M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD.,VIDYUT BHAWAN, JAN PATH, JYOTI NAGAR, JAIPUR vs. DCIT, CIRCLE-6, , JAIPUR

आयकरअपीलीय अधिकरण] जयपुरन्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh]U;kf;dlnL; ,oaJhjkBksMdeys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihy la-@ fu/kZkj.ko"kZ@AssessmentYear :2015-16 M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. cuke DCIT, Vs. Vidyut Bhawan, Jan Path, Jyoti Nagar, Circle-6, Jaipur. Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCR 8312 A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri P.C. Parwal (C.A.) jktLo dh vksjls@Revenue by: Shri James Kurian (CIT) lquokbZ dh rkjh[k@Date of Hearing :08/06/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 24 /08/2023 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M.

This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 22-03-2023, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2015-16 wherein the assessee has raised the following grounds of appeal.

“1. The Ld. CIT(A), NFAC has erred on facts and in law in- upholding the validity of the order passed by AO u/s 147 of the IT Act, 1961.

M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd.

2. The Ld. CIT(A), NFAC has erred on facts and in law in- confirming the disallowance of write off of debts of Rs.200 crores in respect of transmission charges recoverable from Ajmer Vidyut Vitran Nigam Ltd. without considering the submission filed by the assessee on 22.02.2023 along with the documentary evidence.

3. The Ld. CIT(A), NFAC has erred on facts and in law in confirming the action of AO in not allowing deduction of Rs.15,85,10,128/- in respect of provision for doubtful advance written back without considering the submission filed by the assessee on 22.02.2023 along with the documentary evidence.

4. The Ld. CIT(A), NFAC has erred on facts and in law in R confirming the action of AO in making following additions in computing the book profit u/s 115JB:- (a) on account of depreciation of Rs.2,69,10,85,274/- (b) on account of provision for doubtful advances written back of Rs.15,85,10,128/- without considering the submission filed by the assessee on 22.02.2023 along with the documentary evidence. 2.1 First of all, we take up the grounds of appeal of the assessee from serial No. 2 to 4 for adjudication and ground no. 1 will be decided subsequently. 3.1 Apropos Ground No. 2 of the assessee, brief facts of the case are that the AO on perusal of the profit and loss account of the entity noticed that the entity has written off bad debts of Rs.200 crores during the year. In reference to the same, the following note was mentioned in the financial statement of the entity (to quote) 20.3. In compliance with decision of 229th meeting of Board of Directors dated 20-01-2015, a sum of Rs.200,00,00,000 has been written off during the year 2014-15 out of old dues of Rs.481,60,00,000 crores of M/s.Ajmer Vidyutvitran Nigam Ltd.

M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. upto 31-03-200’’It is noted that during the reassessment proceedings ,the AO issued notice u/s 142(1) dt.03.10.2019requiring the assessee to justify the write-off of Rs.200 crore due from Ajmer Vidyut Vitran Nigam Limited in its books of account as bad debts. He further required the assessee to provide proof of including this amount in computing the income for earlier years.In response to same, assessee filed its reply vide letter dt.19.10.2019 (filed on 15.11.2019) justifying the claim of bad debts. The reply filed by assessee is reproduced at Pg No.2 of the assessment order. The AO, however, rejected the claim of assessee by observing as under:- a) The assessee has not provided any evidence of offering the above amount as income in any previous year. b) The assessee has regularly been transacting with the AVVNL and selling substantial amount of transmission services to it, despite the fact that the AVVNL is an almost a financially bankrupt entity unable to pay his debts. c) The assessee entity on the one hand is continuously selling services/products to the entity and on the other hand also writing off the payments due from it, effectively,making sales at less than fair market value or Nil value to the entity. d) Both AVVNL and RRVPNL are 100% owned by the Government of Rajasthan and are government undertaking with a common shareholder. Therefore, this seems to be a mechanism of shifting losses from one loss making entity to another Profit making entity. e) The State Government has taken over total debt of the assessee of Rs.13,668.42 crore under UDAY Scheme in F.Y. 2015-16 by way of Equity capital money of Rs.1,882.56 crore and Loan of Rs.11,785.86 crore. This clearly reveals that the entity has received substantial financial help from the State Government. This further reveals that even the claim of the debt at all is not established and is incorrect.

M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. Accordingly, AO disallowed the claim of bad debts of Rs.200 crore by treating the same as artificially shifting of losses of one entity to another profit making entity and reduce its tax liability for which the relevant para of 3.5 of the assessment order is reproduced as under:- ‘’3.5 For a claim of bad debt to be made, there should first be an existence of a bad debt which is claimed to be non-receivable. In the instant case, the debt has not become bad and is in fact not a bad debt but rather a larger design to artificially shift losses of one entity to another profit making entity and reduce its tax liability. In light of the above facts and circumstances, I hereby propose to disallow the claim of bad debts of Rs.200,00,00,000/-made by the entity and added to the income of the assessee….’’ In first appeal, the ld . CIT(A) has confirmed the action of the AO by 3.2 observing at para 9 of his order:- ‘’9. Looking into the facts of the case, brought on record by the AO in detail as well as the judicial pronouncement as discussed above. For a claim of bad debt to be made, there should first be an existence of a debt which is claimed to be non-receivable . In the instant case, the debt has not become bad and is in fact not a bad debt rather a large design to artificialy8 shift looses of one equity to another profit making entity and reduce it tax liability. In light of above facts circumstances, the AO disallowed the claim of bad debts of Rs.200,00,00,000/- and added it to the income of the appellant assessee. It is amply clear that the assessee has not given any substantial documentary evidence in support of its claim before the AO. The AO has rightly formed an objective opinion that what the appellant assessee had claimed is in fact not a bad debt. The disallowance made and added back to the income of the appellant assessee has been correctly treated by the AO. Therefore, this ground of appeal taken by the appellant is dismissed.’’ During the course of hearing, the ld. AR of the assessee filed a detailed 3.3 written submission as under:- ‘’1. At the outset it is submitted that before Ld. CIT(A) assessee has filed detailed submission along with supporting documents on 22.02.2023 (PB 1-2). The Ld. CIT(A), however, confirmed the disallowance by incorrectly holding that the assessee has not given any substantial documentary evidences in support of its claim before the AO. Thus M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. the order passed by Ld. CIT(A) without considering the submission filed by the assessee is illegal & bad in law.

2. It is submitted that AVVNL is anelectricity distributing company whereas assessee is an electricity transmitting company. Both the companies are 100% Government owned corporations. Assessee has outstanding dues of more than Rs.570.10 crore as on 31.03.2009 (PB 65).Thereafterevery year various services provided by the assessee for transmission of electricity is debited to its account and credited to P&L A/c. As on 31.03.2014 the outstanding dues were Rs.772,37,81,982/- (PB 67).

3. The AVVNL was suffering from continuous losses and therefore, it approached the assessee for write off of Rs.200 crore out of the old dues existing as on 31.03.2009 with a promise to liquidate the balance outstanding in instalments. Accordingly, in the 229th board meetingdt.20.01.2015(PB 73-74)it was decided to write off Rs.200 crore against the outstanding balance of Rs.481.60 crore as on 31.03.2009 with the condition that AVVNL shall pay to the assessee a sum of Rs.10 crore per month by way of daily escrow in favour of the assessee. Accordingly, the amount of Rs.200 crore was written off by crediting the account of AVVNL on 31.03.2015 (PB 68).This write off is allowable u/s 36(1)(vii) of the Act.

4. The AO for disallowing the claim of bad debts has made certain observations which are incorrect and irrelevant. The fact that the amount written off has earlier been taken into account in computing the income of the assessee is verifiable from the ledger account of AVVNL and also the financial statements of the assessee where the sale of services comprising of transmission charges has been debited to AVVNL and credited to the revenue account. Of course the assessee is regularly providing services to AVVNL but the law do not restrain the write off of earlier debts even if there are subsequent transactions with that person. Both are Government owned companies and therefore it cannot be alleged that the write off is a mechanism of shifting losses from one loss making entity to another profit making entity. It may also be noted that even the assessee is a loss making company in as much as its accumulated unabsorbed depreciation as on 31.03.2015 is to the extent of Rs.2034.40 crore. Providing financial help by the Government to these companies also cannot be a reason for not allowing the claim of bad debt.

M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. Explanation 1—For the purposes of this clause, any bad debt or part thereof written off as irrecoverable in the accounts of the assessee shall not include any provision for bad and doubtful debts made in the accounts of the assessee;” From the above provision it can be noted that the following conditions are required to be fulfilled for claim of bad debt:- (a) The amount of such debt or part thereof has been taken into account in computing the income. (b) Bad debt has been written off as irrecoverable in the accounts. Various courts includingHon’ble Supreme Court and Rajasthan High Court haveheld that the only condition for allowing the bad debt is that the same is written off in the books of the assessee. Reliance in this connection is placed on the following cases:- TRF Limited Vs. CIT(2010) 323 ITR 397 (SC) The relevant para of the said decision reads as under:- “4. This position in law is well-settled. After 1st April, 1989, it is not necessary for the assessee to establish that thedebt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts ofthe assessee. However, in the present case, the AO has not examined whether the debt has, in fact, been writtenoff in the accounts of the assessee. When a bad debt occurs, the bad debt account is debited and the customer'saccount is credited, thus, closing the account of the customer. In the case of companies, the provision is deductedfrom sundry debtors. As stated above, the AO has not examined whether, in fact, the bad debt or part thereof iswritten off in the accounts of the assessee. This exercise has not been undertaken by the AO. Hence, the matter isremitted to the AO for de novo consideration of the abovementioned aspect only and that too only to the extent ofthe write-off.” PCITVs. M/s Rajasthan State Beverages Corpn. Ltd. (2017) 250 Taxman 32 (Raj.) (HC) The relevant para of the said decision reads as under:- “6. Insofar as the claim about bad debt of Rs. 12,79,968 is concerned, we notice that the said amount relates to debit balances of the supplier which remained outstanding since 2005-06 and 2007-08 and it was the claim of the assessee that the advances were given to the suppliers for business purposes but supply of liquor was not received and there is a finding of fact recorded by the CIT(A) as well as the Tribunal and could not be disputed by the counsel for the Revenue that the amounts were old and outstanding and the said amount was written off in accordance with the provisions contained in s. 36(1)(vii) of the Act. The CIT(A) as well as the Tribunal has taken into consideration the judgment of the apex Court in the case of T.R.F. Ltd. vs. CIT (2010) 230 CTR (SC) 14 :(2010) 35 DTR (SC) 156 : (2010) 323 ITR 397 (SC) and recorded a finding of fact that the said amount having become irrecoverable, the assessee has rightly written off the M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. same and merely because the assessee has not filed any claim, that could not be considered to be a ground for disallowing a bad debt.” Anant Raj Ltd. Vs. ACIT (2020) 184 ITD 820 (Del.) (Trib.) Assessee need not require to establish/ prove that debt has in fact become irrecoverable and it is sufficient that if bad debt is written off irrecoverable in account of assessee and there is no requirement under Act that bad debt has to accrue out of income under same head ‘income from business or profession’ to be deducted as income. Late Surendra Kumar Bansal Vs. ACITITA No. 730/JP/2017order dt.06.02.2018 (Jaipur) (Trib.) The relevant para of the said decision reads as under:- “5. We have considered the rival submissions as well as relevantmaterial on record. During the year under consideration the assesseewritten of the total debits of Rs. 7,27,022/- as bad and claimed thededuction u/s 36(1)(vii) of the Act. The AO allowed the claim of theassessee in respect of the other debts written off except four party, thedetails of which have been produced in the earlier part of this order.The only reason for disallowance made by the AO is that the assesseehas written off the debts of these four parties on 01.09.2012 just afterthe survey carried out u/s 133A on 30.08.2012. The Assessing Officerhas not disputed the facts that these amounts represents as written offby the assessee gone bad and irrecoverable on the reasons as given inthe reply filed before the AO. We note that in case of Radhika ClothStore the cheque issued by the said party got dishonoured in case ofsecond party in the table the amount represents goods sold to BombayTextiles and were return on 23.12.2010 and thereafter no goods weresold to the said party. In case of Sagar Garments the goods sold werelost in transit and therefore, the said parties has not paid the amount.In case of Girraj Saree Centre the amount is regarding goods returnedin the preceding year and other were reported as lost and therefore,the payment was not made by the said parties. It is also not disputedby the AO that after the written off the debits in respect of these fourparties there is no business transaction between the assessee and theseparties. Hence, the assessee has written off debts as gone bad andirrecoverable and the condition u/s 36(2) is also satisfied then the claim of deduction u/s 36(1)(vii) cannot be denied. The Hon’ble SupremeCourt in case of TRF Ltd. vs. CIT (Supra) has held that post amendmentof section 36(1)(vii) w.e.f. 01.04.1989 what is required for claim ofdeduction in respect of bad debts is that the bad debts is written offirrecoverable and there is no necessity for the assessee to establish thatthe debt has become irrecoverable. Therefore, the decision of theassessee to write off the debts as irrecoverable cannot be questioned ifthe other conditions are satisfied being the amount was considered asthe income in the previous year or in the earlier year as per section36(2) of the Act then the AO has to allowed the claim of deduction untiland unless the decision of writing of the debts is not an honest decisionand is only a device to avoid the tax. The CBDT circular No. 12/2016also clarified this position as under:- “3. The legislative intention behind the amendment was toeliminate litigation on the issue of the allowability of the bad debitby doing away with the requirement for the assessee to M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. establishthat the debt, has in fact, become irrecoverable. However,despite the amendment, disputes on the issue of allowabilitycontinue, mostly for the reasons that the debit has not beenestablished to be irrecoverable. The Hon’ble Supreme Court in thecase of TRF Ltd. in CA Nos. 5292 to 5294 of 2003 vide judgmentdated 9-2-2010, has stated that the position of law is well settled.“After 1-4-1989, for allowing deduction for the amount of any baddebit or part thereof under section 36(1)(vii) of the Act, it is notnecessary for assessee to establish that the debit, in fact hasbecome irrecoverable; it is enough if had debit is written off asirrecoverable in the books of account of assessee.

4. In view of the above, claim for any debt or part thereof in anyprevious year, shall be admissible under section 36(1(vii) of theAct, if it is written off as irrecoverable in the books of account ofthe assessee for that previous year and it fulfills the conditionsstipulated in sub-section(2) of Sub-section36(2) of the Act.

5. Accordingly, no appeals my henceforth be filed on this groundand appeals already filed, if any, on this issue before variouscourts/Tribunals may be withdrawn/not pressed upon.” In view of the above facts and circumstances of the case as well as thedecision of Hon’ble Supreme Court in case of TRF Ltd. vs. CIT(supra) aswell as CBDT Circular No. 12/2016 we are of the considered opinionthat the assessee has satisfied the conditions as provided u/s 36(1)(vii)as well as section 36(2) of the Act and therefore, the claim of bad debtsis allowable deduction. Accordingly we set aside the orders of theauthorities below qua this issue and allowed the claim of bad debts.” In view of above, disallowance confirmed by Ld. CIT(A) be directed to be deleted.’’ On the other hand, the ld. DR supported the order of the ld. CIT(A). 3.4 3.5 We have heard both the parties and perused the materials available on record including the case laws cited (supra) by the respective parties. Brief facts of the case are that the AO made an addition of Rs.200,00,00,000/- by treating the same as artificially shifting of losses of one entity to another profit making entity and reduced its tax liability which has been confirmed by the ld. CIT(A) by holding that the assessee

M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. has not given any substantial documentary evidence in support of its claim before the AO. It is notedthat AVVNL is an electricity distributing company whereas assessee is an electricity transmitting company. Both the companies are 100% Government owned corporations. Assessee has outstanding dues of more than Rs.570.10 crore as on 31.03.2009 (PB 65). Thereafter every year various services provided by the assessee for transmission of electricity is debited to its account and credited to P&L A/c. As on 31.03.2014 the outstanding dues were Rs.772,37,81,982/- (PB 67). It is also noted that the AVVNL was suffering from continuous losses and therefore, it approached the assessee for write off of Rs.200 crore out of the old dues existing as on 31.03.2009 with a promise to liquidate the 229th balance outstanding in instalments. Accordingly, in the board meetingdtd.20.01.2015(PB 73-74) it was decided to write off Rs.200 crore against the outstanding balance of Rs.481.60 crore as on 31.03.2009 with the condition that AVVNL shall pay to the assessee a sum of Rs.10 crore per month by way of daily escrow in favour of the assessee. Accordingly, the amount of Rs.200 crore was written off by crediting the account of AVVNL on 31.03.2015 (PB 68). We have also taken into consideration the Minutes of Board Meeting at PB Pages 73- 74 wherein the Board was informed that meeting were held in the chamber of Director (Finance), Jaipur Discom on 23-07-2010 and 30-09-2010 to review the progress of ICT reconciliation and adjustment thereof . It is also noted that Ajmer M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. Discom further vide its letter dated 16-1-2014 has agreed to pay Rs 40 Lakh per working day to RVPN to liquidate their dues against RVPN subject to the condition that RVPN agrees to write off an amount of Rs.200 crores out of above dues against Ajmer Discom. The Board considered the proposal and passed the following resolution: ‘’RESOLVED THAT approval of the Board be and is hereby accorded to write off Rs.200 crores out of balance of old dues of Rs.481.60 crores of Ajmer Discom provided that Ajmer Discom shall pay to RVPN a sum of Rs. 10 Crore per month by way of daily scrow in favour of RVPN. RESOLVED FURTHER THAT above approval to write off is given by the Board das a ‘special case’ and shall not form aprecedence.’’ Hence, it is noted that following conditions which are required to be fulfilled for claim of bad debts have been satisfied:-

(a) The amount of such debt or part thereof has been taken into account in computing the income. (b) Bad debt has been written off as irrecoverable in the accounts.

It is pertinent to mention that various courts including Hon’ble Supreme Court and Rajasthan High Court (supra) have held that the only condition for allowing the bad debt is that the same is written off in the books of the assessee. Keeping in view all the facts, circumstances of the case, minutes of Board Meeting, we feel that the assessee has satisfied the condition as provided u/s 36(1)(vii) as well as M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. Section 36(2) of the Act and thus the claim of bad debts of the assessee is allowable. Hence, the Ground No. 2 of the assessee is allowed.

4.1 Apropos Ground No.3 of the assessee, brief facts of the case are that the AOon perusal of computation of income filed by the assessee observed that the assessee has reduced its income by claiming of provision for doubtful advances written back amounting to Rs. 15,85,10,128/- which is allowable only if the same has already added as income to the Profit & Loss account. However, it is not found so on perusal of record by the AO. Therefore, vide notice dated 03.10.2019 the assessee was requiredto justify the allowability of the same. In response to the same the assessee has replied as under- "section 36(1)(vi) of Income tax Act, 1961 provides deduction in respect of bad & doubtful debts written off. Thus whenever a debts is written off in the books of accounts, same is allowable as deduction in computing total income, however provision made for bad & doubtful debts is not allowable as deduction in this section. The assessee company has time to time made provision for bad & doubtful debts and according to legal provision same was disallowed in the computation of income Copy of income tax retum for AY 2013-14 & 2014-15 showing that the assessee company has made disallowance of Rs 17,36,72,463 & Rs 26,85 51.7124 in respect of provision for bad & doubtful debts respectively, is enclosed. Thus it is not a case that when assessee company has made provision for bad & doubtful debts, no disallowance was made in the computation of income In the year under consideration, assessee company has written back part of the provision for bad & doubtful debts amounting Rs. 15,85,10,128, since the provision for bad & doubtful debts is not allowable in the year of making provision, similarly has reduced the same provision is not taxable, accordingly assessee company has reduced the same while computing taxable income. Thus writing back of provision for bad & doubtful debts amounting to Rs. 15,85,10,128 has been correctly reduced in the computation of taxable income."

M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. The above reply of the assessee has been considered carefully by the AO but he did not find acceptable. The AO noted that the assessee had submitted that the company had made disallowance of Rs. 17,36,72,463/- & Rs.26,85,51,712/-in respect of provision for 'bad & doubtful debts' for A.Y 2013-14 and 2014-15 respectively whereas in this year the assessee has claimed deduction on account of 'doubtful advances written back which is different in nature from 'bad & doubtful debts. Therefore, it is clear that the assessee has not shown these advances as income for the year under consideration and any earlier year's income. Hence, according to the AO, deduction for provisions for doubtful advances written back is not allowable as the assessee has not shown this amount as income. Accordingly, an amount of Rs. 15,85,10,128/- is added back to the total income of the assessee as well as in book profit by the AO in the assessment order. 4.2 In first appeal, the ld. CIT(A) has confirmed the action of the AO holding that it is amply clear that the assessee has not shown these advances in the return of income under consideration. The deduction claimed by the assessee is not justified and therefore, this ground of assessee is dismissed. 4.3 During the course of hearing, the ld. AR of the assessee filed the following detailed written submission praying therein to delete the addition confirmed by the ld. CIT(A).

M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. ‘’1. At the outset it is submitted that before Ld. CIT(A) assessee has filed detailed submission along with supporting documents on 22.02.2023 (PB 1-2). The Ld. CIT(A), however, without considering the same confirmed the addition made by the AO. Thus the order passed by Ld. CIT(A) without considering the submission filed by the assessee is illegal & bad in law.

Provision Made/ Note Opening Closing Particulars (Provision No. Balance Balance written back) FY 2012-13 Provision for Bad & 20.2 7,27,74,623 - 7,27,74,623 Doubtful Debts Provision for Doubtful Debts 23 15,79,59,000 17,36,72,463 33,16,31,463 in Advance Receivables Total 67,29,57,798 17,36,72,463 51,44,47,670 FY 2013-14 Provision for Bad & 20.1 7,27,74,623 26,47,91,225 33,75,65,848 Doubtful Debts Provision for Doubtful Debts 23 33,16,31,463 37,60,487 33,53,91,950 in Advance Receivables Total 67,29,57,798 26,85,51,712 51,44,47,670 FY 2014-15 Provision for Bad & 20.1 33,75,65,848 (26,47,91,225) 7,27,74,623 Doubtful Debts Provision for Doubtful Debts 23 33,53,91,950 10,62,81,097 44,16,73,047 in Advance Receivables Total 67,29,57,798 (15,85,10,128) 51,44,47,670 From the abovetable it can be noted that in AY 13-14, 14-15 &in earlier years, the assessee has disallowed the provision for bad & doubtful debt/advances in computing the business income. Copy of computation of total income for AY 13-14 & 14-15 along with the financial statements of these years is at PB 75-87.Out of the said provision, provision for bad &doubtful debts/advances to the extent of Rs.15,85,10,128/- was written back in the year under consideration. Since the provision for bad & doubtful debts/advances is added in computing the business income of relevant assessment year, the assessee has M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. correctly reduced the provision for bad & doubtful debt/advances written back during the year in computing the business income. In view of above, addition confirmed by Ld. CIT(A) is uncalled for and be deleted.’’ 4.4 On the other hand, the ld. DR supported the order of the ld. CIT(A). 4.5 We have heard both the parties and perused the materials available on record. In this case, it is noted that the assessee has written back provision of bad &doubtful debts/advances at Rs.15,85,10,128/-in the P& L but since it was disallowed in the year in which the provision was made the same was reduced in computing the business income for the year under consideration.The AO observed that the amount of doubtful advances written back during the year is different in nature from the bad & doubtful debts which was disallowed in computing the business income for AY 13-14 & 14-15 and therefore, he added back this amount in computingthe total income as well as in computing the book profit and the ld. CIT(A) confirmed the addition made by the AO by holding that it is amply clear that the assessee has not shown these advances in the return of income under consideration. We have gone through the tabulation (supra) and noted that in AY 13-14, 14-15 &in earlier years, the assessee had disallowed the provision for bad & doubtful debt/advances in computing the business income for which copy of computation of total income for AY 13-14 & 14-15 along with the financial statements of these years is placed at PB 75-87. It is also noted that out of the said M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. provision, provision for bad &doubtful debts/advances to the extent of Rs.15,85,10,128/- was written back in the year under consideration. Since the provision for bad & doubtful debts/advances is added in computing the business income of relevant assessment year, therefore, the assessee has correctly reduced the provision for bad & doubtful debt/advances written back during the year in computing the business income. In view of the above facts and circumstances of the case, we do not concur with the findings of the ld. CIT(A). Hence, the Ground No. 3 of the assessee is allowed. 5.1 Apropos Ground No. 4 of the assessee, brief facts of the case are that the AO on perusal of note 30.1 (related to depreciation chart as per company Act) to the profit and loss account where it was certified by the Auditor that due to change in accounting estimate, depreciation for the current year was higher by Rs 2,69,10,85,274/-. The change in accounting estimate of assets and depreciation attracts the provisions of section 115JB of the Act which provided that if the amount of depreciation so increased due to change in valuation of assets, the book profit shall be increased by such increased amount of depreciation. However, the assessee did not do so. Therefore, vide noticedated 14.12.2019, the assessee was required to show cause as to why the amount of Rs 269,10,85,274/- should not be added back to the book profit of the year under consideration In response to the same the assessee has submitted reply dated 15.12.2010 as under:-

M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. ‘’In this connection we are to submit that book pro is 1150 is required to be computed as per the annual accounts prepared considering the accounting policies, the accounting standard adopted for preparing such accounts and the method and rates adopted for calculating the depreciation shall be same as have been adopted for the purpose of preparing such accounts including Statement of Profit&Loss account and told before the company at Annual General Meeting in accordance with the provision section 129 of Companies Act, 2013 in the present case, method of depreciation followed by assessee company is as per accounting policy in accordance of accounting standard followed by company. Thus the depreciation calculated on the basis of accounting standard and as per Companies Act 2013 has to be reduced from calculation of book profit us and no adjustment is required to be made. Hence assessee has rightly reduced entire depreciation while calculating book profit as per provision of section 115JB of the Act. Without prejudice to above, it is submitted that the change in depreciation method is due to compliance of statutory requirement. The assessee company has changed the method of depreciation on the basis of Rajasthan Electricity Regulatory Commission (Terms and Conditions for determination of Tariff) Regulations, 2014, according to which depreciation has been charged based on the life of assets rate of depreciation and methodology in the said regulations. Thus the change in accounting policy is due to compliance of statutory requirement of regulators hence change in method of depreciation is bonafide and in the line of statutory requirement, hence depreciation charged in books of accounts is justified and allowable for the purpose of computation of book profit u/s 115JB Without prejudice to above, it is submitted that book profit u/s 115JB is required to be computed according to audited accounts and subject to adjustment in Explanation 1 sub section (2) to section 115JB of the Act Besides this no adjustment is required to be made in the book profit. Explanation 1 does not provide any kind of adjustment on account of impact reported by auditor on the basis change in accounting policy. Thus no adjustment on account of such impact reported by auditor can be made in the computation of book profit u/s 115JB of the Act."

M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. The above reply of the assessee has been considered thoroughly by the AO and found that the assessee has merely trying to state that depreciation had increased due to change in accounting method of depreciation.Hence, depreciation so increased will not be added in book profit. The AO observed that the assessee's contention is not acceptable because a plain reading of the clause (iia) of explanation [1] of sub section (2) to section 115JB of the Act clearly stated that, if any amount referred to in clauses (a) to (i) is debited to the profit and loss account, the amount of depreciation debited to the profit and loss account excluding the depreciation on account of revaluation of assets, shall be reduced. However, in this case the depreciation for the year under consideration was higher by Rs.269,10,85,274/- due to change in accounting estimate of the assets. Therefore, the AO added back Rs.269,10,85,274/- to the book profit of the assessee. 5.2 In first appeal, the ld. CIT(A) has confirmed the action of the AO by observing at para 13 of his order as under:- ‘’13. Looking into the facts of the ground brought on record by the AO and as discussed above, the AO has correctly added back Rs.269,10,85,274/- to the book profit on account of depreciation which was higher due to change in accounting of assets. The appellant assessee has failed to establish why the amount qualified in note 30.1 by its own auditor be allowed even so when it does not qualify to be allowable. The addition made by the AO is justified and therefore, this ground of appellant is dismissed.’’ M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. 5.3 During the course of hearing, the ld. AR of the assessee prayed for deletion of addition by filing the following written submission.

‘’1. At the outset it is submitted that before Ld. CIT(A) assessee has filed detailed submission along with supporting documents on 22.02.2023 (PB 1-2). The Ld. CIT(A), however, without considering the same confirmed the addition made bythe AO. Thus the order passed by Ld. CIT(A) without considering the submission filed by the assessee is illegal & bad in law.

2. The relevant Explanation 1 to section 115JB reads as under:- “Explanation 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) (b) … (g) the amount of depreciation, (h) (i) the amount or amounts set aside as provision for diminution of value of any asset, (j) if any amount referred to in clauses (a) to (i) is debited to the statement of profit and loss or if any amount referred to in clause (j) is not credited to the statement of profit and loss, and as reduced by,— (i) (ii) (iia) the amount of depreciation debited to the statement of profit and loss (excluding the depreciation on account of revaluation of assets); (iib)…” From the plain reading of said section it may be noted that depreciation debited to P&L A/c is required to be added and thereafter depreciation excluding depreciation on account of revaluation of the assets is required to be reduced in computing the book profit.

M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. 6.1 Apropos Ground No. 1 of the assessee, brief facts of the case are that the assessee company is a state government undertaking. It is engaged in the transmission of electricity within the state of Rajasthan. The assessee company is also having its share in interstate/partnership generation projects In this case, return of income was filed on 28.09.2015 declaring total loss of Rs.3,96,45,48,139/- and scrutiny assessment u/s 143(3) of the Income Tax Act, 1961 (The Act) was completed on 14.12.2017 at total loss of Rs.3,96,45,41,813/-. Thereafter, it is noticed that some taxable income has escaped from assessment. Therefore, reasons u/s 147 of the Act has been recorded and notice u/s 148 of the Act was issued on 14.05.2019 after obtaining necessary approval of the competent authority. In compliance of the notice dated 14.05.2019, the assessee filed its return of income on 19.09.2019 declaring total loss of Rs.396,45,48,139/- Notice u/s 143(2) of the Act was issued on 03.10.2019 and duly served upon the assessee. Further notices u/s 142(1) of the Act were also issued from time to time. Vide letter dated 19.10.2019 the assessee objected the reopening of the assessment u/s 148 which was disposed by this office letter dated 03.12.2019. 6.2 Aggrieved from the said order of assessment, the assessee has filed the appeal before the ld. CIT(A) who after hearing the contention of the M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. assessee dismissed the appeal of the assessee by giving following findings on the issue:- “ Ground No. 1 7. I have carefully considered the facts and found that at the time of initiation of proceedings u/s 147/148 of the IT Act the AO has reason to believe that income chargeable to tax has escaped assessment. The belief was formed on the basis of material in possessions of the AO. Other conditions laid down in section 147 of the IT Act are duly fulfilled. Therefore, this ground of appeal taken by the appellant is dismissed.

During the course of hearing, the ld. AR objected to upholding the 6.3 validity of the order passed by AO u/s 147 of the Act by filing a detailed submission as under:- 1. From the facts stated above it may be noted that assessment in this case was framed u/s143(3). In making the assessment AO considered the financial statements of assessee, auditor’s report and the reply filed to the queries raised by him. All the 3 issues recorded for reopening of assessment has been duly considered by the AO inmaking the assessment u/s 143(3). The same is explained hereunder:- (i) The fact of bad debt of Rs.200 crore of Ajmer VidhyutVitaran Nigam Limited (in short AVVNL) has been reported by the statutory auditor under “Emphasis of Matter” paragraph as under(PB 7):- “In the 229th meeting of Board of Directors dt.20.01.2015, Board approved and decided to write off an amount of Rs.200 crore out of old dues of Rs.481.60 crore recoverable from M/s Ajmer VidyutVitran Limited, which was treated as good debtor upto Rs.31.03.2014. The said amount of Rs.200 crore has been written off as bad debts during the current year 2014-15.” The AO considering the same and the provisions of section 36(1)(vii) of the Act correctly allowed the deduction of bad debts written off. In letter filed objecting to reopening of assessment assessee also referred to CBDT Circular 12/2016 dt.30.05.2016 but AO in disposing the objections has not rebutted the contention of the assessee. Thus, there was no new material with the AO apart from what is already on recordto allege that by allowing deduction of bad debts in the original assessment proceedings, income chargeable to tax has escaped assessment. (ii) On the issue of provision for bad & doubtful debts/advances written back to the P&L but deducted in computing the business income, the assessee at Point No.15of reply dt. 01.11.2017 (PB60-61)has specifically pointed out this fact and considering the same the AO allowed M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. deduction of the same in computing the total income. Thus this issue is specifically examined by the AO. Further in the objection filed against the reopening of assessment, assessee has specifically filed copy of ITR for AY 13-14 & 14-15 to prove that in earlier years provision made for bad & doubtful debts/advances has been added to the total income and therefore when the same is written back, it is correctly reduced in computing the business income which is as per law. Thus, there was no new material with the AO apart from what is already on record to allege that by allowing deduction of provision for bad & doubtful debts/advances in the original assessment proceedings, income chargeable to tax has escaped assessment. (iii) The AO in the reasons recorded for reopening the assessment has observed that assessee has not added back Rs.269,10,85,274/- to the book profit as the depreciation for the year is higher by the same amount due to change in accounting estimate of the asset. However, it can be noted that this fact is appearing at Note No.30.1 of Financial Accounts (PB 38) where it has been specified as under:- “30.1 During the year company has adopted the Rajasthan Electricity Regulatory Commission (Terms andConditions for determination of Tariff) Regulations 2014 for charging depreciation. Accordingly, thedepreciation has been charged based on the life of assets/rate of deprecation and methodology asmentioned in the said regulations except in case of shared projects. Till previous year company wascharging deprecation on SLM basis at the rates/useful life notified by The Forum of Regulators on dated23.06.2006 in pursuance to Para 5.3(c) of the Tariff Policy issued by the Ministry of Power, Gol on dated06.01.2006 duly adopted by RERC except in case of shared project. Due to this change in the accountingestimate, depreciation for the current year is higher by Rs.269,10,85,274.” In reply filed by the assessee objecting to the reopening of assessment on this issue, it was specifically pointed out that u/s 115JB the amount of depreciation debited to P&L is to be added and the amount of depreciation debited to P&L excluding the depreciation on account of revaluation of asset is to be reduced but the AO in disposing the objections has not rebutted this contention of the assessee. Thus, there was no new material with the AO apart from what is already on record to allege that by allowing deduction of depreciation of Rs.269.10 crore, the book profit has been under computed resulting into escapement of income.

2. It may be noted that in the reasons recorded for reopening, the AO has not referred to any information or material which has come to his possession after the completion of assessment to have reason to believe that the income has escaped assessment. In fact the AO has relied on the same material which was already on record while making the assessment u/s 143(3). Thus, it is only a case of change of opinion of AO and not a reason to believe that income has escaped assessment. The fact of appraising the same material available on record for reopening of assessment is accepted by the AO also in the reasons recorded for reopening. Hence the reopening is illegal and bad in law. Reliance in this connection is placed on the following cases:- RampalSamdaniVs. Union of India (2023) 222 DTR 137 (Raj.) (HC) In the notice issued to the assessee u/s 148 dt. 30th March, 2021, there is not a whisper that the assessee made non-disclosure or untrue disclosure of material facts in the return filed for the AY 2013-14. Facts were unquestionably disclosed and under consideration of the ITO who passed the assessment order dt. 17th June, 2021. In addition thereto, the reassessment notice has been issued only on account of ‘change of opinion’, plain and M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. simple, without any tangible fresh material being available to the ITO for reopening the assessment proceedings. Reopening was not therefore sustainable. Nila Infrastructures Ltd. Vs. ACIT (2023) 223 DTR 401 (Gujarat) (HC) There is no whisper in the impugned order as regards any failure on the part of assessee to disclose fully and truly all material facts. Grounds on which the AO has proposed to reopen the assessment were part of the scrutiny during the assessment and the AO having consciously taken a particular decision, the change of opinion cannot form the basis for reopening the assessment that too based on same set of facts. Great Eastern Shipping Co. Ltd. Vs. NFAC &Ors. (2022) 211 DTR 442 (Bom.) (HC) There is no tangible material coming into existence after conclusion of regular assessment proceedings and before recording of the reasons on the issues stated in the reasons recorded for reopening the case. Reassessment is stated to be made on the material already on record and considered at the time of passing the original assessment order u/s 143(3). Reopening was therefore not sustainable. Asianet Star Communications Pvt. Ltd. Vs. ACIT (2020) 191 DTR 152 (Mad.) (HC) Even in cases where there is no discussion in regard to specific issues, if it is established by the assessee that all material relevant and germane to that issue were available before the AO, easily discernible and part of the record, reassessment is impermissible.Further, even as per the reasons stated, there is no new material that has come to the notice of the authorities and the impugned exercise is undertaken solely on the basis of the materials already supplied by the petitioners and available on the records of the department.That apart, reopening was on the basis of audit objection which is not permissible. State Bank of India Vs. ACIT &Ors. (2018) 172 DTR 401 (Bom.) (HC) Assessment orders passed in regular assessment proceedings do refer to examining the computation of income filed along with the return of income. Moreover, the assessment order in regular assessment proceedings in terms disallowed some of the claims made for deduction under sec. 143(3). Therefore, in the present facts, the AO has by necessary implication allowed the claim. Moreover, the basic document for completing the assessment under sec. 143(3) is the computation of income. Therefore, to the extent the claims made for deduction in the computation of income were disallowed by the AO, discussion on the same is found in the assessment order. It is an accepted position that the assessment orders would necessarily deal only with the claims being disallowed and not with the claims being allowed. Where the AO accepts the claim made, the occasion to ask questions on it will not arise nor does it have to be indicated in the order passed in the regular assessment proceedings. Thus, issuing the impugned notices on the above ground would prima-facie amount to change of opinion. Admittedly no fresh material/information was obtained by the AO as the same does not find mention in the reasons recorded in support of the impugned notice. Hence, the impugned notices are without jurisdiction. Hitech Corporation Ltd. Vs. ACIT Writ Petition (L) No.6861 OF 2022 order dt. 09.03.2022 (Bom.) (HC) The assessment of the petitioner was completed u/s 143(3) of the Act. In the course of assessment proceedings specific question was raised as regards taxability of the subsidy and provision for expenses. After considering the reply the AO accepted the contention of M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. the petitioner and partly disallowed the provision for expenses. Against the order of AO the petitioner preferred an appeal before the CIT(A) which is pending for disposal. After the expiry of four years the AO issued the notice for reassessment and in the recorded reasons the AO proposed to make addition as regards the subsidy and provision for expenses. The petitioner filed detailed reply objecting to proposed reassessment, however, the AO rejected the objection without discussing any of the contention of the petitioner. It was held that it is quite clear that both the issues raised in the reasons for reopening were subject matter of consideration before the AO. When primary facts necessary for assessment are fully and truly disclosed, the AO is not entitled on change of opinion to commence the proceedings for reassessment. Where on consideration of material on record, one view is conclusively taken by the AO, it would not be open to reopen the assessment based on the very same material with a view to take another view. The notice, therefore, has to go. Further it is settled law that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. The change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Further the order disposing the objections, though running into almost 21 pages, does not deal with any of the submissions made by petitioner on merits. The Faceless AO, though has listed some 68 orders/judgments to justify why the notice was issued, has not made any effort to set out how those judgments/ orders were applicable to the facts and circumstances of the case. He has also not even made an effort to deal with the submissions of petitioner on the facts that these two issues were subject matter of consideration during earlier assessment proceedings. Thus, the Faceless AO has only wasted his time in writing such unsustainable order on objections. Upal Developers (P) Ltd. Vs. DCIT &Ors. (2022) 211 DTR 196 (Bom.) (HC) It is not the case where assessee has not disclosed any details. The figures and details are available not only in the return of income, profit and loss and balance sheet filed by assessee but all these points have been raised and considered in the original assessment order passed. Assessee had fully and truly disclosed all material facts necessary for the purpose of assessment which are wrongfully alleged as not disclosed fully and truly. Not only material facts were disclosed by assessee truly and fully but they were carefully scrutinized and figures of income as well as deduction were reworked carefully by the AO. When on consideration of material fact one view is exclusively taken by the AO it would not be open to reopen the assessment based on the very same material with a view to take another view. In view of above, reopening of assessment u/s 147 is illegal and bad in law and be quashed.

On the other hand, the ld. DR supported the order of the ld. CIT(A) 6.4 on the issue in question.

M/s Rajasthan Rajya Vidyut Prasaran Nigam Ltd. 6.5 We have heard both the parties and perused the materials available on record. Since, we have decided ground No. 2 to 4 of the assessee in its favour which is the reasons recorded for reopening the assessment, therefore, we are of the considered opinion that the legal ground needs not require separate adjudication and, therefore, the same is dismissed as infructuous. 7.0 In the result,the appeal of the assessee is partly allowed. Order pronounced in the open court on 24/08/2023.