M/s Shalivahana Green Energy Ltd(formerly Known as M/s Shalivahana Projects Pvt.Ltd), Hyderabad V. DCIT, Hyderabad

ITA 1229/HYD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1400 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-02-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKARA RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Principle of natural justice; Capital receipt
• Section: 115JB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, J.M. AND SHRI B.R.BASKARAN, A.M. ITA NO.1229/HYD/2010 (ASSESSMENT YEAR 20 07-08) M/S. SHALIVAHANA GREEN ENERGY LTD. (FORMERLY KNOWN AS M/S. SHALIVAHANA PROJECTS P. LTD.,) SECUNDERABAD. ( PAN - AAICS 4041 A ) V/S. DY. COMMISSIONER OF INCOME - TAX, CIRCLE 3(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI S.RAMA RAO RESPONDENT BY : S HRI D.SUDHAKARA RAO, CIT - DR DATE OF HEARING 2.1 .201 3 DATE OF PRONOUNCEMENT 04.01.2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 09- 08-2010 PASSED BY LEARNED CIT(A)-IV, HYDERABAD AND IT RELATES TO THE ASSESSMENT YEAR 2007-08. 2. THE GROUNDS URGED BY THE ASSESSEE GIVE RISE TO T HE FOLLOWING ISSUES:- (A) THE ORDER PASSED BY LEARNED CIT(A) EX-PARTE IS IN V IOLATION OF PRINCIPLES OF NATURAL JUSTICE. (B) THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONFIRMING T HE ASSESSMENT OF CARBON EMISSION RECEIPTS (CER), POPULARLY KNOWN AS CARBON CREDITS. ITA NO.1129/HYD/2010 M/S.SHALIVAHANA GREEN ENERGY LTD. SECUNDERABAD 2 (C) THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONFIRMING T HE DISALLOWANCE OF PRIOR PERIOD EXPENSES. (D) THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONFIRMING T HE DECISION OF THE AO THAT THE PROVISIONS OF SEC. 115JB ARE NOT AT TRACTED. 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRIEF. THE ASSESSEE IS ENGAGED IN GENERATION AND SALE OF ENERGY. DURING T HE YEAR UNDER CONSIDERATION, IT FILED ITS RETURN OF INCOME DECLARING NIL INCOME UNDER NORMAL PROVISIONS OF THE ACT AND DECLARING AN INCOME OF RS.3,75,06,941/- U/S 115JB OF THE ACT. THE ASSESSING OFFICER NOTICED THAT IT HAD RECEIVED A SU M OF RS.12.26 CRORES ON SALE OF ENERGY AND FURTHER SUM OF RS.6.16 CRORES ON SALE OF ON SALE OF CER. THE ASSESSEE HAD DECLARED A NET INCOME OF RS.5,68,85,944/- AND C LAIMED THE SAME AS DEDUCTION U/S 80IA OF THE ACT AND THUS RETURNED NIL INCOME. THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE IS NOT ENTI TLED TO CLAIM DEDUCTION U/S 80IA OF THE ACT IN RESPECT OF AMOUNT RECEIVED ON SALE OF CER, AS IT IS NOT AN INCOME DERIVED FROM GENERATION OF ENERGY. ACCORDINGLY HE TREATED THE ENTIRE NET INCOME OF RS.5.68 CRORES REFERRED (SUPRA) AS REPRESENTING THE AMOUNT RECEIVED ON SALE OF CER AND ASSESSED THE SAME AS THE INCOME OF THE ASSE SSEE. THE ASSESSING OFFICER ALSO NOTICED THAT THE ASSESSEE HAS CLAIMED PRIOR PE RIOD EXPENDITURE OF RS.72,98,251/- AS DEDUCTION. SINCE THE SAID EXPEND ITURE RELATES TO THE EARLIER YEAR, THE ASSESSING OFFICER DISALLOWED THE SAME. T HUS THE TOTAL INCOME WAS DETERMINED AT RS.6,41,84,195/- BY THE ASSESSING OFF ICER. SINCE THE ASSESSED INCOME UNDER NORMAL PROVISIONS OF THE ACT WAS MORE THAN THE INCOME COMPUTED U/S 115JB OF THE ACT, APPARENTLY, THE ASSESSING OFF ICER DID NOT COMPUTE INCOME UNDER THAT SECTION. 4. THE ASSESSEE CARRIED THE MATTERS IN APPEA L BEFORE LEARNED CIT(A). SINCE NONE APPEARED ON BEHALF OF THE ASSESSEE BEFOR E THE FIRST APPELLATE AUTHORITY, HE PROCEEDED TO DISPOSE OF THE APPEAL EX -PARTE. THE LEARNED CIT(A) ITA NO.1129/HYD/2010 M/S.SHALIVAHANA GREEN ENERGY LTD. SECUNDERABAD 3 CONFIRMED THE ASSESSMENT ORDER AND ACCORDINGLY DISM ISSED THE APPEAL FILED BY THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEF ORE US. 5. DURING THE COURSE OF HEARING, THE LEARNED A.R, BY PLACING RELIANCE ON THE DECISION DATED 02-11-2012, PASSED BY THE CO- ORDINATE BENCH IN THE CASE OF M/S MY HOME POWER LTD, SUBMITTED THAT THE AMOUNT RE CEIVED ON SALE OF CER CONSTITUTES CAPITAL RECEIPT AND HENCE THE SAME IS N OT TAXABLE AT ALL. WITH REGARD TO THE DISALLOWANCE OF PRIOR PERIOD EXPENSES, THE L EARNED COUNSEL SUBMITTED THAT THE DISALLOWANCE SO MADE ALSO CONSTITUTE INCOME ELI GIBLE FOR DEDUCTION U/S 80IA OF THE ACT. HE FURTHER SUBMITTED THAT THE BOOK PROFIT HAS TO BE COMPUTED U/S 115JB OF THE ACT, IF THE SALE OF CER IS TREATED AS CAPITA L RECEIPT. 6. ON THE OTHER HAND, THE LEARNED D.R SUBMIT TED THAT THE ASSESSEE HAS PUT IN NEW CLAIM BEFORE THE TRIBUNAL WITH REGAR D TO THE TREATMENT OF CER RECEIPTS AND IT REQUIRES EXAMINATION AT THE END OF THE ASSESSING OFFICER. HE FURTHER SUBMITTED THAT THE QUESTION WHETHER THE DIS ALLOWANCE OF PRIOR PERIOD EXPENSES WOULD ALSO BE ELIGIBLE FOR DEDUCTION U/S 8 0IA OF THE ACT WAS ALSO NOT CONSIDERED BY THE ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND C AREFULLY PERUSED THE RECORD. WE NOTICE THAT THE AMOUNT RECEIVED ON SALE OF CER WAS ASSESSED AS THE INCOME OF THE ASSESSEE BY HOLDING THAT THE SAID REC EIPTS CANNOT BE CONSIDERED AS INCOME DERIVED FROM GENERATION OF POWER/ENERGY. AP PARENTLY, THE CLAIM OF THE ASSESSEE THAT IT CONSTITUTES CAPITAL RECEIPT WAS NOT EXAMINED EITHER BY THE ASSESSING OFFICER OR THE LEARNED CIT(A). AS NOTICE D EARLIER, THE TAX AUTHORITIES HAVE ASSESSED THE SAID AMOUNT ON THE GROUND THAT IT DOES NOT CONSTITUTE INCOME DERIVED FROM GENERATION OF POWER/ENERGY. SINCE THE ASSESSEE IS PUTTING FORTH A NEW CLAIM, IN OUR VIEW, IN THE INTEREST OF NATURAL JUSTICE, IT REQUIRES EXAMINATION AT THE END OF THE ASSESSING OFFICER. BEFORE THE ASSES SING OFFICER, THE ASSESSEE MAY ITA NO.1129/HYD/2010 M/S.SHALIVAHANA GREEN ENERGY LTD. SECUNDERABAD 4 ADVANCE HIS ARGUMENTS ON THIS NEW FACET AND MAY ALS O PLACE RELIANCE ON ANY OF THE JUDICIAL DECISIONS. ACCORDINGLY, WE SET ASIDE THE ORDER OF LEARNED CIT(A) ON THIS ISSUE AND RESTORE IT TO THE FILE OF THE ASSESS ING OFFICER WITH THE DIRECTION TO EXAMINE THE NEW CLAIM MADE BY THE ASSESSEE AND DECI DE THE SAME IN ACCORDANCE WITH LAW. 8. SINCE WE HAVE SET ASIDE THE MAIN ISSUE TO T HE FILE OF THE ASSESSING OFFICER, WE FEEL THAT THE ASSESSING OFFICER MAY ALS O CONSIDER THE CLAIM OF THE ASSESSEE THAT THE DISALLOWANCE OF PRIOR PERIOD EXPE NSES WOULD ALSO CONSTITUTE PART OF INCOME DERIVED FROM THE UNDERTAKING INVOLVED IN GENERATION OF POWER/ENERGY AND HENCE ELIGIBLE FOR DEDUCTION U/S 80IA OF THE AC T. THE ASSESSING OFFICER MAY ALSO EXAMINE THE APPLICABILITY OF PROVISIONS OF SEC . 115JB OF THE ACT DEPENDING UPON THE OUTCOME OF HIS DECISION ON THE ABOVE SAID ISSUES. THE ORDER OF LEARNED CIT(A) ON THESE ISSUES ARE ALSO SET ASIDE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 04.01.2013 SD/- SD/- ( ASHA VIJAYARAGHAVAN ) ( B.R.BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED/- 04 TH JANUARY, 2013 COPY FORWARDED TO: 1. M/S. SHALIVAHANA GREEN ENERGY LTD. (FORMERLY KNOWN AS M/S. SHALIVAHANA PROJECTS P. LTD.,) (SECUNDERABAD), C/O. DR.C.P.RAMASWAMY, ADVOCATE, FLAT NO.303, GITAN JALI APTS., PLOT NO.108, SRINAGAR COLONY, HYDERABAD-500 072. 2. DY. COMMISSIONER OF INCOME - TAX CIRCLE 3(1), HYDERABAD ITA NO.1129/HYD/2010 M/S.SHALIVAHANA GREEN ENERGY LTD. SECUNDERABAD 5 3. 4. 5. COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD COMMISSIONER OF INCOME-TAX, III, HYDERABAD DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.