DCIT, Circle-3(2), Hyd, Hyderabad V. Sri Indra Power Energies Ltd., Hyd, Hyderabad

ITA 1255/HYD/2015

• Counselvise Citation: 125522514 RSA 2015
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 03-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SITHARAM
• Assessee Lawyers: V RAGHAVENDRA RAO
• Section: 115JB; 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.1255 & 1256/HYD/2015 ASSESSMENT YEAR 2008-2009 & 2009-2010 THE DCIT, CIRCLE-3(2), HYDERABAD. VS., M/S. SRI INDRA POWER ENERGIES LTD., HYDERABAD-34 PAN AAFCS6524H (APPELLANT) (RESPONDENT) FOR REVENUE : MR. SITHARAM FOR ASSESSEE : MR. V. RAGHAVENDRA RAO DATE OF HEARING : 16.12.2015 DATE OF PRONOUNCEMENT : 18.12.2015 ORDER PER SMT. P. MADHAVI DEVI, J.M. THESE APPEALS ARE FILED BY THE REVENUE FOR THE A.YS. 2008-09 AND 2009-2010 RESPECTIVELY. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF GENERAT ION OF POWER FROM BIOMASS FILED ITS RETURN OF INCOME FO R THE A.Y. 2008-09 SHOWING TOTAL INCOME OF RS.NIL AFTER CLAIMING DEDUCTION UNDER SECTION 80IA OF THE I.T. A CT OF RS.6,76,48,717 ON 30.09.2008. THE ASSESSEE ADMITTED TAX UNDER SECTION 115JB OF THE ACT ON THE BOOK PROFITS OF RS.13,49,39,184. THE RETURN WAS PROCESSED UNDER SEC TION 143(1) OF THE I.T. ACT ON 5 TH MARCH, 2010. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED BY ISSUING A NOTICE UND ER 2 ITA.NO.1255/HYD/2015 M/S. SRI INDRA POWER ENERGIES LTD., HYDERABAD. SECTION 148 OF THE ACT ON THE GROUND THAT ON VERIFI CATION OF THE P & L A/C, IT WAS OBSERVED THAT THE PROFIT O F RS.6,76,48,717 INCLUDES OTHER INCOME OF RS.10,57,35 ,526 AND INTEREST INCOME OF RS.19,87,056 WHICH ARE NOT E LIGIBLE FOR DEDUCTION UNDER SECTION 80IA OF THE I.T. ACT. I T WAS THEREFORE, HELD THAT THE ASSESSEE HAS CLAIMED DEDUC TION IN EXCESS OF ITS ALLOWABILITY. IN RESPONSE TO THE ABOV E NOTICE, ASSESSEE COMPANY SUBMITTED THAT ORIGINAL RETURN FIL ED FOR THE RELEVANT ASSESSMENT YEAR MAY BE TREATED AS RETU RN FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148 O F THE ACT. SUBSEQUENTLY, DURING THE ASSESSMENT PROCEEDING S UNDER SECTION 147 OF THE I.T. ACT, THE A.O. OBSERVE D THAT THE DEDUCTION UNDER SECTION 80IA AND 80IB OF THE A CT ARE ONLY ON PROFITS DERIVED FROM INDUSTRIAL UNDERTAKI NG. HE OBSERVED THAT THE ASSESSEE HAS EARNED A SUM OF RS.2,02,46,674 FROM CARBON CREDITS RELATING TO THE EARLIER YEARS AND HAS CLAIMED THIS INCOME AS INCOME DERIVED FROM THE BUSINESS OF GENERATION OF POWER AND CLAIME D DEDUCTION UNDER SECTION 80IA OF THE ACT ON THIS AMO UNT. HE HELD THAT THE INCOME FROM SALE OF CARBON CREDITS IS NOT TO BE HELD AS INCOME DERIVED FROM THE BUSINESS OF P OWER GENERATION AS IT IS INDEPENDENT OF THE MAIN BUSINES S OF POWER GENERATION AND THEREFORE, IT COULD NOT BE SAI D THAT SUCH A RECEIPT IS ENTITLED FOR DEDUCTION UNDER SECT ION 80IA. HE ACCORDINGLY BROUGHT IT TO TAX. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO ALLOW ED THE SAME BY FOLLOWING THE JUDGMENT OF THE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT VS. MY HOME POWER LTD., RE PORTED 3 ITA.NO.1255/HYD/2015 M/S. SRI INDRA POWER ENERGIES LTD., HYDERABAD. IN (2014) 365 ITR 82. AGAINST THE RELIEF GIVEN BY T HE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 3. THE LD. D.R. STRONGLY SUPPORTED THE ORDERS OF THE A.O. AND PLACED RELIANCE UPON THE DECISION OF T HE TRIBUNAL AT COCHIN IN THE CASE OF APOLLO TYRES LTD. , (2014) 47 TAXMANN.COM 416 WHEREIN THE TRIBUNAL AFTER CONSIDERING THE DECISION OF THE TRIBUNAL AT HYDERAB AD IN THE CASE OF MY HOME POWER LTD., VS. DCIT REPORTED I N (2012) 27 TAXMANN.COM 27 (HYD.) HAS HELD THE ISSUE IN FAVOUR OF THE REVENUE. 4. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE LD. CIT(A) AND AL SO HAS SUBMITTED THAT THE A BENCH OF THIS TRIBUNAL AT HYDERABAD IN ASSESSEES OWN CASE FOR THE A.Y. 2010- 11 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT VS. MY HOME POWER LTD., CITED (SUPRA). A COPY OF THE SAID ORDER IS PLACED BEFORE US. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AS WELL AS THE JUDICIAL PRECEDENTS RELIED UPON BY THE RIVAL PARTIES, WE FIND THAT THIS ISSUE HAD ARISEN IN THE CASE OF M Y HOME POWER LTD., (SUPRA) BEFORE THE TRIBUNAL AND HAS SUBSEQUENTLY BEEN CARRIED TO THE HONBLE JURISDICTI ONAL HIGH COURT AND THE JURISDICTIONAL HIGH COURT HAS HE LD THE CARBON CREDITS TO BE IN THE NATURE OF CAPITAL RECEI PT AND HENCE, NOT TAXABLE. THE RELEVANT PARAGRAPH WHICH HA S 4 ITA.NO.1255/HYD/2015 M/S. SRI INDRA POWER ENERGIES LTD., HYDERABAD. BEEN REPRODUCED BY THE LD. CIT(A) AT PARA-5.3 OF IT S ORDER IS REPRODUCED HEREUNDER FOR READY REFERENCE : 5.3. IT IS PERTINENT TO MENTION THAT THE HON'BLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF CIT V. MY HOME POWER LTD (2014) 365 ITR 82 HELD THAT 'WE HAVE CONSIDERED THE AFORESAID SUBMISSION AND WE ARE UNABLE TO ACCEPT THE SAME, AS THE LEARNED TRIBUNAL HAS FACTUALLY FOUND THAT 'CARBON CREDIT IS NOT OFFSHOOT OF BUSINESS BUT AN OFFSHOOT OF ENVIRONMENT AL CONCERNS'. WE AGREE WITH THIS FACTUAL ANALYSIS AS T HE ASSESSEE IS CARRYING ON THE BUSINESS OF POWER GENERATION. THE CARBON CREDIT IS NOT EVEN DIRECTLY LINKED WITH POWER GENERATION. ON THE SALE OF EXCESS CARBON CREDITS THE INCOME WAS RECEIVED AND HENCE AS CORRECTLY HELD BY THE TRIBUNAL IT IS CAPITAL RECEIP T. 6. RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MY HOME POWER LTD., (SUPRA), THE APPEALS OF THE REVENUE FOR BOTH THE ASSESSMENT YEARS ARE DISMISSED. 7. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 18.12.2015. SD/- SD/- (S. RIFAUR RAHMAN) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 18 TH DECEMBER, 2015 VBP/- 5 ITA.NO.1255/HYD/2015 M/S. SRI INDRA POWER ENERGIES LTD., HYDERABAD. COPY TO 1. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(2), 7 TH FLOOR, B BLOCK, I.T. TOWERS, A.C. GUARDS, HYDERABAD. 2. M/S. SRI INDRA POWER ENERGIES LTD., G-1, VIJAYA RES IDENCY, 8-2-210/110/115, ROAD NO.14, BANJARA HILLS, HYDERAB AD. 3. CIT(A) - 3 , HYDERABAD. 4. PR. CIT - 3 , HYDERABAD. 5. D.R. I.T.A.T. A BENCH, HYDERABAD. 6. GUARD FILE