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Ambala Electric Supply Co. Ltd. Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Reference Nos. 12 and 13 of 1976
Judge
Reported in[1983]139ITR925(P& H)
ActsIncome Tax Act, 1961 - Sections 32(1) and 41(2); Indian Electricity Act, 1910 - Sections 7A(4)
AppellantAmbala Electric Supply Co. Ltd.
RespondentCommissioner of Income-tax
Appellant Advocate Balwant Singh Gupta, Adv.
Respondent Advocate D.N. Awasthy and; B.K. Jhingan, Advs.
Excerpt:
.....communicated the order of refusal passed to the persons concerned, the period of limitation for filing an appeal would commence from the date when the parties concerned acquire knowledge of passing of the said order. - having failed on this issue before the aac as well as the tribunal, the assessee got question no. however, after going through the supplementary statement of the case, we are constrained to observe that the tribunal has still failed to give answer on the first point and has reiterated what was already stated earlier......items as contemplated by section 41(2) of the act was computed by the ito as rs. 6,75,323, as the actual cost and the written down value included the amounts of consumers contributions also, the ito reduced the written down value by a sum of rs. 1,69,890 and thereby 'assessed the profits at rs. 2,77,050 for the purpose of section 41(2) of the act. having failed on this issue before the aac as well as the tribunal, the assessee got question no. 2 referred to this court.5. the case came up for the first time before a division bench consisting of b.s. dhillon and m.r. sharma jj., who found that it was necessary to get a supplementary statement of the case on the following points :'1. whether the ito worked out the w.d.v. taking into consideration the new definition of 'actual cost' under.....
Judgment:

S.P. Goyal, J.

1. The following two questions have been referred to this court by the Tribunal under Section 256(1) of the I.T. Act, 1961, (hereinafter called 'the Act');

'(1) Whether, on the facts of the case, the Tribunal was right, in law, in holding that the sum of Rs. 2,13,618 received by the assessee by virtue of the provisions of the proviso to Section 7A(4), Indian Electricity Act, 1910, formed part of the price within the meaning of Clause (b) of Explanation (1) occurring below Section 32(1)(iii), Income-tax Act, 1961, and denning the term 'money payable', as occurring in Section 41(2), Income-tax Act, 1961 ?

(2) Whether, on the facts of the case, the Tribunal was right, in law in reducing the written down value by a sum of Rs. 1,69,890 representing the consumer's contributions ?'

2. The learned counsel for the assessee has very fairly conceded that question No. 1 stands concluded against him in view of the Supreme Court decision in Fazilka Electric Supply Co. Ltd. v. CIT : [1962]46ITR127(SC) and a decision of this court in Sonepat Light, Power and General Mills Ltd. v. CIT [1961] 59 ITR 392. The question is, accordingly, answered in favour of the Revenue.

3. The relevant facts on the second question are that the electric supply undertaking of the assessee was taken over by the erstwhile Punjab State Electricity Board with effect from July 4, 1962, and the total amount of Rs. 13,83,585 was assessed as compensation for the building, machinery and other equipment. However, Rs. 2,69,469 were deducted out of the said amount on account of the value of the equipment financed by the consumers and the amount payable to the assessee was assessed at Rs. 11,13,939. As the compensation paid was more than the written down value of the assets of the assessee, it became necessary to determine the profits for the purpose of Section 41(2) of the Act.

4. Although the assets of the assessee consisted of the building and various items of machinery and other equipment, the dispute between the parties centres round the four items Nos. 5, 6, 7 and 12 as entered in annex. I, namely, the overhead mains, street lights fittings and wires, service lines and underground cables. The total compensation regarding these fouritems was assessed by the Board at Rs. 8,91,006 and after deducting the consumers' contributions the amount payable to the assessee came to Rs. 6,17,595. The written down value of these items as contemplated by Section 41(2) of the Act was computed by the ITO as Rs. 6,75,323, As the actual cost and the written down value included the amounts of consumers contributions also, the ITO reduced the written down value by a sum of Rs. 1,69,890 and thereby 'assessed the profits at Rs. 2,77,050 for the purpose of Section 41(2) of the Act. Having failed on this issue before the AAC as well as the Tribunal, the assessee got question No. 2 referred to this court.

5. The case came up for the first time before a Division Bench consisting of B.S. Dhillon and M.R. Sharma JJ., who found that it was necessary to get a supplementary statement of the case on the following points :

'1. Whether the ITO worked out the W.D.V. taking into consideration the new definition of 'actual cost' under the Income-tax Act, 1961, or under the old Act and if so, what was the actual figure of the W.D.V. so determined ?

2. What was the amount of the consumer's contribution and whether the said figure was taken into consideration while calculating the actual cost or not ?'

6. The case was, accordingly, referred back and this is how the supplementary statement, dated October 14, 1981, was submitted by the Tribunal. However, after going through the supplementary statement of the case, we are constrained to observe that the Tribunal has still failed to give answer on the first point and has reiterated what was already stated earlier. In spite thereof, we do not propose again to refer back the case, but opt to go through the record ourselves to decide the matter finally.

7. From the perusal of the various schedules and annexures prepared by the ITO and the answer on point No. 2 contained in the supplementary statement of the case, it is apparent that the ITO worked out the cost without giving allowance to the consumers' contributions and, thereafter, from the amount arrived at, deducted the consumers' contributions to work out the actual cost. Similarly, he determined the written down value without giving allowance to the consumers' contributions and, from the figure arrived at, reduced the amount to the extent of the written down value of the items, the charges for which had been contributed by the consumers. The Tribunal's observation in its order, that the figure of 'actual cost' as under the old Act or the new Act were not available, was factually incorrect and as noticed above both the figures had been entered in the order of the ITO, the former being Rs. 8,91,006 and the latter Rs. 6,17,595. The Tribunal, therefore, rightly rejected the assessee's contention that the possibility of the ITO having taken into consideration the new definition of the term 'actual cost' in the written down value could not be ruled out, with the observation that there was no material on the record to support this contention. We have, therefore, no hesitation in endorsing the view of the Tribunal on question No. 2 and the same is, accordingly, answered in the affirmative. No costs.

Prem Chand Jain, J.

8. I agree.


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