PCIT-7 Vs Tata Power Delhi Distribution Limited (Delhi High Court)
In PCIT-7 Vs Tata Power Delhi Distribution Limited, the Delhi High Court dismissed the Income Tax Department’s appeal after condoning delays of 67 days in filing and 120 days in refiling. The appeal raised multiple substantial questions of law concerning deletion of additions and disallowances by the Income Tax Appellate Tribunal (ITAT).
On the issue of derecognition of income relating to efficiency gains, the Court held that the matter was already covered by its earlier judgment dated 11.03.2020 and decided it against the Department. Regarding addition under Section 43B for unpaid energy tax, the Court upheld the findings that tax liability arises only upon collection from consumers, relying on prior High Court and Supreme Court decisions, and rejected the Department’s contention.
On interest payable on consumer security deposits, the Assessing Officer had treated part of the liability as contingent and disallowed it. The Court held that such interest is a statutory and contractual obligation payable to consumers and cannot be treated as contingent, thereby affirming the Tribunal’s deletion of the addition.
With respect to depreciation on UPS, the Court agreed with the Tribunal that UPS is an integral part of a computer system and is eligible for depreciation at the higher rate applicable to computers. On deduction under Section 80IA, the issue was again held to be covered by the earlier judgment and decided against the Department.
