2014 PLP (Trib (PTD)

CH. MUNIR SADIQ (JUDICIAL MEMBER).

This order shall dispose of the titled six appeals which relate to a public limited unlisted company primarily engaged in the business of power generation and impugn the consolidated appellate order dated 25-6-2012 issued by the first appellate authority while disposing of the taxpayer's appeals for tax years 2009, 2010 and 2011 against separate amendment orders issued under section 122(5A) of the Income Tax Ordinance, 2001 (hereinafter referred to as 'Ordinance') by the learned Additional Commissioner Inland Revenue (Audit), Zone-II, Large Taxpayers Unit, Lahore.

2. These are cross appeals for all the three years in a manner that where relief was allowed to the taxpayer by the first appellate authority the revenue feels aggrieved against the findings thereof whereas on the issues where the treatment of the learned additional commissioner has been upheld the taxpayer challenges such findings of the first appellate authority before this Tribunal. In this case, the taxpayer admittedly remained entitled to exemption under Clause (132) of Part 1 of the Second Schedule in respect of profit and gains as were derived from electric power generation project. It is in the context of these exemption provisions that the taxpayer claimed exemption on entire income derived during the respective years, however, the learned additional commissioner charged to tax such components of income, derived during the years in appeal, as were held to be in the nature of other income. It is this subjection to tax of such income that compelled the taxpayer to file appeals before the first appellate authority and after its part confirmation thereof the subject appeals have been filed.

3. We have heard the rival parties, perused the available record, given earnest consideration to the submissions made at bar by the standing counsels and gone through the various decisions relied upon in their support by the representatives of the taxpayer and revenue. The subject appeals are disposed of in the ensuing paragraphs. TAXPAYER'S APPEALS

4. In the three appeals preferred by the taxpayer, the taxpayer impugns the findings of the first appellate authority on the following issues: (i) Taxation of rental income; (ii) Non proration/apportionment of common expenditure to the income charged to tax; (iii) Non allowance of tax credit under sections 65A and 65B of the Ordinance; and (iv) Taxation of insurance claim receivable by the taxpayer on account of loss of capacity revenue. (i) Taxation of rental income

5. For all the three years in appeal, the appellant recovered from certain employees rental income in respect of accommodation facilities provided to such employees at the plant regarding which the exemption was claimed under clause (132) referred supra. The authorities below in the respective orders have concluded that the exemption under the aforesaid provisions could not be allowed to rental income as the same does not constitute profit and gains of the electric power project. In the amendment orders for the respective years the amounts under this head were charged to tax at full corporate tax rate, however, the first appellate authority partly accepted the appeal and held that these amounts were properly chargeable to tax at rates applicable to the property income.

6. It is the contention of the taxpayer that, in substance, this amount constituted recoupment of salary expense, incurred in the form of payment of remuneration to such employees, which, for taxation purposes, under the provision of section 70 of the Ordinance was required to be excluded from the gross salary expenditure of the taxpayer for the respective years instead of being treated as separate source of income i.e. rental income. It was submitted that the authorities below clearly erred in not adopting the 'substance' of the amounts for the taxation purpose rather they relied upon the 'form' of the transaction. It was further submitted that there is no dispute by the revenue that the amounts were recovered from employees; that these employees were paid salary by the taxpayer; and provisions of section 70 of the Ordinance clearly provide that any amount which is recovered against a previously allowed deduction the same is required to be treated at par with such previously allowed deduction; however, still the charge of tax was imposed and upheld respectively by the authorities below. On this basis, it was argued, that the action of charging tax by additional commissioner and its confirmation by the first appellate authority remained illegal in the eyes of law. The learned DR, as well as, the LA supported the order of the first appellate authority and submitted that all the attributes of rental income are present in the transaction, therefore, the amounts were properly held to be taxable by the first appellate authority.

7. We have given serious consideration to the submissions made before us and feel persuaded by the arguments of the taxpayer. It is a well settled position of law that while determining charge of tax the authorities must take into account the 'substance' of the transaction. Any taxation on the basis of 'form' of the transaction has always been deprecated by higher courts. In terms of `substance' of the transaction, this was a case of recoupment of salary expense which, under the law, was properly required to be dealt with under the head income from business regarding which the taxpayer admittedly remains entitled to exemption. That being the case no tax could be separately levied on this amount which for taxation purposes was required to be considered as a deduction from gross salary expenditure. Ordered accordingly. (ii) Non proration in apportionment of common expenditure to the income charged to tax

8. For all the years, the taxpayer feels aggrieved by non-allowing of proportionate common expenditure against income charged to tax by the additional commissioner as required under section 67 of the Ordinance read with provision of Rule 13 of the Income Tax Rules, 2002. In this respect, the learned AR for the taxpayer submitted that it is not a disputed position that pursuant to issuance of amendment order, part of the income was held to be chargeable to tax whereas business income was held to be exempt from levy of tax. By reference to this admitted position, the taxpayer argued that the additional commissioner was duty bound to apportion common expenditure as is contemplated in the aforesaid provisions of law. The learned LA/DR could not rebut the proposition. After considering the averments of the taxpayer, we are inclined to accept the appeal on this point as the provisions of law are clear and unambiguous. Consequently, we accept the appeals on this point and direct the taxation officer to allow the deduction of common expenditure against income chargeable to tax in terms of mechanism provided in Rule 13 of the Income Tax Rules, 2002. (iii) Non allowance of tax credit under sections 65A and 65B

9. This issue is involved in tax years 2010 and 2011 only. The fact that terms and conditions set out in provisions of section 65A (for both the years) and section 65B (for tax year 2011) are adequately met by the taxpayer is not disputed, however, the first appellate authority in the impugned order denied this benefit to the taxpayer by observing that since income of the appellant from main operations had not been charged to tax, therefore, tax credits could not be allowed against income from other sources.

10. In support of its contention, the AR of the taxpayer principally relied upon the decision of full bench of this Tribunal in 1989 PTD 1185 in which, in the context of largely pari materia provisions of the repealed Income Tax Ordinance, 1979, it has been held that allowability of credit is by reference to taxpayer and not any particular source of income. The learned AR further, relied upon decision of this tribunal in I.T.A. No. 5862/LB/2005 dated 7-11-2006 in which similar findings were recorded by relying upon aforesaid decision of the full bench. By reference to these decisions, it was argued, that the first appellate authority grossly erred in rejecting the appeal in complete disregard to principles already settled by this tribunal. The learned LA/DR opposed the appeal, however, could not bring anything contrary to the decisions relied upon by the taxpayer which are even otherwise full of reasoning and justifications. The matter in appeal, having already been decided in the favour of the taxpayer at the level of the Tribunal, no exception could be taken, therefore, the appeals of the taxpayer are also accepted on this point in terms of decision in 1989 PTD 1185 and it is held that full credit is allowed to the taxpayer under sections 65A and 65B of the Ordinance. (iv) Taxation of insurance claim

11. This issue is involved in tax year 2011 only. Briefly, the facts are that during the period 4-8-2010 to 22-12-2010, the taxpayer was not capable of producing electricity because the company's plant was hit by devastating floods which made it non-operational. In view of the circumstances that during such period the taxpayer was not maintaining the capacity as contemplated in the Power Purchase Agreement executed with Government of Pakistan, the company was eligible to recover from Government of Pakistan the revenue on account of capacity purchase price. The amount on this account, however, remained recoverable by the company from an insurance company as it had already insured its loss of profits on account of capacity payments with such insurance company. The amount being recoverable from the insurance company was recognized by the taxpayer in the financial statements. The amount recoverable on this account, having been recognized as income in the financial statements, has been subjected to tax by the additional commissioner by holding the same to be income from other sources. A perusal of the order of the additional commissioner reveals that no separate reason has been advanced by him for bringing this amount to charge of tax and as such, this amount has been treated at par with other amounts already dealt with in this order above. Being aggrieved, the taxpayer challenged the action of the additional commissioner before the first appellate authority and argued that this amount could not be charged to tax under the law as the same remained a component of business income. In this respect, inter alia, the reliance was placed on two decisions from the Indian jurisdiction viz. 1985 PTD 136 (Bombay H.C.) and 22 ITR 484 (Ind. S.C.). The learned first appellate authority dismissed the appeal of the taxpayer by assigning the following reasons: (a) The cases of Indian jurisdiction were distinguishable and as such, the amount did not constitute profit and gain of business. In this respect, it has been observed in the impugned order that the taxpayer did not distinguish the cases from the Pakistan jurisdiction on which the Additional Commissioner placed reliance in the amendment order; (b) By reference to definition of expression 'business', as given in the Ordinance, the amount did not include a single characteristic or attribute of business income and as such, there was not even a remote connection of the receipt with the business; (c) In terms of provisions of section 18(1)(a) of the Ordinance, for an amount to be characterized as profit and gain, the person has to carry on the business whereas the amount has accrued to the taxpayer, in fact, for not doing a business; and (d) The meaning of expressions 'profit' and 'gain' as given in the Black's Law Dictionary did not support the contention of the taxpayer regarding claim of exemption on this amount.

12. In the course of addressing the observations and findings of the first appellate authority on the matter, the learned AR vehemently argued that first appellate authority has not been able to properly appreciate the ratio decidendi of judgments from Indian jurisdiction as each and every aspect raised by the first appellate authority in the impugned order has been dealt with, in minute detail, in these judgments. It was submitted by the learned AR that the observation of the first appellate authority that the taxpayer has not distinguish the judgments from the Pakistan jurisdiction, relied upon by the Additional Commissioner, is out of context as the two judgments i.e. 2006 PTD (Trib.) 288 and 2007 PTD (Trib.) 2615 were not cited in the amendment order with reference to the matter under consideration and instead these were generally referred to regarding taxation of income from other sources. Consequently, it was asserted that comment to this effect is not relevant.

13. Initiating the arguments, the learned AR relied upon Para 16 of the decision of the apex court, now reported as 2010 PTD 1809 titled Uch Power Company Limited v. Income Tax Appellate Tribunal and others, wherein, in the following words, the apex court has unequivocally, clearly and unambiguously laid down the principles regarding scope and extent of exemption available under clause (176) of Part-I of the Second Schedule to the repealed Income Tax Ordinance, 1979 which are pari materia to clause (132) referred supra:-- ".... From the plain reading of these sections, it is evident that it is the only the language of section 22, which carries the words "profits and gains" and for the purpose of allowable deduction, income generated under this head is regulated by section 23, while inadmissible deductions have been categorized in section

24. Relating to the controversy in hand, the other relevant section is section 30, which is residuary section and covers income from all other sources, which are not covered by sections 16, 17, 19, 22 and

27. Thus a combined reading of these provisions of the Ordinance makes it abundantly clear that use of words "profits and gains" under clause (176) is only with reference to the income generated by the companies; which is covered by section 22 of the Ordinance" (emphasis supplied).

14. Placing reliance on the aforesaid observations of the apex court, the learned AR submitted that for exemption to be available regarding the amount recoverable on account of insurance claim what needs to be determined is whether the subject amount is classifiable as income from business under section 18 of the Ordinance, the provisions pari materia to section 22 of the repealed Income Tax Ordinance, 1979 dealt with by the apex court. In this respect, the learned AR also submitted that first appellate authority while dealing with the matter, rightly framed the issue when he stated in the impugned order that "the issue, as stated above, is whether it is profit and gain of business or not?", however, he fell in grave error while concluding that this is not so. In this context, the learned AR made an emphatic reference to the following paras from the judgment of the Bombay High Court in 1985 PTD 136 wherein their lordships of the Bombay High Court were dealing with the insurance claim received by an assessee as a result of loss of stock-in-trade:-- " . Now, in order to decide whether the excess amount received by the assessee-company from the insurance company partakes of the nature of revenue receipt, it has to be decided whether the receipt is in respect of a trading asset or whether it is in respect of a capital asset. In other words, what has first to be determined is whether the excess amount which has accrued to the assessee-company arises out of a transaction in respect of a trading asset or in respect of a capital asset. ...... The question to be asked is what would be the nature of the receipt which the assessee would have received if the rate of exchange remained the same. Now, what the assessee has, in fact, received is in the nature of compensation for goods lost and, normally, the compensation would have represented the price of the stock-in-trade for which the assessee had taken out the insurance. Therefore, moneys received from the insurance company, in fact, represented the equivalent in money value of the goods which were insured. There can hardly be any dispute that such receipt would clearly be of a revenue nature. The character of such receipt would be the same as the amount which the assessee-company would have received by the sale of the stock-in-trade to its customers. The only difference is that if the assessee had received the stock-in-trade, he would have received the price of the stock-in-trade from the customers but the stock-in-trade having been seized by the Government of Pakistan, the money value thereof is paid to the assessee-company by the insurance company. On principle, therefore, the nature of the receipt of the amount paid by the insurance company is in no way different or what it would have been if the price for the stock-in-trade would have been received when the stock-in-trade is sold to the buyers. If any authority for this proposition is needed, we may refer to the decision of the House of Lords in I.R.C. v. J. Gliksten & Sons Ltd. (1929)" 14 TC 364 at P. 382 (HL). .. It is difficult to accept the argument of Mr. Pandit that the stock-in-trade, when it was seized by the Government of Pakistan, ceased to be stock-in-trade and it must be treated as capital of the assessee-company. As a matter of fact, once the stock-in-trade was seized by the Government of Pakistan and it could not be retrieved by the assessee, the right to claim compensation arises in favour of the assessee, and that compensation, as already pointed out, would partake of the same nature as the price of the stock-in-trade. There is no question of that stock-in-trade converting itself into a capital of the assessee . .... These observations will also show that on the view which we have taken that the recovery of compensation for the stock-in-trade lost on account of being seized by the Government of Pakistan was in connection with the business transaction of the assessee, viz., as a dealer in stock-in-trade, in view of the decision of the Supreme Court in Canara Bank's (1967) 63 ITR 328, also the excess receipt would be of a revenue nature --(emphasis supplied(sic)).

15. Relying upon the above referred excerpts from the judgment of the Bombay High Court, the learned AR reiterated that answers to all of the observations of the first appellate authority while approving the taxation of the amount has already been adequately answered by their Lordships. The amount has been held to be part and parcel of the business carried on by the assessee. The amount received from an insurance company, the AR added, partakes of the nature of the amount in respect of which the claim accrues. The AR submitted that their Lordships observed that the character of such receipt would be the same as the amount which recipient would have received by the sale of stock-in-trade to its customers. The only difference is that if the assessee had received the stock-in-trade he would have received the price of the stock-in-trade from the customers but stock-in-trade having been seized by the Government of Pakistan, the money value is paid by the insurance company. On principle, their Lordships further added, that the nature of the amount paid by the insurance company is in no way different or what it would have been if the price would have been received from saler to buyer. Drawing analogy, the AR vociferously contended that insurance claim accruing to the taxpayer on account of loss of capacity payment would have to be treated as capacity payment for determining the taxability thereof. Since, it is not disputed that capacity payment receivable from Government of Pakistan enjoys exemption, therefore, the amount recoverable from insurance company on this account which is admittedly the case, needs to be treated at par. Reverting to the judgment of Indian Supreme Court in 22 ITR 484, the learned AR relied upon the following excerpts and argued that in terms of principles settled therein the amount representing the insurance claim is clearly a receipt that is inseparably connected with the ownership and conduct of the business: " .. ..... The assessee is a business company. Its aim is to make profits and to insure against loss. In the ordinary way it does this by buying raw material, manufacturing goods out of them and selling them so that on balance there is a profit or gain to itself. But is also has other ways of acquiring gain, as do all prudent businesses, namely by insuring against loss of profits. It is indubitable that the money paid in such circumstances is a receipt and in so far as it represents loss of profits, as opposed to loss of capital and so forth, it is an item of income in any normal sense of the term. It is equally clear that the receipt is inseparably connected with the ownership and conduct of the business and arises from it" (emphasis supplied).

16. Supplementing the averments made on the strength of judgments cited supra, the AR submitted that in context of the scheme embodied in the Ordinance, the expression "business carried on by a person...." has been used in contradistinction to discontinuation/cessation of business as has been contemplated inter alia in section 72 of the Ordinance. In the context of subject amount, the AR submitted that not only in the light of ratio decidendi of judgments from Indian jurisdiction but also otherwise the Taxpayer continued and carried on with the business. Any break or interruption occurring on any account is not a discontinuation or non-carrying of business. The business is regarded as being continued for all practical purposes. According to the learned AR, if recoverable from the insurance company, for arguments' sake, is regarded as amount accruing for not doing business, then the capacity payment is made for not doing business. This is a farcical proposition. Doing a business and doing a transaction are two different connotations.

17. While responding to the dictionary meanings, it was submitted that the first appellate authority has taken these from the decision of apex court in the case of Uch Power Company [2010 PTD 1809] and since the ultimate finding of the apex court that whatever is covered as 'income from business' would qualify for statutory exemption was given after considering these dictionary meanings, therefore, to say the least, these were wrongly referred to by the first appellate authority while deciding the matter against the taxpayer and hence remain absolutely irrelevant and out of context. The learned LA/DR heavily supported the orders of the authorities below and argued that tax has been properly levied and confirmed by lower authorities. The primary thrust of the arguments of LA/DR remain that this Tribunal in 2006 PTD (Trib.) 288 that the statutory exemption is not extendable to auxiliary and ancillary items of income. In their view, the amount accruing to the taxpayer, at best, constituted auxiliary/ancillary income, therefore, the tax was rightly levied.

18. We have given our earnest consideration to the rival submissions of the parties and have also given due appreciation to the findings of the first appellate authority contained in the impugned order. We have also minutely gone through the decisions from the Indian jurisdiction, heavily relied upon by the taxpayer, while challenging the orders of the authorities below. When the facts of the matter are analyzed in the light of decisions from the Indian jurisdiction especially when these are read in juxtaposition with the findings of apex court in 2010 PTD 1809 as well as the provisions of section 18 of the Ordinance, no exception could be taken from the position that exemption under clause (132) is available to income covered by section 18 of the Ordinance dealing with income from business. To this extent, the learned first appellate authority rightly framed the issue, however, the learned first appellate authority erred in concluding that impugned amount does not constitute income from business. In terms of ratio settled in 1985 PTD 136, this amount clearly qualifies to be income from business. As held by their Lordships of the Bombay High Court, the character of insurance claim would be the same as the amount which would have been received by a taxpayer had there been no loss that results into insurance claim. On principle, the nature of the receipt of the amount paid by the insurance company is in no way different or what it would have been if the amount otherwise resulting into insurance claim had been received in the ordinary course of transaction. The compensation on this account would partake of the same nature against which the receipt accrues to a taxpayer. Consequently, for all purposes, practical or legal, the insurance claim has to be treated as a component of income from business because capacity payment, otherwise accruing to taxpayers, constitutes business income.

19. That being the case, since business income of the taxpayer admittedly enjoyed exemption under clause (132), therefore, insurance claim accruing to the taxpayer in the fact and circumstances discussed supra, being a component of business income, remained exempt from levy of tax. The findings contained in the impugned order are faulty on another count. At one hand the insurance premium paid by the taxpayer, including on account of insuring loss of capacity revenue, is undisputedly being accepted as a deduction for the purposes of computing income from business while on the other hand amount accruing on account of insurance claim is being divorced from the business. This is a clear case of blowing hot and cold together. Thus the orders of the authorities below are not sustainable. The amount clearly remains connected with the business of the taxpayer and hence constitutes nothing but business income.

20. The first appellate authority misdirected itself when he observed that this amount did not constitute income from business. The conclusion arrived at by the first appellate authority is clearly in contradiction to the principles emanating from the judgments relied upon by the AR. For what have been discussed above, we accept the taxpayer's appeal on this point, vacate the orders of the authorities below and hold that amount accruing to the taxpayer as insurance claim on account of loss of capacity revenue was rightly claimed as exempt by the taxpayer. The addition, therefore, is hereby deleted. REVENUE'S APPEALS

21. In the three appeals filed by the revenue, the findings of the first appellate authority have been assailed on the following issues: (i) Allowability of interest expense against interest income; (ii) Taxation of gain on sale of fixed assets; (iii) Taxation of exchange gain; (iv) Taxation of liabilities written back: (v) Taxation of scrap sales; and (vi) Minimum tax liability. (i) Allowability of interest expense

22. This issue is involved in all the three years in appeals. In the impugned order, the learned first appellate authority, while dealing with the matter of interest income, though, agreed with the Additional Commissioner regarding non-availability of exemption under Clause (132), however, issued directions to the taxpayer that documentary evidence should be produced before the officer regarding interest expense incurred in connection with earning of interest income and held that expense to this extent should be allowed. It is these directions with which the revenue feel aggrieved and has preferred subject appeals.

23. The learned AR of the taxpayer placed before us decision of this Tribunal dated 7-2-2012 issued in the taxpayer's own case by the Tribunal while dealing with the matter for the tax years 2004, 2005, 2006 and 2007. In view of the fact that this matter has already been decided in the taxpayer's own case at the level of this Tribunal, therefore, we have no hesitation to follow the earlier decision of this Tribunal, the result of which is that the appeals filed by the revenue on this point fail. (ii) Gain on sale of fixed assets

24. This issue is also involved in all the three years. The grievance of the revenue is that the learned first appellate authority was not justified in holding that gain on sale of fixed assets remained covered by the exemption provision cited supra. In this respect, reliance of the taxation officer remained on decision of this Tribunal on 2006 PTD (Trib.) 288 in which it was held that the exemption does not apply to any auxiliary or ancillary. On the basis of these findings, it was held that gain resulting from sale of fixed assets could not be extended exemption. On the other hand, the learned first appellate authority observed in the impugned order that since in terms of provisions of section 22 of the Ordinance, gain resulting from sale of fixed assets remains strictly and exclusively chargeable to tax as income from business, therefore, the exemption was fully applicable.

25. In our view, this is a straightforward matter when analyzed in the context of decision of the apex court in 2010 PTD 1809, referred supra, in which after elaborative discussion on the scope and extent of exemption available to electricity generation companies under the statute, it was unequivocally held that exemption remains available to what is covered by section dealing with the income from business. In this case, there is no dispute, and rightly so, that subject gain falls within the scope of section 18 of the Ordinance dealing with income from business. Consequently, by following the principle settled by the apex court, we agree with the contention of the taxpayer and dismiss the appeals of the revenue on this point by holding that no exception could be taken from the finding in the impugned order. Ordered accordingly. (iii) Taxation of exchange gain

26. The revenue has raised this issue for all the three years, however, the learned AR of the taxpayer pointed out that this issue in fact was involved in tax years 2009 and 2011 only and as such, raising this issue for tax year 2010 seems to be an error. The learned AR pointed out and we agree that this issue, having been decided by the first appellate authority by placing reliance on decision of this Tribunal dated 3-2-2009 in I.T.A. No. 622/LB/08 issued in the taxpayer's own case, no exception could be taken therefrom, as a result of which, the appeals on this point also stand dismissed. (iv) Taxation of liabilities written back

27. In these appeals, the revenue also feels aggrieved by the order of the first appellate authority whereby the tax liability determined by the Additional Commissioner regarding liabilities written back was disapproved by relying upon the decision of this Tribunal in I.T.A. No. 742/IB/2011 dated 18-1-2012 issued in the case of Saba Power Company. The revenue has raised this issue for all the three years, however, the learned AR of the taxpayer pointed out that this issue in fact was involved in tax years 2010 and 2011 only and as such, raising this issue for tax year 2009 seems to be an error. Both the parties reiterate the submissions made during earlier proceedings. We have taken into consideration the provisions referred to by the first appellate authority while deciding the matter in favour of the taxpayer and have also gone through the decision relied upon at the first appellate stage. The issue having been properly dealt by the first appellate authority and that too, in the light of expressed provision of the statute, no interference is warranted in the order of the first appellate authority which is upheld. (v) Scrap sales

28. This issue is also involved in all the three years. Income from sale of scrap was again charged to tax by the Additional Commissioner by relying upon decision of this Tribunal in 2006 PTD (Trib.)

288. In this respect, the basis of imposing tax, as are apparent from the records, is that this was observed by the Additional Commissioner in the nature of ancillary income. The first appellate authority decided this matter in the favour of the taxpayer by relying upon the decision of this Tribunal in 2011 PTD 2440 which we note since is subsequent in time would take lead over the one primarily relied upon by the Additional Commissioner. Even otherwise by reference to the principle settled by the apex court, discussed above in the case of taxation of gain of sale of fixed assets, the decision of first appellate authority is found to be fair and not open to any exception. The order of the first appellate authority is upheld on this point. (vi) Minimum tax liability

29. This matter relates to charge of minimum tax on capacity revenues, interest on delayed payments by WAPDA and supplemental bonus income by the Additional Commissioner while rejecting the taxpayer's claim for exemption from minimum tax under clause (11A)(v) of Part-IV of the Second Schedule to the Ordinance on the plea that such exemption is available only to sale of electricity. Before the first appellate authority, the AR of the taxpayer relied upon the decision of this Tribunal in (1999) 80 Tax 71 in which learned Members by placing further reliance on the findings of the Supreme Court of India in 1994 PTD 1171 held that where there is an accretion in receipt under the same contract, the nature of the accretion shall remain the same and it will partake the colour of the same receipt on which accretion takes place, irrespective of the fact, whether it takes place directly under the contract or because of some subsequent events so long the source remains the same contract. This proposition has been discussed in the following words in the decision of this Tribunal, relied upon by the taxpayer before the first appellate authority: "We further agree with the principle laid down by the Indian Supreme Court in the judgment reported as 1994 PTD 1171 (2003 ITR 881) and hold that if there is accretion in receipts under the same contract the nature of accretion shall remain same and it shall partake the colour of same receipts on which accretion takes place, irrespective of the fact whether it takes place directly under the contract or because of some subsequent events so long the source remains the same contract".

30. The learned LA/DR argued that the first appellate authority erred in extending the exemption to other receipts while dealing with appeal for the tax year 2010. On our query as to whether the receipts on which minimum tax has been imposed by the Additional Commissioner emanate from the same contract whereunder revenue on account of sale accrues to the taxpayer, the learned LA/DR replied in affirmative. In these circumstances, we do not find any infirmity in the findings of the first appellate authority on the issue. It is a fact verifiable from record that the subject receipts, being received under the same power purchase agreement which was entered into for sale of electricity, therefore, the other receipts would partake the same character. In fact, the taxpayer in this case is engaged exclusively in the business of sale of electricity, hence, all other forms of revenue, contemplated in the Power Purchase Agreement, are nothing but consideration for sale of electricity though payable in different circumstances/ eventualities. Consequently, in the light of clear finding of this Tribunal, it is our opinion that all receipts under the Power Purchase Agreement would be treated as consideration for sale of electricity and since exemption from levy of minimum tax is undisputedly available to sale revenue, therefore, the same would also apply to other types of revenues. The appeal on this point also fails. The six appeals are decided in the manner and to the extent discussed above. HBT/21/Tax(Trib.) Order accordingly.