Telangana Power Generation Corporation Limited Vs DCIT (ITAT Hyderabad)
Summary : In Telangana Power Generation Corporation Limited vs DCIT (ITAT Hyderabad, order dated 25 July 2025), the Tribunal dealt with the appeal filed by the assessee, a government undertaking engaged in electricity generation, against the order dated 18 June 2024 passed by the CIT(A)-5, Mumbai for Assessment Year (A.Y.) 2021–22. The appeal arose from disallowances made under Section 143(1) of the Income Tax Act, 1961, by the CPC Bengaluru, including (i) Rs. 59.11 lakh towards employees’ EPF contribution, (ii) Rs. 21.92 crore towards contribution to pension and gratuity trust under Section 43B, (iii) Rs. 36.54 lakh towards taxes and duties, and (iv) Rs. 25.93 crore towards interest on pension bonds claimed as deduction as per IND AS-109 adjustments.
The Tribunal primarily considered two major issues: disallowance of Rs. 25.93 crore related to IND AS-109 adjustment on pension bonds, and disallowance of Rs. 21.92 crore towards contribution to the pension and gratuity trust.
Disallowance of Rs. 25.93 crore on Pension Bonds (IND AS-109 Adjustment):
The assessee explained that the liability to discharge past pension and gratuity obligations of employees of the erstwhile Andhra Pradesh State Electricity Board (APSEB) was transferred to Andhra Pradesh Power Generation Corporation (APGENCO) under the Andhra Pradesh Electricity Reform Act, 1998. Following the state bifurcation under the A.P. Reorganisation Act, 2014, Telangana Power Generation Corporation Limited (TGENCO) assumed part of these liabilities. Bonds were issued to the trustees of the Andhra Pradesh State Electricity Employees’ Master Pension and Gratuity Trust to meet these obligations.
