NTPC LTD. Vs. COMMISSIONER OF INCOME TAX-V

JUDGEMENT

(1.) This is an assessee's appeal against the decision of the Income Tax Appellate Tribunal (ITAT) dated 30.4.2012 in ITA 1438/Del/2009 for the assessment year 2005-06. The question of law which arises for consideration in this case is whether the Commissioner of Income Tax fell into error in invoking his power under Section 263 of the Income Tax Act, 1961 ("the Act") modifying the assessment order by withdrawing the additional depreciation of Rs.187,55,77,000 and further directing the Assessing Officer ("AO") to examine the allowance of Rs.938.80 crores on account of revision of sales afresh.

(2.) The assessee (hereafter called "NTPC") filed its return of income under the Act on 24.10.2005 and declared a total income of Rs.1330,17,92,000/. The return was processed under Section 143(1) on 27.2.2006 at the same figure. Later, the case was selected for scrutiny assessment and a notice under Section 143(2) of the Act was issued on 23.3.2006; the AO had served a detailed questionnaire upon NTPC under Section 142(1) of the Act. NTPC in response furnished the necessary details whenever called for by the AO. Upon analysis of various issues, the AO framed the assessment order under Section 143(3) on 27.11.2006. He determined the taxable income at Rs.3736,18,91,370/-.

(3.) The Commissioner, after going through the assessment order, felt that the AO allowed additional depreciation under Section 32(1)(iia) of the Act for the sum of Rs.187,55,71,000/30 due to additional assets at the Ramagundam and Talcher Super Power Plants, and that prima facie, this was not inadmissible. It was stated that there was lack of deliberation by the AO on the issue and, therefore, his order was erroneous as well as prejudicial to the revenue's interest. The Commissioner also noted that NTPC had raised the total sale bills to its customers of Rs.23066.03 crores in terms of the earlier norms of Central Electricity Regulatory Commission (CERC) and that the final order of CERC was not made during the year; it was to be passed in the succeeding year.