NUCLEAR POWER CORPORATION OF INDIA LTD,MUMBAI vs. CIT LTU, MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य, राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार/ PER Rajendra A.M.- अनुसार Challenging the orders dated 26/03/2014 of the CIT-(LTU),Mumbai,passed u/s. 263 of the Act,the assessee has filed the present appeal.The assessee had filed its return of income on 30/09/2009,declaring total income under the normal provisions of the Act at Rs. NIL and the book profit as per the provisions of section 115 JB at Rs. 28,003.18 lakhs.The Assessing Officer (AO)completed the assessment u/s. 143 (3) of the Act on 09/12/2011, determining the income of the assessee at rupees nil under the normal provisions and at Rs. 311,58,55, 000/- u/s. 115 JB of the Act. 2.Perusal of the assessment records showed that following four items were not created to the P&L account of the assessee- i. Interest income on decommissioning fund - Rs. 50.02 Crores ii. Levy for year transferred from sale of decommissioning - Rs. 25.46 Crores iii. Interest income on renovation and modernisation fund(R&M Fund)-Rs. 10.46 Crores iv. Interest income on research and development(R&D) - Rs. 23.24 Crores ------------------- Rs. 109.31 Crores. He further found that while completing the assessment under normal provisions the AO had rejected the claim of the assessee and had added the amount of Rs. 1 09, 31, 36, 711/-to the total income of the assessee, that while computing the book profit u/s. 115 JB of the Act, he did not consider said amount. Accordingly, the CIT issued a notice u/s. of the Act asking the

3880/M/14-NTPC assessee as to why the said amount should not be added to the book profit,vide his letter dated 12/03/2014. After considering the submissions of the assessee and the cases relied upon by it, the CIT held that contributions to decommissioning fund,R&M fund and R&D Fund were collected as part of Electricity Charges by the assessee from the consumers, that after the charges were collected the assessee would transfer portion of the charges to various funds as mandated by the Government of India, that there was no merit in the contention that contributions to the various funds did not form part of the income of the assessee and therefore same should not be added back to the profit as per the profit and loss account to arrive at book profit. He relied upon the case of Vellore Electric Corporation Ltd. (227 ITR 557) and held that there was no were debatable issue in that regard, that the failure of the AO in adding back the interest income to decommissioning fund, levy for the year transferred from sale of decommissioning, interest income on renovation and modernisation fund and the interest income on research and development was erroneous and was prejudicial to the interest of revenue. Setting aside the order of the AO, the CIT directed him to that back the above items to the profit as per the P&L account to arrive at the book profit u/s. 115 JB of the Act.

3.During the course of hearing before us, the Authorised Representative(AR) contended that the assessee had furnished all the documents called for by the AO during the assessment proceedings, that the AO had applied his mind while computing the income under the normal provisions as well as u/s. 115 JB of the Act, that the AO had issued a notice u/s. 154 of the Act on 15/05/2012 wherein he had asked the assessee as to why remedial action should not be taken for computing the income under the MAT provisions, that vide its letter dated 22/05/2012 the assessee had made detailed submissions in that regard, that the method of competition of book profit had been provided in the explanation below the section 115 JB (2), that only the adjustment contemplated in section 115 JB could be carried out for computing book profit and that no adjustment on account of decommissioning levy and interest thereon, interest on R&M and R&D Fund was not possible, that none of the above-mentioned for items fell under any of the adjustments mention in the section, that the Hon’ble jurisdiction High Court has admitted substantial question of law in case of the assessee against the quantum order passed by the tribunal, that the issue was debatable. He relied upon the cases of Malayala Manorama Co.Ltd. (300 ITR 251) Apollo Tyres Ltd (255 ITR 273),Nico Extrusion Ltd. (ITA/3662/Mum/2015 AY. 2009-10, dated 08/07/2016). The Departmental Representative(DR) supported the order of the CIT and heavily relied upon the judgement of 3880/M/14-NTPC the honorable Delhi High Court delivered in the case of Ashok Logani (ITA No. 553 of 2010, dated 11/05/2011).

4.We have heard the rival submissions and perused the material before us.We find in the case under consideration, while completing the assessment,the AO had made additions under four heads of income namely interest on decommissioning fund,Levy for decommissioning,R&M Fund,R&D Fund ,that while computing the book profit u/s. 115 JB he did not include those items, that later on he issued a notice u/s. 154 of the Act for including the said items, the CIT had issued a notice u/s. 263 of the Act, that he directed the AO to recompute the income under the MAT provisions and to include the above items.We find that while completing the original assessment the AO had called for details of 115 JB computation in the notice issued u/s. 142 (1) of the Act and the assessee had filed the requisite details (Pg. 7,10-13 of the paper book). After considering the available material the AO had passed the original order. Not only this, later on he issued a notice u/s. 154 to include the same items for computing book profit, that the assessee had filed detailed reply in that regard. In the circumstances,we are of the opinion that the AO had applied his mind while passing the original order and dropping the rectification proceedings. We also find that the CIT had directed the AO to make the additions. Thus, he has left the AO with no option but to make additions.The provisions of section 263 of the Act permit the CIT to revise the orders which are erroneous and prejudicial to the interest of revenue but it does not give unbridled power to the CIT to take over the power of the AO and to decide the issue at his end.

4.1.The provisions of section 115JB of the Act,were introduced in the Act with specific purposes.While computing the income under the said section certain items are to be added and certain items are to be deducted.The AO or the assessee cannot travel beyond the Laxman Rekha drawn by the section itself.The disputed four items are not part of the list appearing in the section.Therefore,in our opinion,there was no justification for the CIT to use his revisionary powers in the case under consideration.It is to be remembered that the accounts of the assessee were audited by the C&AG and by a special auditor.They had not found any defect in the accounts prepared by it.Besides,in the judgment of Apollo Tyres Ltd.(supra),the Hon’ble Supreme Court has held as under: “The Assessing Officer, while computing the book profits of a company u/s. 115J of the Income-tax Act, 1961, has only the power of examining whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act.The Assessing Officer, thereafter, has the limited power of making increases and reductions as provided for in the Explanation to section 115J . The 3880/M/14-NTPC