PCIT Vs M. P. Paschim Kshetra Vidyut Vitran Company Ltd. (Madhya Pradesh High Court)
The Madhya Pradesh High Court has dismissed an appeal filed by the Principal Commissioner of Income Tax-I, upholding the decision that “Supply Affording Charges” and “Electrification Charges” recovered by an electricity distribution company are capital receipts, not revenue receipts. This ruling was made in the case of PCIT Vs M. P. Paschim Kshetra Vidyut Vitran Company Ltd.
The appeal, filed under Section 260A of the Income Tax Act, 1961, challenged an order dated April 10, 2024, which had dismissed the Income Tax Appellate Tribunal’s (ITAT) decision for Assessment Year 2012-13, along with other related assessment years.
M. P. Paschim Kshetra Vidyut Vitran Company Ltd. (DISCOM), an electricity distribution company, had filed a return declaring a loss of Rs. 2,39,34,28,780/- for the Assessment Year 2012-13. During scrutiny assessment, the Assessing Officer (AO) identified Rs. 35,57,00,000/- as “Supply Affording Charges” and “Electrification Charges,” which the AO considered revenue receipts but the company had treated as capital receipts.
On February 27, 2015, the AO ordered that these amounts should be credited to the Profit and Loss account as revenue receipts, leading to an addition to the company’s total income and imposition of a penalty for concealment of income.
