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Facts
The assessee, engaged in electricity generation and transmission, filed its return declaring total income under Section 115JB. The assessment order made additions and disallowances. The CIT(A) partly allowed the appeal, but the AO, while giving effect, did not provide proper relief regarding prior period income and made additions on account of dividend income.
Held
The Tribunal held that the issue of disallowance of prior period expenses should be decided de novo. Relying on the decision of the Gujarat High Court in CIT vs. Adani Enterprises Ltd., the Tribunal directed the AO to allow the prior period expenditure in consonance with the High Court's view.
Key Issues
Whether prior period income should be allowed in computing book profits under Section 115JB, and whether the AO correctly gave effect to the CIT(A)'s order regarding such disallowances.
Sections Cited
115JB, 143(1), 143(3), 10(34)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & MS. SUCHITRA KAMBLE
(Assessment Year: 2012-13) Gujarat Urja Vikas Nigam Ltd., Vs. Deputy Commissioner of Sardar Patel Vidyut Bhavan, Income Tax, Race Course, Circle-1(1)(1), Vadodara-390007 Vadodara [PAN No.AACCG2861L] (Appellant) .. (Respondent) Appellant by : Shri Manish J Shah & Shri Jimi Patel, A.Rs. Respondent by : Shri B. P. Srivastava, Sr. D.R. Date of Hearing 13.03.2025 Date of Pronouncement 02.04.2025 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER:
The appeal filed by the assessee is against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi on 21.04.2023 for A.Y. 2012-13.
The grounds of appeal raised by the assessee are as under:
“1.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the action of the Assessing Officer in not allowing any relief whatsoever in respect of the Prior Period Income amounting to Rs.61,97,000/- while computing the Book Profits under section 115JB of the I T Act, 1961. The learned Commissioner of Income Tax (Appeals) ought to have appreciated additions made to the Book Profits under section 115JB of the I T Act had been deleted as a whole and not item-wise additions were directed to be deleted.
Gujarat Urja Vikas Nigam Ltd. vs. DCIT Asst. Year–2012-13 - 2 - 2.0 The appellant craves leave to add to, alter, delete or modify the ground of appeal either before or at the time of hearing of this appeal.”
3. The assessee engaged in the business of generation and transmission of distribution of electricity in the Gujarat State. The assessee is regularly assessed to tax for the Financial Year relevant to the Assessment Year 2012-13 the assessee voluntary filed return of income on 27.09.2012 declaring total income at Rs. 1,32,97,70,000/- under Section 115JB of the Income Tax Act,1961. The return was processed and accepted under Section 143(1) of the Act. The return was selected for scrutiny under Section 143(3) of the Income Tax Act and the assessment was completed vide order dated 27.02.2015 thereby making certain additions and/or disallowances. The total income was enhanced before set off of business losses of earlier years in normal courses of income as well as book profit computed under Section 115JB of the Act.
4. Aggrieved by the assessment order and the consequent additions made to the total income of the assessee, the assessee preferred appeal before the CIT(A). The CIT(A) allowed certain additions and/or disallowance subject to verification of the facts by the Assessing Officer. In response to the notice issued by the Ld. AO for giving effect to this appellate order, the assessee submitted all documentary evidences and other information vide its various loss. After detailed verification and examination of the same, the Assessing Officer passed the order giving effect to the order of the CIT(A) vide order dated 25.11.2016. However, while computing the book profits under Section 115JB of the Act, the AO has not given the proper effect to the CIT(A) directions as per the assessee in respect of disallowances under the head prior period items. The AO enhance the book profits on account of the dividend income which is exempted under Section 10(34) of the Income Tax Act. Being aggrieved by the order dated 25.11.2016 passed by the AO, the assessee
The Ld. A.R. submitted that the CIT(A) erred in law while confirming the action of the AO in not allowing in the relief whatsoever in respect of the prior period income amounting to Rs. 61,97,000/- while computing the book profits under Section 115JB of the Income Tax Act, 1961. The Ld. A.R. submitted that the Revenue Authorities ought to have appreciated that the additions made to the book profits under Section 115JB of the Income Tax Act had been deleted as a whole and not item-wise additions.
The Ld. D.R. relied upon the assessment order and the order of the CIT(A) and also that of order of the assessment order dated 25.11.2016 which is passed in respect of order giving effect to the earlier order dated 21.09.2015 passed by the CIT(A).
We have heard both the parties and perused all the relevant materials available on record. The Ld. A.R. relied upon the order of the Tribunal in assessee’s own case for A.Y. 2012-13 (ITA No. 3359/Ahd/2015, and order dated 26.04.2019. The Tribunal has restored the issue relevant this to disallowance of prior period expenses to the file of the AO for deciding de-novo after verification/examination of the complete details with specific findings/reasons after affording adequate opportunities to the assessee. The Tribunal also directed to consider the decision in case of CIT vs. Adani Enterprises Ltd. (Gujarat High Court) Tax Appeal No. 573/Ahd/2016 order dated 20.07.2016. The contention of the Ld. A.R. that the additions made by the AO tantamount to double taxation as the prior period expenditure should have been allowed in Gujarat Urja Vikas Nigam Ltd. vs. DCIT Asst. Year–2012-13 - 4 - consonance with the return filed by the assessee in respect of 115JB of the Act. Therefore, the AO is directed to allow in consonance with the view taken by the Hon’ble High Court in case of Adani Enterprises Ltd. (supra), the appeal of the assessee is allowed.
In result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 02/04/2025
Sd/- Sd/- (DR. BRR KUMAR) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 02/04/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,