IN THE ITAT HYDERABAD BENCH ‘B’
G.V.K. Industries Ltd.
V/s.
Assistant Commissioner of Income-tax
IT APPEAL NOS. 1579, 1580, 1659 & 1660 (HYD.) OF 2008
[ASSESSMENT YEARS 2002-03 AND 2006-07]
MARCH 30, 2012
ORDER
Assessee’s Appeal – ITA No.1659/Hyd/2008:
2. There are three grounds in this appeal of the assessee. Grounds No. 1 and 3 are general and do not call for separate adjudication and that leaves the singular Ground No. 2 for consideration and it has three sub-grounds and they read as under:
2(a) The CIT(A) grossly erred in confirming the action of the AO in making addition of Rs. 2,40,45,266/- representing Income tax Receivable from AP TRANSCO as income for the AY 2002-03 ignoring the submissions of the appellant.
(b) The CIT(A) grossly ought to have seen that the reimbursement of the income tax is disputed by AP TRANSCO and since it is not reimbursed so for, the said amount has neither accrued not crystalised and therefore cannot be taken as the appellant’s income for the AY 2002-03.
(c) The CIT(A) grossly erred in holding that the Income tax receivable from AP TRANSCO is assessable under the head income from other sources but not as income from business.
3. The first limb mentioned in ground 2 vide the sub-grounds 2(a) and 2(b) relates to making of an addition on account of income tax receivable from A.P. Transco as income of the assessment year 2002-03 under the correct head of income. Other limb mentioned in sub-ground 2(c) relates to the decision of the AO in changing the head of income in the respect of the above receipt and taxing the same under the head ‘income from other sources’.
4. Briefly stated, relevant facts of the case are that the assessee is engaged in the business of generation of electricity and selling the same to APTRANSCO, a subsidiary of APSEB. During the assessment proceedings, AO made an addition of Rs. 2,40,45,266/- representing the ‘income tax receivable’ from AP TRANSCO. Factually, the Power Purchase Agreement provides for reimbursement by the AP TRANSCO of the ‘income tax payable’ to the assessee and accordingly, the assessee raised the bill in respect of the tax paid under MAT provisions also and the AP TRANSCO refused to reimburse the same. Of course, there is no dispute on the tax paid under normal provisions. Thus, there is dispute on the very payability of the MAT segment of tax by AP TRANSCO to the assessee, who of course incessantly demanded for reimbursement and the matter reached the judicial forum for arbitration first before the APERC and then to the AP High Court. Therefore, assessee has disputed the issue and the impugned MAT was never reimbursed till date and the issue is still pending for finality. Ignoring the above facts, on accrual basis, the AO taxed the same and the CIT(A) confirmed the said decision.
5. AO in taxing the said receivable ignored the assessee’s argument that the said income tax (MAT) receivable is a disputed one and the same has never been reimbursed to the assessee at all. The CIT(A) ignored the fact that the said receipt neither accrued nor crystallized in the year under consideration. Under the factual matrix of the above, Shri Shiv Kumar, Ld counsel for the assessee, at the very outset, narrated the issue and made a mention that there is a case for setting aside the issue to the file of the assessing officer for one more round of proceedings. For strengthening his arguments, Ld counsel for the assessee drew our attention to the paper-book filed before us on the day of hearing on these appeals, viz. 6.3.2012, and took us through the annexure to the said covering letter dated 5.3.2012. The contents of that covering letter are reproduced hereunder-
“Petition seeking admission of additional evidence under rule of Income Tax Appellate Tribunal Rules, 1963
The above numbered appeal has been filed by the assessee. The assessee is contesting the decision of the CIT(A) who held the reimbursement of income tax to which the assessee is entitled as per Power purchase agreement between the assessee and APSEB is to be treated as income accrued to the assessee inspite of the fact that the liability pay the same has been repudiated by the APTRANSCO (one of the successors top APSEB)
2. The assessee has filed copy of a letter issued by APTRANSCO in support of its contention as part of the paper book filed by it. APTRANSCO has issued more than one letter in successive years, returning the bills submitted by the assessee without payment, based on the earlier letter dated 20.11.2003 issued by it. It is submitted that these documents proposed to be filed before the Hon’ble Income Tax Appellate Tribunal as addl. evidence constitute vital evidence to show the APTRANSCO repeatedly declined to pay the amounts of Income tax reimbursable to the assessee as per Power Purchase Agreement with APSEB. The assessee submits that copies of two bills submitted by the assessee and copies of letters issued by APTRANSCO as per table given below are proposed to be introduced as additional evidence. The assessee prays that the undermentioned documents may kindly be admitted as addl. evidence and taken into account while adjudicating the appeal.
