AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 81
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....7,33,40,420/- under the normal provisions of the Income Tax Act, 1961 ("the Act") and profit of Rs. 102,46,25,988/- under MAT provisions. The case of the assessee was selected for scrutiny under CASS and accordingly, notice under section 143(2) of the Act was issued to the assessee by the Learned Assessing Officer ("Ld. AO") on 29.09.2019. After considering the submissions of the assessee, the Ld. AO made addition of Rs. 121,92,80,037/- on account of interest from the deposits of unutilised LIS fund Rs. 2,38,48,596/- on account of provision for non-moving, obsolete and unserviceable material and Rs. 2,47,01,752/- on account of disallowance of belated payments of provident fund. The Ld. AO also rejected the claim of the assessee on account of TDS credit on interest receipt of Rs. 121,92,80,037/-. Accordingly, the Ld. AO completed the assessment under section 143(3) of the Act dated 31.01.2020, computing the loss of the assessee at Rs. 100,55,10,035/- under the normal provision of the Act. The Ld. AO also made all the three additions to the book profits of the assessee for the purpose of computing the profits under the provisions of MAT and computed the book profit under MAT provisio....
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....IT(A) erred and was perverse in not considering that the interest earned on the fixed deposits made out of the unutilized grants from State Government is a revenue receipt for the year under consideration and hence ought to be added to the total income of the assessee. 10. The Ld. CIT(A) ought to have appreciated that the conditions laid down by the State Government for giving grants did not impose any conditions with respect to interest and board decisions cannot override the provisions of the taxing statute. 11. The Ld. CIT(A) failed to consider the fact that the interest income earned by the Assessee on surplus kept in the form of fixed deposits out of the grants issued by the State Government for execution of lift irrigation scheme projects need to be brought to tax. All income is required to suffer tax at least once. 12. The Ld. CIT(A) failed to consider that the classification of the interest as that of a grant and not as income is an attempt to avoid payment of tax and is a colourable exercise. 13. Any other ground that may be urged at the time of hearing. sd/- (G.Kodanda Rama Reddy,IRS) Deputy Commissioner of Income Tax Circle....
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....ng on the orders of this Tribunal in assessee's own case for earlier years, which in turn relied on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Bokaro Steel Ltd. (236 ITR 315). It was contended that the facts of CIT Vs. Bokaro Steel Ltd (supra) are distinguishable as in that case, the interest was held to reduce the cost of construction. Accordingly, it was prayed that the order of the Ld. CIT(A) be set aside and that of the Ld. AO be restored. 8. Per contra, the Learned Authorized Representative ("Ld. AR") submitted that the issue is squarely covered in favour of the assessee by the orders of this Tribunal in assessee's own case for earlier years, namely Assessment Years 2008-09 to 2013-14 in ITA Nos.366 to 372/Hyd/2018 dated 13.06.2018 and for Assessment Year 2015-16 in ITA No.255/Hyd/2019 dated 13.07.2021. The Ld. AR further invited our attention to Note No.39 of the annual accounts of the assessee for the Financial Year 2017-18, wherein the assessee has disclosed the balance of LIS grants and interest accrued thereon. It was submitted that the interest accrued on LIS deposits has been credited to the Government account and treated as a liabil....
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....alia, observed that there is no dispute in the fact that the assessee earned an interest of Rs. 99,57,57,978/- from the deposits made with DISCOMS. However) the assessee instead of recognizing the same as revenue) credited it to (Deposits from GoAP for LIS account). Though the assessee did not offer the above interest to tax) it claimed the credit for the TDS made on the same) which is self-defeating/contradicting action on the part of the assessee. Further) to allow the claim of TDS the provisions of Section 199 are clearly applicable to the instant case. As per the provisions of Sec. 199 tax credit would be given only when the assessee offers corresponding income for tax purpose. However) in the present case) the assessee failed to offer the interest income on Deposits from GoAP for LIS account' . In view of the above observations, the AO held that the interest earned by the assessee on the deposits/ investments made from unutilized LIS funds is treated as income added back to the total income of the assessee. 5.2 The CIT(A) following the decision of the coordinate bench of this Tribunal in assessee's own case in ITA Nos. 366 to 372/Hyd/2018, order dated 13/06/20....
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....le to the Government. Therefore, the contention of the Ld. DR is found to be factually incorrect. As regards the argument of the Ld. DR that the earlier orders of the Tribunal relied on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Bokaro Steel Ltd. (supra), which is distinguishable, we are of the considered view that even independent of the said decision, the facts of the present case clearly demonstrate that the interest accrued on such deposits belongs to the Government and not to the assessee. Therefore, the same cannot be brought to tax in the hands of the assessee. Accordingly, we uphold the order of the Ld. CIT(A) deleting the addition of Rs. 121,92,80,037/-. 13. In the result, the appeal of the Revenue is dismissed. ITA NO. 1585/Hyd/2025 (Assessee's Appeal): 14. The assessee has raised the following grounds of appeal: 1. The CIT(A) erred in law and facts of the case in ignoring the fact that that your appellant has admitted the interest income on grants as exempted income, therefore the TDS credit cannot be restricted. 2. Your Appellant submits that the direction of the CIT(A) not to allow the credit of TDS on the amount....
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.... denied. 16. Per contra, the Ld. DR relied upon the order of the Ld. CIT(A) and submitted that as per the provisions of Rule 37BA of the Income-tax Rules, 1962 ("the Rules"), credit of TDS can be allowed only to the person who has offered the corresponding income to tax, and since the assessee has not offered such income, the TDS credit is not admissible. 17. We have considered the rival submission and perused the material available on record. There is no dispute about the fact that the interest income on which tax has been deducted at source has been accounted for in the books of account of the assessee. It is also not in dispute that the assessee has made the said deposits with the deductor, and the deductor has furnished the details of such deduction in its TDS return, reflecting the assessee as the deductee. Consequently, the TDS amount is duly appearing in Form 26AS of the assessee. In this factual background, we find merit in the contention of the Ld. AR that merely because the corresponding income is not taxable in the hands of the assessee, the TDS credit cannot be denied. In this regard, we have also gone through the provisions of Rule 37BA of the Rules, which is to ....
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....cation in accordance with the risk management strategy formulated by the Board from time to time." 18. On perusal of the above, it is evident that Rule 37BA of the Rules provides that credit for tax deducted at source shall be given to the person to whom payment has been made or credit has been given, on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority. In the present case, it is an admitted position that the deductor has furnished the requisite information to the income-tax authority, specifying the assessee as the deductee. Therefore, the primary condition for grant of TDS credit stands satisfied. Perusal of Rule 37BA of the Rules also contemplates a situation where the deductee furnishes a declaration to the deductor that the credit of TDS is to be given to another person. However, in the present case, no such declaration has been furnished by the assessee. Therefore, the said provision is not applicable to the facts of the case. The contention of the Ld. DR that TDS credit can be allowed only if the corresponding income is offered to tax is not borne out from the plain reading of Rule 37BA of the Rules. We do not fin....
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....regards the addition of Rs. 121,92,80,037/- on account of interest on deposits of unutilised LIS funds, we have already adjudicated this issue in the appeal of the Revenue in ITA No.1258/Hyd/2025 and deleted the said addition under the normal provisions of the Act. Consequently, the Ld. AO is directed to delete the same while computing the book profit under section 115JB of the Act. 22. As regards the addition of Rs. 2,47,01,752/- on account of disallowance of belated payment of provident fund, we have gone through Explanation 1 to section 115JB of the Act, which is to the following effect: Special provision for payment of tax by certain companies. 115JB. (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2012, is less than eighteen and one-half per cent of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be t....
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....nation 1.- For the purposes of this section, "book profit" means the profit as shown in the statement of profit and loss for the relevant previous year prepared under sub-section (2), as increased by- (a) the amount of income-tax paid or payable, and the provision therefor; or ci (b) the amounts carried to any reserves, by whatever name called, other than a reserve specified under section 33AC; or (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or (d) the amount by way of provision for losses of subsidiary companies; or (e) the amount or amounts of dividends paid or proposed ; or (f) the amount or amounts of expenditure relatable to any income to which section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply; or (fa) the amount or amounts of expenditure relatable to income, being share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86; or (fb) the amount or amounts of expenditure rel....
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....rves created or provisions made in a previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation or Explanation below the second proviso to section 115JA, as the case may be; or (ii) the amount of income to which any of the provisions of section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply, if any such amount is credited to the statement of profit and loss; or (iia) the amount of depreciation debited to the statement of profit and loss (excluding the depreciation on account of revaluation of assets); or (iib) the amount withdrawn from revaluation reserve and credited to the statement of profit and loss, to the extent it does not exceed the amount of depreciation on account of revaluation of assets referred to in clause (iia); or (iic) the amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no ....
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.... Bankruptcy Code, 2016 (31 of 2016). Explanation .- For the purposes of this clause,- (i) "Adjudicating Authority" shall have the meaning assigned to it in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016); (ii) "Tribunal" shall have the meaning assigned to it in clause (90) of section 2 of the Companies Act, 2013 (18 of 2013); (iii) a company shall be a subsidiary of another company, if such other company holds more than half in the nominal value of equity share capital of the company; (iv) "loss" shall not include depreciation; or (iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account in case of a company other than the company referred to in clause (iih). Explanation .- For the purposes of this clause,- (a) the loss shall not include depreciation; (b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil; or (iv) to (vi) [ *** ] (vii) the amount of profits of sick industrial company for the assessment year commencing on and from the ....
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.... assessee is allowed for statistical purposes. 25. Ground Nos. 4 and 5 of the assessee relate to levy of interest under section 234A of the Act. The Ld. AR submitted that the original return of income was filed by the assessee within the due date prescribed under section 139(1) of the Act. It was further submitted that though the assessee filed a revised return subsequently, the Ld. AO has levied interest under section 234A of the Act up to the date of filing of the revised return. It was contended that section 234A of the Act provides for levy of interest only in cases of delay in filing of the return of income under section 139(1) of the Act and since the original return was filed by the assessee within the prescribed time, no interest under section 234A of the Act can be levied. 26. Per contra, the Ld. DR submitted that the issue is factual in nature and requires verification at the end of the Ld. AO and therefore prayed that the matter may be set aside to the file of the Ld. AO. 27. We have heard the rival submissions and perused the material available on record. There is no dispute about the fact that the original return of income under section 139(1) of the Act has b....
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.... tax payable under section 140B.] Explanation 3 .- Where, in relation to an assessment year, an assessment is made for the first time under section 147^86[or section 153A], the assessment so made shall be regarded as a regular assessment for the purposes of this section. Explanation 4 .- ^87[ *** ] (2) The interest payable under sub-section (1) shall be reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section. (3) Where the return of income for any assessment year, required by a notice under section 14886[or section 153A] issued 88[after the determination of income under sub-section (1) of section 143 or] after the completion of an assessment under sub-section (3) of section 143 or section 144 or section 147, is furnished after the expiry of the time allowed under such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of 89[one] per cent for every month or part of a month comprised in the period commencing on the day immediately following the expiry of the time allowed as aforesaid, and,- (a) where the return is furnished after the expiry of the....
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....or levy of interest under section 234A does not stand satisfied. The subsequent filing of a revised return cannot trigger the levy of interest under section 234A of the Act. Accordingly, we find merit in the contention of the Ld. AR. The Ld. AO is directed to delete the interest charged under section 234A of the Act. Thus, Ground Nos. 4 and 5 of the assessee are allowed. 29. Ground No. 6 raised by the assessee is general in nature and does not require any separate adjudication. Accordingly, the same is dismissed. 30. In the result, the appeal filed by the assessee is allowed for statistical purposes. 31. To sum up, the appeal of the Revenue is dismissed and the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 30^th March, 2026. ============= Document 1 GOVERNMENT OF TELANGANA ENERGY (BUDGET.A2) DEPARTMENT Letter No.593/Budget.A2/2022-1 Dt :- 12.05.2022 From The Special Chief Secretary to Government, Energy Department, BRKR Bhavan, Telangana Secretariat, Hyderabad. To The Chairman & Managing Director, TSTRANSCO, Hyderabad. Sir, Sub :- Energy Department - Permission to allow TSTRANSCO to temporarily d....