Tribunal has adjudicated the same. This Bench of the Tribunal has already dealt with this issue and decided the issue in favour of the assessee in the ass....
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....ature of capital grants and they are deposited in a separate bank account and the State Government directed the assessee company to utilize any interest earned/accrued on such deposit in un-utilised grant funds only towards implementation of LIS projects and by various communications, the Government has directed to render account for such interest and to refund unused interest amount to the Government. AO did not agree and held that interest has accrued to assessee- company and brought the amounts to tax. 3. Before the Ld. CIT(A) it was submitted that the funds are 'tagged grants' and the interest accrued/ earned on the amount of such grants can only be used for LIS projects and assessee cannot use at its discretion. It has relied on various communications from the Government. The facts and contentions are listed by the CIT(A) in para 6 as under: * The Capital Grant amounts have to be treated as Tagged Grants and an obligation is attached to it to utilise the amounts only for the implementation of LIS Projects. * The LIS Grant amount has to be deposited in a separate Bank Account and maintained separately for rendering account to the State Governm....
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....t is to be treated as part of the grant. Further, the Assessing Officer brought out that the assessee never refunded any excess grant or interest on deposits to the Government. The evidence filed by the assessee to claim so was agreed to/permitted by the Government was letter issued only at the specific request of the assessee. The assessee has claimed credit for the TDS on the interest. 7.1 The assessee contends that the assessee right from the beginning i.e, from Asst. Year 2008-09 onwards treated the interest earned as part of the grant and accounted for accordingly. The same was discussed in the 74th Board Meeting of the Company on 28-06-2008 while finalizing the accounts for Asst. Year 2008-09. The same is represented by the Directors representing GoAP also. The funds are given as Grants for Lift Irrigation works and are capital grants in nature. The assessee relied on the ratio laid down in the following cases to contend that interest earned on deposits made from "Specific or Tagged Grants" can not be taxed as revenue receipt. 1. Tax Appeal No.855 of 2013 in the case of Commissioner of Income Tax-II V/s. SAR Infracon P Ltd. 2. Gujarat Municipal Fina....
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....the specific projects (electrical works) to be executed by the assessee and the same funds are separately placed in fixed deposits by the assessee. The above cannot be utilized by the assessee for any other purpose. 7.3. Considering the factual position emerging from the records as above, it is seen that the amounts given by the Government are grants for specific purpose and interest earned thereon is inextricably connected to such grants. The facts of the case are similar to the various cases relied on by the assessee as at para-6.1 and the ratio laid down in case of M/s Bokaro Steel 236 ITR 315 (SC) is squarely applicable. Accordingly, it is held that the interest income cannot be assessed as 'business income' of the assessee and would go to increase the grants received from the GoAP. In view of the above, the grounds raised as regards to this issue are allowed". 4. Ld.DR, reiterated the contentions of AO, whereas Ld. Counsel for assessee referred to the detailed submissions made before the CIT(A). 5. After considering the rival contentions, we do not find any merit in Revenue grounds. As can be seen, the funds are clearly allocated for a specif....
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.... the cyclone expenditure claimed by the assessee, the Ld. DR submitted that the assessee has incurred expenditure in consequence to HUDHUD cyclone amounting to Rs. 20.30 crores which was considered as Extraordinary Item and charged to the Profit & Loss Account during the Financial Year 2014-15. He referred to the order of the Ld. AO wherein the extract of C & AG comments regarding the extraordinary debits stating that the amount of expenditure incurred for the damage and losses to transmission network caused by HUDHUD cyclone in the month of October 2014 shall be utilised from the contingency reserve and cannot be debited to the Profit & Loss Account. He further submitted that the APERC also during November, 2014 gave permission to utilise contingency reserve funds of the Company to meet the cyclone expenditure. He therefore vehemently argued that this extraordinary expenditure cannot be debited to the Profit & Loss Account and should be adjusted against the contingency reserves. He therefore pleaded that order of the Ld. AO be upheld. 14. Per contra, Ld.AR submitted that Ld. AO erred in disallowing the extraordinary expenditure since the amount should have been made from the co....