M/s. Renuga Textiles Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1009/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4693 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 08-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAGATI KUMAR IRS
• Assessee Lawyers: DR ANITA SUMANTH
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI V, DURGA RAO, JUDICIAL MEMBER ITA NO. 1009(MDS)/2012 ASSESSMENT YEAR : 2007-08 M/S RENUGA TEXTILES LTD., NO.87, CUMBUM ROAD, P.C. PATI, THENI 652 531. PAN : AADCS 8242 G V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(2), CHENNAI - 600 034. (APPELLANT) (RESPONDENT) APPELLANT BY : DR. ANITA SUMA NTH, ADVOCATE RESPONDENT BY: SHRI PRAGATI KUMAR , IRS, CIT DATE OF HEARING : 21 ST NOVEMBER, 2013 DATE OF PRONOUNCEMENT: 21 ST NOVEMBER, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2007-08. THE APPEAL IS DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX, CHENNAI-I II AT CHENNAI, PASSED ON 30.3.2012, UNDER SECTION 263 OF THE INCOM E-TAX ACT, 1961, REVISING THE ORIGINAL ASSESSMENT ORDER PASSED IN THE PRESENT CASE UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 19 61. 2 I.T.A. NO. 1009/MDS/12 2. THE ASSESSEE WAS ENTITLED FOR THE DEDUCTION AVAI LABLE UNDER SECTION 80-IA IN THE IMPUGNED ASSESSMENT YEAR. THE ASSESSEE HAD GENERATED REVENUE FROM SALE OF STEAM AND ALSO B Y SALE OF CARBON CREDITS. THE SALE PROCEEDS OF BOTH THESE IT EMS WERE TREATED BY THE ASSESSEE-COMPANY AS BUSINESS PROFITS IN ITS ACCOUNTS, AS A RESULT OF WHICH, THE REVENUE GENERATED OUT OF THE A BOVE TWO EVENTS FORMED PART OF THE PROFIT ELIGIBLE FOR DEDUCTION UN DER SECTION 80-IA. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER PASSE D UNDER SECTION 143(3) ACCEPTED THIS POSITION AND GRANTED T HE BENEFIT OF DEDUCTION TO THE ASSESSEE-COMPANY UNDER SECTION 80- IA. 3. THEREAFTER, ON VERIFICATION OF RECORDS OF THE CA SE, THE COMMISSIONER OF INCOME TAX FOUND THAT THE PROFIT RE CEIVED BY THE ASSESSEE-COMPANY BY WAY OF SALE OF STEAM AND CARBON CREDITS WERE TREATED AS INCOME DERIVED FROM RUNNING OF THE ELIGIBLE INDUSTRIAL UNIT. HE, ACCORDINGLY, PROPOSED TO EXCL UDE THESE TWO AMOUNTS FROM THE COMPUTATION OF PROFITS, ELIGIBLE F OR DEDUCTION UNDER SECTION 90-IA. 4. IN VIEW OF THE DETAILED REPLY FILED BY THE ASSES SEE-COMPANY, THE COMMISSIONER OF INCOME TAX ACCEPTED THE CONTENT IONS OF THE ASSESSEE AND AGREED WITH THEM THAT PROFIT ARISING O UT OF SALE OF STEAM WAS IN THE NATURE OF INCOME DERIVED OUT OF CA RRYING ON OF THE 3 I.T.A. NO. 1009/MDS/12 ELIGIBLE INDUSTRIAL UNIT. ACCORDINGLY, HE DROPPED THE SALE OF STEAM FROM HIS EARLIER PROPOSAL. BUT, IN THE CASE OF INC OME GENERATED OUT OF SALE OF CARBON CREDITS, THE COMMISSIONER OF INCO ME TAX HELD THAT THE SAID INCOME CANNOT BE TREATED AS INCOME GENERAT ED OUT OF RUNNING THE ELIGIBLE INDUSTRIAL UNIT. THEREFORE, H E DIRECTED THE ASSESSING OFFICER TO EXCLUDE THAT MUCH AMOUNT OF IN COME FROM THE COMPUTATION OF ELIGIBLE PROFITS FOR THE PURPOSE OF GRANTING DEDUCTION UNDER SECTION 80-IA OF THE INCOME-TAX ACT, 1961. 5. IT IS AGAINST THE ABOVE REVISION ORDER THAT THE ASSESSEE HAS COME IN APPEAL BEFORE US. 6. WE HEARD DR. ANITA SUMANTH, THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE AND SHRI PRAGATI KUMAR, THE LEARNE D COMMISSIONER OF INCOME TAX, APPEARING FOR THE REVEN UE. 7. AS POINTED OUT BY THE LEARNED COMMISSIONER OF IN COME TAX, THE ASSESSING OFFICER HAS NOT DISCUSSED ANYTHING AB OUT THE SUBJECT OF CARBON CREDITS IN HIS ASSESSMENT ORDER. BUT, AS HE HAS NOT DISTURBED THE CLAIM OF THE ASSESSEE, IT IS UNDERSTO OD THAT THE ASSESSING OFFICER HAS GRANTED THE RELIEF UNDER SECT ION 80-IA ON THE AMOUNT OF PROFIT INCLUDING THE PROFIT ARISING OUT O F THE SALE OF CARBON CREDITS AS WELL. 4 I.T.A. NO. 1009/MDS/12 8. BUT, THE ABOVE SITUATION CANNOT BE ENLARGED TO I TS LOGICAL POSITION, AS ARGUED BY THE LEARNED COMMISSIONER OF INCOME TAX. THIS IS BECAUSE ON THE MERITS OF THE ISSUE, WHETHER SALE OF CARBON CREDITS IS REVENUE INCOME OR NOT IS STILL A MATTER OF DISPUTE. IN SUCH CIRCUMSTANCES, IT IS POSSIBLE TO HOLD SUCH A VIEW. IF THE ASSESSING OFFICER HOLDS A VIEW THAT SALE OF CARBON CREDITS GE NERATES REVENUE INCOME, IT SHOULD BE FAIRLY CONCEDED THAT IT IS A V IEW POSSIBLE IN LAW. WHEN THE ASSESSING OFFICER HAS ADOPTED A VIEW POSSI BLE IN LAW, THEN, IT IS NOT POSSIBLE TO BRAND THE ASSESSMENT OR DER AS ERRONEOUS. ONCE AN ASSESSMENT ORDER CANNOT BE HELD TO BE ERRON EOUS, THERE IS NO MUCH FORCE IN EXAMINING WHETHER THE ASSESSMENT O RDER IS PREJUDICIAL OR NOT. THIS IS BECAUSE IT IS NECESSAR Y TO SATISFY BOTH THE CONDITIONS OF ERROR AND PREJUDICE SO AS TO JUSTIFY INVOKING SECTION 263. 9. IN THE PRESENT CASE, WE FIND THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS ONE OF THE POSSIBLE VIEWS IN L AW AND THEREFORE, HIS ORDER CANNOT BE CONSIDERED AS ERRONEOUS. FOR T HIS SHORT REASON ITSELF, WE FIND THAT THE REVISION ORDER PASSED BY T HE COMMISSIONER OF INCOME TAX IS NOT SUSTAINABLE IN LAW. IT IS SET ASIDE. 10. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED. 5 I.T.A. NO. 1009/MDS/12 ORDER PRONOUNCED ON THURSDAY, THE 21 ST OF NOVEMBER, 2013 AT CHENNAI. SD/- SD/- (V. DURGA RAO) (DR. O. K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 21 ST NOVEMBER, 2013. KRI. COPY TO: APPELLANT/RESPONDENT/ CIT, CHENNAI-III, C HENNAI/ DR/GF