DCIT Vs NLC India Ltd. (ITAT Chennai)
The main objection of the AO is that the new unit started cannot be considered as separate undertaking because it is using the same manufacturing technology and the finished goods are also the same, i.e., power. The new unit, i.e., unit TPS-I Expansion is nothing but the expansion of the already existing TPS-l unit. He further stated that benefit of sec 80-lA shall be applicable only to the assessee who have started “new business” of generation of power and not to those expanding their business by establishing new plant and machinery and also by introducing new technology for enhancing existing productivity. But reading of the section, in my opinion, does not lead to the interpretation as expounded by the AO. Relief u/s 80-lA(1) is in respect of profits and gains derived by an undertaking from business referred to in subsection (4) of sec 80-lA. In the present case, as per clause(iv) of sub-sec (4), deduction in respect of an undertaking which is set up in any part of India for the generation or generation and distribution of power if it begins to generate power at any time during the period beginning on the 1st day of April, 1993 and ending on 31st day of March, 2011 shall be 100% of the profit for a period of ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise generates power or commences transmission or distribution of the power. Therefore, deduction is clearly for the profits of an undertaking and not for an undertaking engaged in a new business. Similar expressions as found in sec 80-IA are found in sections 80HH, 80I and 80J. For example, in section 80J, deduction is in respect of new undertaking and the section also has similar proviso referred to by the AO. The Supreme Court while interpreting the Section 80J in the case of Textile Machinery Corporation Ltd v. CIT, 107 ITR 195 (SC) has held that expansion of the existing business will also be entitled to relief under section 80J. In the case of CIT v. Ganga Sugar Corporation Ltd, 92 ITR 173 (Del.), it was pointed out that the concept of reconstruction of business is not attracted when a company which is already running one industrial unit sets up another industrial unit. The industrial unit, it was pointed out, would not lose its separate and independent identity even though it has been set up by a company which is already running an industrial unit. It was further pointed out that the object of the section was to provide an incentive for selling up of new industries so as to accelerate the process of industrialization and that it does not appear or to have been the intention of the legislature that the benefit of the section would be confined only to parties who had not already set up such industrial undertakings and not to parties who had past experience of running similar industrial undertaking. This principle has since been approved by the Supreme Court in the case of Textile Machinery Corporation Ltd(supra). Applying the principles of the above decision of the Hon’ble Supreme Court, it has been held that mere fact that the second unit manufactured some of the items which were manufactured by the first, did not make it an integral part of the first unit as it could survive independently of the first unit. Reference may be made to (the decision in CIT v. Indian Aluminium Co Ltd, 108 ITR 367(SC), CIT v. Gedore Tools (India) P. Ltd, 126 ITR 673, CIT v. Ambur Cooperative Sugar Mills Ltd, 127 ITR 495(Mad.), CIT v. Hutti Gold Mines Co.Ltd, 128 ITR 476(Kar). In the case of the appellant, the main section grants relief in respect of profits and gains of an undertaking. Explanation 2 under subsection (3) of sec 80-IA cannot govern or restrict the relief available under the main section. It is not correct to interpret the relief that can be granted u/s.80-IA on the basis of a wording in an Explanation to a subsection concerned only with regard to transfer of machinery previously used for any other purpose to a new business. Various Hon’ble Courts including the Hon’ble Supreme Court, on issues relating to deductions u/s. 80HH, 80I and 80J, have consistently held that expansion in production of the existing product in a geographically separate and independent undertaking will be entitled to relief under those sections. In fact, the heading of these section as well as 80-lA is “Deduction in respect of profits and gains from industrial undertakings or enterprise engaged in infrastructure development, etc..” and not “profits and gains from certain new business”. In these circumstances, I am of the considered opinion that the appellant is entitled to relief under section 80-lA in respect of TPS-l Expansion. The requirement regarding investment in the plant and machinery and other conditions for availing benefit of deduction u/s.80-IA have also been satisfied and the AO has not raised any other objection regarding these conditions. In view of the above factual position and authoritative precedents, the deduction claimed by the appellant us 80-IA is allowed. Accordingly, the ground is allowed.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
These cross appeals filed by the assessee, as well as the Revenue are directed against separate, but identical orders of the Commissioner of Income Tax (Appeals)-5, Chennai both dated 27.12.2017 and pertain to assessment years 2013-14 & 2014-15. Since, facts are identical and issues are common, for the sake of convenience these appeals are heard together and are being disposed of by this consolidated order.
2. The assessee as well as the Revenue have raised common grounds of appeal for both assessment years and therefore for the sake of brevity, following grounds of appeal filed by the assessee and the Revenue for assessment year 2013-14 are reproduced as under:-
Assessee’s Appeal
Disallowance of ‘other income’ under Section 80IA
The Learned AO and CIT(A) erred in disallowing amount to the tune of Rs. 27,80,384 under Section 80IA the following income classified as ‘other income’ without appreciating the fact that there is first degree nexus with the business of the assessee
II. The Learned AO and CIT(A) failed to appreciate the fact that the decision of Hon’ble Apex Court in the case of M/s Liberty India (317 ITR 218) is not applicable to the facts of the present case.
III. Without prejudice to the above, the Learned CIT(A) erred in estimating only 10% of ‘other income’ as expenses incurred in relation to earning of the ‘other income’ and 90% thereof as profit element therein not eligible for deduction without any nexus to any material or evidence.
Disallowance of expenses under Section 14A
IV. The Learned AO and CIT(A) erred in remanding the issue of applicability of Section 14A for fresh consideration by the Learned AO without appreciating that during the Assessment year 2004-05, the power bills due and surcharge dues from EB’s has been converted into 8.5% Tax free SLR Power bonds issued by the State Government.
V. The Learned AO and CIT(A)failed to appreciate that no expenditure was incurred by the Assessee for earning the exempt income and the Bonds are kept in dematerialized form.
VI. The Learned AO and CIT(A) has included even investments in equity shares of the subsidiary of the Appellant without appreciating the fact that no income tax free dividends were received in the relevant year.
VII. The Learned AO and Learned CIT(A) has failed to appreciate that the investment made in equity shares of the subsidiary company was strategic in nature and was not merely for the purpose of earning exempt income in the form of dividends and hence, the Learned AO has erred in making disallowance under section 14A read with Rule 8D.
VIII. The Learned AO and CIT (A) failed to appreciate that no expenditure was incurred by the Appellant for earning the exempt income, if any, from the investment made in equity shares of the subsidiary.
Disallowance of surcharge recoverable from EBs
IX. The Learned CIT(A) erred in holding that the surcharge recoverable from electricity boards is taxable in the year under appeal ignoring the fact that there was no accrual owing to uncertainty in realization of the sum involved.
X. The Learned CIT(A)failed to appreciate that the said accounting treatment of postponing the recognition of income is as per Accounting Standard-9 issued by the Institute of Chartered Accountants of India.
XI. The Learned CIT(A) has also failed to appreciate that the facts of the Appellant’s case are squarely covered by the decision of the Hon’ble Apex Court in Godhra Electric Co Ltd
[(1997) 255 ITR 746] (SC)].
XII. The Learned CIT(A) has erred in following its earlier order in ITA No. 2161, 2162, 2163/Mds2016 & ITA No. 2199 & 2200/Mds/2016 wherein the Hon’ble Bench of the ITAT held that the recovery is assured by the tripartite agreement ignoring the fact that the Appellant is not a party to the agreement and therefore in view of the well-established principle of ‘privity of contract’ could not have enforced the same. The finding on assurance of recovery is therefore based on irrelevant evidence. The Hon’ble ITAT has thus erred in not considering the fact that even when the tripartite agreement was in place, there remained uncertainty with respect to realization.
XIII The Learned CIT(A) ought to have appreciated that the Appellant is entitled to deduction on account of any debt written off as irrecoverable in the books of account as can be inferred from the decision of Hon’ble Apex Court in the case of TRF Ltd. v CIT [(2010) 323 ITR 397 (SC)] and the accounting and tax treatment of the Appellant in not recognizing the revenue is equivalent to the accounting and tax treatment of recognizing the revenue and simultaneously writing off the same as bad debt. Thus, in view of the settled law [CIT v. Sarkar Builders (2015) 375 hR 392 (SC)] that an assessee should not be prejudiced by the differences in accounting treatment adopted by him, the Hon’ble ITAT ought to have accepted the plea of the Appellant.
XIV The Appellant craves leave to alter, modify, add any additional grounds of appeal during the course of the proceedings.
Revenues Appeal
1. The order of the learned CIT(A) is contrary to law and facts and circumstances of the case.
2. The learned CIT(A) has erred in deleting the disallowance made u/s 801A in respect of TPS-l expansion unit by placing reliance on its ITAT order in the assessee’s own case for the AY 2001-02 and 200809 to 2010-li.
3. The learned CIT(A) has erred in allowing the depreciation @ 60% on UPS holding it as part of computer as against 15% allowed by the Assessing officer holding it as part of plant and machinery.
4. The learned CIT(A) has erred in treating the drainage and water supply system as plant instead of building for the purpose of depreciation claim.
5. The learned CIT(A) has erred in allowing the claim of expenses towards the insurance spares holding it as a revenue in nature instead of capital expenditure.
6. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing officer be restored.
Assessee’s Appeal in ITA Nos.868 & 869/CHNY/2018
3.0 The first issue that came up for consideration from assessee appeal for both assessment years is disallowance of other income for computation of deduction u/s.80IA of the Income Tax Act, 1961 (hereinafter the ‘Act’). The facts with regard to the impugned dispute are that while computing deduction u/s.80IA of the Act, the assessee has included other income being miscellaneous receipts consisting of tender from sales, hospital receipts, notice pay, hire charges of car recovery from employees, insurance claims, forfeiture deposits, etc., and also interest from others. Besides, the assessee has also included surcharge received from Electricity Boards as per the proviso to Regulation 5(3) of Central Electricity Regulatory Commission [Terms and Conditions of Tariff Regulation 2009]. The ld.AO excluded other income for the purpose of computing deduction claimed u/s.80IA of the Act, on the ground that said other income is not derived from the business in order to be eligible for claiming deduction. The AO was further of the opinion that unless income is having first degree nexus with the main business activity, the income is not eligible for claiming the benefit of deduction provided under the Act. On appeal, the ld.CIT(A) upheld the findings of the AO by following the ITAT order in assessee’s own case for assessment year 2007-08 to 2010-11, where the Tribunal has upheld re-computation of income eligible for deduction u/s.80IA of the Act.
3.1 The ld.AR for the assessee, at the time of hearing submitted that this issue is covered against the assessee by the decision of ITAT, Chennai Bench in the assessee’s own case for assessment years 2007-08 to 2010-11 in ITA No.1983/Mds/2011 and 2077/Mds/2013. But, the issue of surcharge received from Electricity Board has come up for consideration for the first time and hence it cannot be said that the issue if fully covered against the assessee. The AR further submitted that interest from EB’s represents interest for delayed payment of receivables which is having a first degree nexus with main business activity of the assessee. Therefore, it forms part of income from operations eligible for deduction under the Act. The ld.AR further submitted that one more item of income came up for the first time for consideration is interest from contractors pertains to amount received from contractors for non-compliance with terms of agreement. The agreement between the parties is with regard to generation of electricity which is the main business activity carried out by the assessee for the impugned assessment years and hence forms a direct nexus to the main business activity of the assessee i.e., generation and distribution of power. Therefore the AO as well as the ld.CIT(A) were erred in excluding other income, more particularly surcharge received from Electricity Boards and interest from others while computing deduction u/s.80IA of the Act.
3.2 The ld.AR has also made an alternative argument that without prejudice to the first argument with respect to interest received from contractors submitted that consequent to an Arbitral award, the assessee have to pay back a sum of Rs.3,26,86,729/- to M/s. Fenner India Limited and hence if at all interest received from others is required to be excluded for the purpose of computation of deduction, then only net amount be considered in computing deduction u/s.80IA of the Act. In this regard, he relied upon the following judicial precedents:-
i. CIT vs. Translam Limited [2014] 231 taxmann 901(All)
ii. CIT vs Phatela Cotgin Industries P Ltd [2008] 303 ITR 411 (P&H)
iii. Avalon Technologies P Ltd vs. ACIT [2015] 36 ITR(T) 567 (Chennai Tri)
iv. CIT vs. Prakash Oils Limited [2011] 58 DTR 279 (Tri-Indore)
3.3 The ld.DR, on the other hand submitted that the issue is squarely covered against the assessee by the decision of ITAT, Chennai Bench for earlier assessment years, where the Tribunal after considering the decision of Hon’ble Supreme Court in the case of M/s. Liberty India Ltd. vs. CIT (317 ITR 218), upheld re-computation of amount eligible for deduction u/s.80IA of the Act after excluding other income being miscellaneous income, interest income, recovery from staff, etc. The facts for the impugned year are identical to the facts considered by the Tribunal for earlier years and hence, there is no reason to take a different view unless there is change in facts for the current financial year.
3.4 We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. On perusal of the assessment order and also the order of the Co-ordinate Bench of this Tribunal in assessee’s own case for earlier assessment years, it clearly shows that the issue in regard to exclusion of other income being handling charges, interest received from employees and miscellaneous income has been held to be not linked with industrial activity of power generation and therefore, in view of the decision of the Hon’ble Supreme Court in the case of M/s. Liberty India Ltd., vs. CIT, referred to supra, same did not have a direct link with the business of power generation, and hence, while computing deduction u/s.80IA of the Act, the other income has been excluded. The facts for the year under consideration are similar to the facts considered by the Tribunal for earlier years except to the extent of two new items of income being surcharge from electricity boards and interest from others [interest received from Fenner India Limited as per terms of agreement]. Therefore, we are of the considered view that the assessee is not entitled for deduction towards eligible profit u/s.80IA of the Act in respect of other income because said income does not have first degree nexus with the main business activity of the assessee. In so far as surcharge from Electricity Boards, the issue has came up for discussion for the first time in the impugned assessment year and hence, needs to be considered in light of arguments advanced by the assessee that it has first degree nexus with business of generation and distribution of power. We have examined the claim of the assessee in light of proviso to Regulation 5(3) of Central Electricity Regulatory [terms and conditions of tariff] Regulations 2009 and find that although the assessee claims that it has received surcharge from Electricity Boards for delayed payment of receivables in respect of supply of electricity, but in principle said payment represents interest for delay in payment of dues to the assessee. Therefore, we are of the considered view that interest earned by the assessee for delay in payment of receivables cannot be characterized as income earned from business operations merely for the reason that said receipt is received from supplier. The character of any receipt would not change for the simple reason that the said receipt is received from the first degree supplier who is related to main business activity of the assessee. Hence, we are of the considered view that there is no merit in arguments of the assessee that surcharge received from Electricity Board form part of income from operations, which is eligible for deduction u/s.80IA of the Act. As regards various case laws relied upon by the assessee including the decision of Hon’ble Punjab & Haryana High Court in the case of CIT vs. Phatela Cotgin Industries P Ltd., 303 ITR 411 and others, we find that all those cases are rendered under different set of facts and has no application to facts of present case, more particularly when the assessee is failed to establish the fact that other income including surcharge received from Electricity Board is having first degree nexus with the main business of the assessee. Hence, the case laws relied upon by the assessee are not considered. As regards interest from others, we find that the assessee has received interest from M/s. Fenner India Limited as per terms of contract and said interest has been recognized as other income. Although, the assessee claims it had direct nexus with the business operation of the assessee, but on perusal of details, we find that it is simpliciter interest received from the party for delay in payment as per terms of contract. Therefore, the same cannot be considered as income generated from business operations which is eligible for deduction u/s.80IA of the Act.
3.5 In so far as alternative plea of the assessee that in terms of arbitral award, it had paid back Fenner India Limited, a sum of Rs.3,26,86,729/- and the same may be reduced from interest received from the party while computing deduction u/s.80IA of the Act, we find that compensation paid in terms of arbitral award is not linked to interest earned by the assessee from the party and hence, the same cannot be set-off against interest earned by the assessee. Therefore, alternative plea of the assessee is rejected. We further note that a similar issue has been considered by the Co-ordinate Bench of the Tribunal in assessee’s own case for assessment year 2012-13 in ITA No.2200/Mds/2016, where under identical set of facts the Tribunal has upheld re-computation of eligible deduction u/s.80IA of the Act, however accepted the plea of the assessee for deduction of 10% expenses towards other income while computing the deduction. The relevant findings of the order of the Tribunal are as under:-
“6.3 We have considered the rival submissions. On perusal of the Assessment Order and also the order of the Co-ordinate Bench of this Tribunal in the assessee’s own case referred to supra clearly shows that the issues in regard to the handling charges, interest received from employees and miscellaneous income has been held to be not interlinked with industrial activity of power generation and therefore in view of the decision of the Hon’ble Supreme Court in the case of M/s. Liberty India Ltd. Vs. CIT referred to supra, as the same did not have a direct link with the business of power generation, the deduction u/s.80IA of the Act on the said incomes were excluded. However, in Para No.10 of the Order the Coordinate Bench has held that 10% of the said other income could be estimated as the expenses relatable to the earning of the said income and directed the AO to exclude 10% of the other income as expenses while computing the deduction u/s.80IA of the Act. In the year under appeal, the other income includes interest on arrears from Electricity Board and interest from others. Applying the ratio of the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for the AYs 2007-08, 2008-09, 2009-10 & 2010-11 referred to supra, the disallowance as made by the AO and as confirmed by the Ld.CIT(A) stands sustained. However, considering the alternate prayer of the assessee and also following decision of the Co-ordinate Bench of this Tribunal, the expenses in relation to the earning of the other income is estimated at 10% and the AO is directed to exclude 10% of the other income as expenses while computing the deduction u/s.80IA of the Act. In the result, Ground Nos.1 & 2 are partly allowed.”
3.6 In this view of matter and consistent with view taken by the Co-ordinate Bench, we are of the considered view that the assessee is not entitled for deduction u/s.80IA of the Act in respect of other income and consequently confirm the additions made by the AO towards disallowance of excess deduction claimed, however allow the alternate plea of the assessee towards deduction of expenses in relation to earning of other income and direct the AO to allow 10% deduction towards expenses and re-compute deduction u/s.80IA of the Act.
4.0 The next issue that came up for our consideration from assessee’s appeal for both assessment years is disallowance of expenditure u/s.14A of the Act. At the time of hearing, the ld.counsels for the assessee as well as the Revenue have fairly agreed that this issue is covered by the decision of the Coordinate Bench of this Tribunal in assessee’s own case for assessment years 2007-08 to 2010-11, where under identical set of facts, the issue has been remitted back to the AO to recompute disallowance of expenses in relation to exempt income.
4.1 Having heard both sides and considered material on record, we find that disallowance of expenditure in relation to exempt income u/s.14A of the Act is recurring issue and is a subject matter of deliberation of the Tribunal in the assessee’s own case for assessment years 2007-08 to 2012-13. Further, the Tribunal after considering relevant facts and also following its earlier order has set aside the issue to the file of the AO and directed him to re-adjudicate the issue in accordance with law. The relevant findings of the Tribunal are as under:-
6.5 We have considered the rival submissions. As the issue is squarely covered by the decision of the Co-ordinate Bench of this Tribunal for the AYs 2007-08, 2008-09, 2009-10 & 2010-11 referred to supra wherein the Co-ordinate Bench of this Tribunal following the decision in the assessee’s own case in ITA Nos.712 & 713/Mds/2010 dated 11.04.2013 wherein it has been held as follows:
13. We have perused the orders and heard the rival submissions. Insofar as ground of the Revenue that ld. CIT(Appeals) had not considered the decision of Special Bench of this Tribunal in the case of Daga Capital Management (P) Ltd. (supra), we find that this decision, insofar as it relates to applicability of Rule 8D for years prior to assessment year 2008-09, stands reversed by Hon’ble Bombay High Court in the case of Godrej and Boyce Mfg. Co. Ltd vs. Dy. CIT (328 ITR 81). Hon’ble Bombay High Court clearly held in the said decision that Rule 8D which came with effect from 24 th March, 2008, will be applicable only after the period 2008-09. Nevertheless, their Lordship has clearly noted that even prior to that year, A.O. was duty bound to compute disallowance under Section 14A by applying a reasonable method having regard to the facts and circumstances of the case. Therefore, despite the argument of learned A.R. that 12 I.T.A. Nos.711, 712 & 713/Mds/10 electricity bonds were taken under compulsion and there was no expenses incurred for earning the interest income, we are inclined to remit the issue back to the file of A.O. for consideration afresh. We, therefore, set aside the orders of the authorities below and remit on this aspect back to A.O. for consideration afresh in accordance with law. Assessee can bring to the notice of the A.O. any case law relevant to the issue and A.O. shall proceed in accordance with law.
6.6 Respectfully following the said decision on identical directions, the issue is restored to the file of the AO for re-adjudication”
4.2 In this view of the matter and consistent with view taken by the Co-ordinate Bench, the ground raised by the assessee for both assessment years is allowed for statistical purposes.
5.0 The next common issue that came up for our consideration from assessee’s appeal for both assessment years is addition towards surcharge recoverable from Electricity Boards.
5.1 The facts with regard to impugned dispute are that during the course of assessment proceedings, the AO has found from the Annual Report that surcharge received from belated settlement of power bills has not been reckoned as income since there is an uncertainty in realization and the same would be accounted as and when the amount is received by the assessee. The AO was of the opinion that when the assessee is following mercantile system of accounting, all income accrued during the relevant assessment year required to be taxed when the assessee is able to estimate the income with certain degree of estimation. The AO further was of the opinion that there is no merit in the argument taken by the assessee that there is uncertainty in the realization of surcharge from the Electricity Boards and unless there is an uncertainty in realization, the same cannot be considered as accrued for the year for the purpose of taxation. The assessee has taken support from AS9 issued by the Institute of Chartered Accountants of India and argued that where the ability to assess the ultimate collection with reasonable certainty is lagging at the time of raising any claim, revenue recognition is postponed to the extent of uncertainty. Since there is no certainty of realization of surcharge from Electricity Boards, the assessee has postponed recognition of income even though said surcharge has been accounted in the books of accounts of the assessee on accrual basis. The assessee has taken support from the decision of Hon’ble Supreme Court in the case of Godhra Electricity Co. Ltd., vs. CIT, 225 ITR 746 and argued that in the event of uncertainty of realization of income, the same even though accrued in the accounts, deserves to be excluded for the purpose of computation of taxable income. The assessee has taken support from the decision of the Hon‘ble Supreme Court in the case of CIT vs. Excel Industries Limited, (2013) 39 taxmann.com 100 (SC) in support of its arguments. However, fairly admitted that the issue is covered against the assessee by the decision of ITAT in assessee’s own case for assessment year 2008-09 to 2010-11 in ITA Nos.1983/Mds/2011 and 2140/Mds/2013.
5.2 The ld.DR on the other hand strongly supporting order of the CIT(A) submitted that the issue is squarely covered against the assessee by the decision of ITAT for earlier assessment years, where under identical set of facts the Tribunal held that surcharge recovered from Electricity Boards is taxable on accrual basis as and when the assessee has accounted in the books of account.
5.3 We have heard the rival submissions of both sides and perused the materials available on record. On perusal of details filed by the assessee, we find that there is a provision of levy of surcharge for delayed payment by the Electricity Boards and such provision is supported by Tri-party Agreement between Government of India, RBI and the assessee. The assessee has accounted surcharge receivable from Electricity Boards on accrual basis in the books of accounts, but for the purpose of taxation, the same has been offered to tax as and when the amount is received from Electricity Boards. The AO as well as the ld.CIT(A) were of the opinion that when there is no uncertainty in realization of surcharge from Electricity Boards, the question of postponement of income for taxation on receipt basis does not arise, when the assessee is following mercantile system of accounting. The view taken by the AO as well as the ld.CIT(A) has been upheld by the Tribunal in assessee’s own case for earlier years, where the Tribunal by considering various clauses of tri-party agreement between the assessee and Government of India observed that, when payment is outstanding for more than 90 days from the date of billing, the same is required to be recovered through adjustment of surcharge and the same can be adjusted out of plan assistance of respective State Governments and hence there was an assurance created through the tri-party agreement and the Government of India for recovery of surcharge from Electricity Boards. Hence, the assessee’s contention that there was no certainty in recovery of dues is ill-founded and the quantum of interest is also fixed in the tri-party agreement entered between the parties. Therefore, there is no doubt regarding the payment of dues when there is binding tri-party agreement. Accordingly, held that surcharge recoverable from Electricity Boards is taxable on accrual basis, but not on receipt basis. The relevant findings of the Tribunal are as under:
4.3 We heard the rival submissions and perused the material placed before us. In this case there is provision for levy of surcharge in delayed payments and the assessee has not reckoned the surcharge as income. The assessing officer has assessed the surcharge on the basis of the accounting system followed by the assessee. The tariff in respect of NLC which is central generating station is governed by the Central Electricity Regulation Commission (in short ‘CERC’) which is generally notifies once in three years. Accordingly, CERC has notified tariff regulations 2001 for the period 2001-04, Tariff regulations-2004 for the period 2004-09 and tariff regulations 2009 for the period of 2009-14 and presently tariff regulations 2014 is valid till 31.03.2019. In all the above notification CERC has provided late payment surcharge and the assessee has levied surcharge, but could not recover from the Electricity Boards. According to the tariff regulations of the CERC, the powers are conferred u/s.178 of Electricity Act, 2003 r.w.s.61. The CERC has to fix the tariff accordingly and the CERC notified the regulations as under:
In exercise of powers conferred under section 178 of the Electricity Act
