The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that electricity load extension charges are allowable as expenditure.
Assessee Tewari Warehousing Co. Pvt. Ltd is a private limited company engaged in the business of loading, unloading, blending and packing of raw tea. After filing the return assessee’s Case selected for scrutiny Assessment under section 143(3) of the Income Tax Act 1961 completed on 31.12.2016 making various additions and assessing income at Rs. 2,34,65,970/-. The additions made by AO were challenged before Commissioner of Income Tax Appeal CIT (A) but the assessee failed to get any relief. Against the order assesee filed second appeal before the ITAT.
Vikash Surana counsel for the assessee relied upon the decision of the Punjab and Haryana High Court in CIT vs. Lakhani Rubber Works submits that that the electricity load extension charges are allowable as revenue expenditure.
Vijay Kumar counsel for the revenue submits that said sum could not be allowed as revenue expenditure since it is capital in nature.
After considering the contentions of the both parties the division bench of the ITAT comprising Sanjay Garg, (Judicial Member) and Dr. Manish Borad, (Accountant Member) allowed the appeal filed by the assessee and observed that,
“The sum paid towards electricity load extension charges is revenue expenditure”
Further relied upon the decision of the Delhi High Court in Dart Manufacturing India Pvt. Ltd. The Bench determined that the expenditure towards installation of low tension lines for supply of electricity to its factory was revenue expenditure.
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