Whether Section 43B is applicable on Electricity Duty payable by the Licensee Assessee being Distributor of Power and Electricity – Recent Judicial Pronouncement
Held by Hon’ble High Court of the State of Punjab & Haryana in the case of [2023] 146 taxmann.com 14 (Punjab & Haryana) Principal Commissioner of Income-tax V Dakshin Haryana Bijli Vitran Nigam Ltd that Section 43B of the Income Tax Act, 1961 a non-obstante clause overriding the entire IT Act is not applicable on the assessee, licensee under the Electricity Act engaged in the distribution of power, collected duty from customers & passing the same to the State Electricity Board. The Hon’ble High Court further held that the Assessee a licensee is mere act as the agent of the State Electricity Board as per the terms of the license for distribution.
Brief Facts of the case: The Assessee is a licensee under the Electricity Act, 2003 and was engaged in the State of Punjab & Haryana for distribution of power, electricity & collection of electricity duty from consumers for passing to the credit of State Government. The ROI for the Assessment Year 2008-09 was filed by the assessee declaring the NIL Income & the same was also accepted by the Assessing Officer while passing the order u/s 143(3) of the Act. However, later the Commissioner of Income Tax exercised his revisionary powers u/s 263 & revised the AO order. AO while giving the appeal effect of the revision order u/s 153(5)/263 disallowed the deduction of electricity duty u/s 43B & certain other deductions.
The assessee preferred an appeal u/s 246 before the CIT(A) & CIT(A) u/s 250 passed the order & allowed the appeal of the assessee with respect to the deduction u/s 43B. Later the matter was taken before the ITAT. The decision of the CIT(A) was upheld by the ITAT on the issue of allowance of deduction u/s 43B. Now, both the parties preferred an appeal before the Hon’ble High Court.
The Hon’ble High Court noted down the relevant provisions of the Punjab Electricity (Duty) Act, 1958 in Para 9 of the Judgment. Further, As per Section 4 of the aforementioned Act read with Section 5, 9 & 10 and explanation annexed thereto, it is cleared that the liability of payment of electricity duty lies on the customer & payable to the State Government. The Distribution Company i.e. the assessee in the present case only acting as a Recovery agent of electricity duty. Section 4 casts an statutory duty of the licensee Assessee to collect the duty from the customer & the same is required to be deposited to the credit of the treasury of State Government.
Section 43B of the Income Tax Act, 1961 is a non-obstante clause & is applicable only when the tax, duty, cess or fee is payable by the assessee. In the present case the Electricity Duty is not payable by the Assessee. Further, the High Court distinguished the case of CIT v. Ahmedabad Electricity Co. Ltd. [2003] 129 Taxman 190/262 ITR 97/181 CTR 222 (Guj.). upon which the reliance was placed by the Revenue. The High Court observed that such judgment was misplaced by the Revenue and not applicable in the case in hand. The Court states that the in the case of Ahmedabad Electricity Co Ltd. It was found that the clear duty of the paying the electricity duty lies with the distribution company & thus the provisions of Section 43B was rightly attracted. The High Court further laid down the relevant extracts of the Judgment of Calcutta High Court in the case of CESE Ltd. v. CIT [2015] 61 taxmann.com 92/235 Taxman 6/280 CTR 501 (Cal.), as follows:
………’’Thus, in our view, the electricity duty, not being a sum payable by the assessee as a primary liability by way of tax, duty, cess or fee, Section 43B is not attracted to the licensee/assessee in respect of electricity duty collected by it for being passed on the State Government.”
Hence, the appeal of the assessee was allowed to the assessee & decided against the revenue.
Author Bio
