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Question ID : 44473

Allowability of electricity supply connection charges paid to State Electricity Board

Whether Rs. 14 lakhs paid by an assessee to WBSEDCL (W.B. State Electricity Development Corporation Ltd.) towards installation of electric poles, cable laying and transmitter for new industrial electric supply connection at his newly constructed rice mill (based on their quotation). The poles, cables and transmitter shall continue to be the property of the WBSEDCL. Commercial production has not yet been commenced in the rice mill. Whether the expenditure shall be debited in full in the profit & loss account of the assessee in the year of payment and the same is allowable as revenue expenditure u/s 37(1) of the Income Tax Act, 1961? Please reply. With regards!

Posted by ALOK NATH SAHA on Apr 27, 2023

Filed Under DIRECT TAXES

Answer ID : 83992

Revenue expenditure to be fully debited in profit and loss account. Inference:- CIT Vs. Hindustan Zinc Ltd (2009) 221CTR (Raj) 637.

Posted by B.CHACKRAPANI WARRIER on Apr 28, 2023
Answer ID : 83993

Yes. It is allowable as revenue expenditure.

Posted by CA. chunauti dholakia on Apr 28, 2023
Answer ID : 84001

Capital expenditure needs to be capitalised first and debited to PL over a period of time. In view of the nature of expenses you can’t debit entire expenses at once.

Posted by SURAJ KUMAR CHOUDHARY on May 07, 2023