INDIA POWER CORPORATION LIMITED,KOLKATA vs. ACIT, CIRCLE-2(1), KOLKATA, KOLKATA

The assessee in the present case is a company which is engaged in the business of generation and distribution of power. The return of income for the year under consideration was filed by it on 12.10.2010 which was subsequently revised on 30.03.2012 declaring a total income of Rs. 7,00,08,681/-. In the assessment completed u/s 143(3) vide an order dated 25.03.2013, the total income of the assessee under the normal provisions of the Act was determined by the A.O. at Rs. 7,55,30,537/- after making addition inter alia on account of disallowance of provision for leave encashment amounting to Rs. 53,05,000/-. The A.O. also computed the book profit of the assessee company u/s 115JB of the Act at Rs. 16,03,65,241/- after making certain additions to the net profit shown by the assessee company in its profit and loss account and since the tax payable on such book profit was more than the tax payable on the income computed under the normal provisions of the Act, he completed the assessment under section 143(3) vide an order dated 25.03.2013 with reference to the book profit as per section 115JB of the Act.

Against the order passed by the A.O. under section 143(3), an appeal was preferred by the assessee before the Ld. CIT(A) who confirmed the addition of Rs. 53,05,000/- made by the A.O. on account of disallowance of provision for leave encashment while computing the total income of the assessee as per the normal provisions of the Act. He, however, allowed the grounds raised by the assessee company on the issue of computation of book profit by the A.O. u/s 115JB of the Act and held by following the decision of the Tribunal in assessee’s own case for A.Y. 2007-08, 2008-09 and 2009- 3 & 2069/Kol/2016 India Power Corporation Ltd. 10 that the provisions of section 115JB were not applicable in the case of the assessee company. 4. Aggrieved by the order of the Ld. CIT(A), the assessee and revenue both are in appeal before the Tribunal on the following grounds:

Grounds raised in the appeal of the assessee: 1.That on the facts and circumstances of the case, the Ld. CIT(Appeals) was not justified & grossly erred in confirming the disallowance of provision for leave encashment of Rs. 53,05,000/- in computing total income under normal provisions of the Act. 2.That on the facts and in the circumstances of the case, the Ld. CIT(A) failed to adjudicate the ground against erroneous adjustment of dividend distribution tax amounting to Rs. 16,354/- against amount refundable to appellant. Grounds raised in the appeal of the revenue: 1.Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the provisions of Section 115JB of the Income Tax Act, 1961 are not applicable to the assessee being an electricity company governed by the Electricity Act, 2003. 2.Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in not appreciating that Section 115JB of the Income Tax Act, 1961 would apply to every assessee, being a company defined in section 2(17) & 2(26) of the Income Tax Act, 1961. 3.Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the assessee is not liable to pay interest u/s 234B of the Income Tax Act, 1961.

In the result, the appeal of the revenue is dismissed while the appeal of the assessee is treated as partly allowed for statistical purposes. Order Pronounced in the Open Court on 9th March, 2018. Sd/- Sd/- (S.S. Viswanethra Ravi) (P.M. Jagtap) (JUDICIAL MEMBER) ACCOUNTANT MEMBER Dated: 09/03/2018 Biswajit, Sr. P.S. Copy of order forwarded to: