Vbc Ferro Alloys Limited, [Hyderabad' v. The Hon'ble The Chiefjustice Ujjai Bhuyanand

IMTHE HIGH COURT FOR AT HYDERABAT) WEDNESDAY ,THE TWENTY TWO THOUSAND AND TWENTY PRESENT THE HON'BLE THE CHIEF ANDTHE HON'BLE SRI JUSTICE [C.V. ] INCOME TAX TRIBUN [N][O: ][6][4 0F ][2004] Appeal Under Section [260 ][A of the lncome ][Tax ][Act ][, ][1961 ][aggrieved ][by]the order in l.T.A. [No. 643 ][t ][Hyd ] [2001 datecl 30-05-2002 ][on ][the ][file of ][the]lncome Tax Appellate Tribunal , [Hyderabad Bench- ][A., Hyderabad ][preferred]against the order of the [Commissioner ][of ][lncome Tax ][( ][Appeals ][) ' ][ll]HyderabadinlTANo.24lJCSR'5/ClT(A)-ll/1999-2000dated13-06-2001the Joint [commissioner ][of ][lncometax ][( ][Assts).,]preferred against the order of Special Range [-5, ]Hyderabad [dated ][30'03'1999 ][in ] [/ ] [No' V'3 ][/SR's] Between: Commissioner Of lncome [Tax-lll, ][Hyderabad.] ...APPELLANT AND VBC Ferro Alloys Limited, [Hyderabad'] ,,.RESPONDENT Counsel for the Appellant: SRl. [J. V. ] [(SC ] [INCOME TAX)]Counsel for the Respondent: The Court made the following: THE HON'BLE THE CHIEFJUSTICE UJJAI BHUYANAND THE HON'BLE SRIJUSTICE C.V.BHASKAR REDDYI.T.T.A.No. 64 of 2004 IUDGMELI, Prr [rhe ][Hon'bh ][rhe ][ChieJJ'li@ ][Uial ][Bh,Ja,,)] Heard Mr. J.V.Ptasad, learned Standing Counsel for thelncome Tax Department appearing for the appellant andMr. Challa Gunaranjan, learned counscl for rhe r espondenr-ASSCSSEE. 2. This appeal has been prcferred by thc re\renuc as theappellant under Section 260-A of the Income ['fax ]Act, 1961 (briefly'the Act' hereinafter) assailing the legaliry ancl validiry of rhe orderdated 30.05.2002 passed by the Income Tax Appellare Tribunal,Hydeabad Bench 'A', Hyderabad (fribunal)1nI.T.A.No. 643/Hyd /2001 for the assessmentyear 1996-97.3. Though the appeal was admitted on 01.04.2004, substanrialquestions of law were not framed as requircd under Section 260-4of the Act. However, lrom the memo of appeal, rvc find that thefollowing rrvo questions have been proposeditssubstandal questions of law: (A) In the facts and citcumstances [of ][the ][case,]whether the Appellate [Tribunal ][is ]iustified [in ][holding]that the additional charges [and ][interest ][payable ][to ][the]A.P.State Electricity [Board ][for ][the ][delayed ][pa)':rnent]of consumption charges [does ][not ][fall ][vdthin ][the]of fee and [hence ][it is ][deductable ][as]puruiew expenditure [nonvithstanding non-remittance ][of ][the]same before the [date ][stipulated ][U/s.438 ][of ][the]I.'I.Act ? (t)) Whcther thc Appellate [Tribunal ][is ][justified ][in]holding that the assessee [is ][entided ][to ][giant of]deduction of the cxpendirure [in ][spite ][of ][the ][same ][not]having bcen recorded in the [books ][of ][accounts ][much]less claimed as a deduction [in ][the ][return under ][the]I.T.Act ? 4. As per the lrst [question, ][decision ][of ][the ][Tribunal ][that]additional charges [and interest paid ][to ][the ][Andhra ][Ptadesh ][State]Elecricity Board for [delayed payment ][of ][consumption ][chatges]does not fall vithin [the ][purview ][of ][fee and hence, ][it ][is ][deductible ][as]expendirure, is questioned. [It ][is questioned ][on ][the ][ground ][that ][it] \l\ is covered under Section 438 of the Act. Since there was non-payment within the stipulated period, it was not a deductable item.5. On the other hand, second question pcrtains to entitlementof the assessee to deduction ol the cxpenditure incurrcd in spite ofthe same not being recorded in the books o[ accour.tt as rvell as notclaimed as a deduction in the income tax returfl filecl under the lct.The second quest.ion has been raised on the ground that the saiddeduction was oot so claimed by the assessee either in thc incometax return filed or during the assessment proceedings before theassessing officer. \l\ is covered under Section 438 of the Act. Since there was non-payment within the stipulated period, it was not a deductable item.5. On the other hand, second question pcrtains to entitlementof the assessee to deduction ol the cxpenditure incurrcd in spite ofthe same not being recorded in the books o[ accour.tt as rvell as notclaimed as a deduction in the income tax returfl filecl under the lct.The second quest.ion has been raised on the ground that the saiddeduction was oot so claimed by the assessee either in thc incometax return filed or during the assessment proceedings before theassessing officer. 6. It is not necessary for us to traverse through the orderspassed by the revenue authorities inasmuch as both the qucst.ionsare covered b1, decisions oF the Supreme Court as rvcil as o[ thisCout. lInsofar the first question is concerned, the same is squarely\,covered by a decision of this Court reported in CIT v. Andhra Ferro Alloys (P) Ltdt. In the sard [decision, ][a ][Division ][Bench ][of]this Coutt had examined the contours of Section [438 ]of [the ][Act]and thereafter, held as follows: Section 438 of the Act does not specificallymention about the electricity charges. The proviso tothe Section says that an assessee has to pay the actualLiabitty on or before the due date applicable in thiscase for furnishing the return of income. In theinstant case, the assessee challenging the balanceelecuiciry clrarges of Rs.52,23,790/-, filed a writpetition before this Court against the APSEB and thisCoutt granted interim stay and the writ petition ispending. As such, the assessee has shown tl:e [said]amount as liabiliry. In this view of the matter, we [are]of the cotrsidered opinion that the [assessee ]has to [pay]tlre disputed clectricitl' charges of Rs.52,23,790/- tothe APSEB as it obtained stay from this Court, and [as]sucl-r, the provisions of Sectjon 43B of the Act wouldnot attract to such unpaid electricity charges.Further, non-payment of such disputed electricitychatges to the APSEB cannot be termed as 'fees' andthat thc Revenue has to give deduction to the [said]amount. The Tribunal while allowing the Appeal held thatthe electricity charges partake the narurc of statutoryliabilitv and accordingly will have to be allorvcd asdeduction irrespective of whether or not the same hasbeen paid and notwithstanding that thc assessee hasdisputed any liability to pay any part of such charges.Section 438 of the Act does not speak about theelectricity charges. Nowhere it is mentioned in theSection or proviso to it that unpaid electricity chargesare flot deductable. The Revenue cannot intelpretthe provisions of Section 43B of the Act in its favour,since the provisions of Section do not incolporate theelectricity charges. Therefore, we are o[ theconsidered opinion that such electricity charges ate inthe nature of starutory Iiability and the Revenue hasto allow them as deduction irrespective of rvhether ornot the same has been paid and notwidrstanding thatthe assessee has disputed any liabiliqv to pay any partof such charges." 8. 8. Regarding the second question, the issue was setded by theSupreme Court in National Thermal Power Company LimitedvCommissioner of Income Tax2, rvhich rvas explained by theSupreme Court in Goetze (India) Ltd. V. Commissioner of Income Tax3. [-fhis ]issue croppcd up again [before ][the ][Supreme] Court in Wipro Finance Limited v. CITa [wherein ]it [has ][been]clarified tl-rat thcrc is no bar for an assessee to set up [a ][fresh ][claim] before the Tribunal though such a bar may oPerate [against ][the]reveflue. 9. In vierv of the above, both the questions [proposed]ASsubstantial queslions o[ law are answered against [the ][revenue and ][in]lavour of the as sessee. 10. Consequendy, the appeal is dismissed. No costs. As a sequel, miscellaneous petitions, pending if any, [stand] dismissed. SD/.B.S.CHIEVIJOINT REGIRAR//TRUE COPY//SECTIONFICER To, 1. The lncome Tax Appellate Tribunal , [Hyderabad ][Bench- ][A., ][Hyderabad] 2. The Commissioner of lncome Tax [( ]Appeals ) [- ]ll [Hyderabad] Income Tax3. [-fhis ]issue croppcd up again [before ][the ][Supreme] Court in Wipro Finance Limited v. CITa [wherein ]it [has ][been]clarified tl-rat thcrc is no bar for an assessee to set up [a ][fresh ][claim] before the Tribunal though such a bar may oPerate [against ][the]reveflue. 9. In vierv of the above, both the questions [proposed]ASsubstantial queslions o[ law are answered against [the ][revenue and ][in]lavour of the as sessee. 10. Consequendy, the appeal is dismissed. No costs. As a sequel, miscellaneous petitions, pending if any, [stand] dismissed. SD/.B.S.CHIEVIJOINT REGIRAR//TRUE COPY//SECTIONFICER To, 1. The lncome Tax Appellate Tribunal , [Hyderabad ][Bench- ][A., ][Hyderabad] 2. The Commissioner of lncome Tax [( ]Appeals ) [- ]ll [Hyderabad] 3. The Joint Commissioner of lncometax [( ][Assts)., Special Range ][-5,]HyderabadHyderabad 4. One CC to SRl. J. V. PRASAD [(SC ]FOR [INCOME TAX), Advocate ]IOPUC] 5. One CC to SRl. CHALLA GUNARANJAN, [Advocate ]IOPUC] 6. Two CD Copies 7. One Spare Copy Nfr\r-'-- I \ HIGH COURT DATED:21 10912022 STAT6 O t \)2t [olI ][?$11]I, ORDERITTA.No.64 of 2004@DISMISSING THE TTTA WITHOUT COSTS N\',A \"\--a,