Trial Run Power Receipts Are Capital in Nature – ITAT Rejects Revenue’s Tax Claim

DCIT Vs Prayagraj Power Generation Company Limited (ITAT Lucknow) Revenue filed appeal against CIT(A)’s order deleting addition of ₹42.56 crore on account of infirm power sale during trial run & directing recomputation of book profit u/s 115JB. AO had treated the receipt from sale of power generated during trial run as revenue income, thereby reducing returned loss & increasing book profit. He also added ₹2.72 crore as interest income. CIT(A) confirmed the interest income addition but deleted the addition of infirm power sale, holding it to be a capital receipt, since the trial r...