Dy.Commissioner of Income Tax, Circle-3(1), Hyderabad V. Rain CII Carbon (Vizag) Limited, Hyderabad

ITA 1270/Hyd/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2201 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 21-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1270/HYD/2017 ASSESSMENT YEAR: 2013-14 DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(1), HYDERABAD VS M/S. RAIN CII CARBON (VIZAG) LIMITED, HYDERABAD [PAN: AAECR1067K] (APPELLANT) (RESPONDENT) FOR REVENUE : SMT. T.H. VIJAYA LAKSHMI, CIT-DR FOR ASSESSEE : SMT. SUVIBHA NOLKHA, AR DATE OF HEARING : 21-12-2017 DATE OF PRONOUNCEMENT : 29-12-2017 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-3, HYDERABAD ON THE ISSUE OF INCOME FROM CARBON CREDITS. ASSESSEE HAS EARNED CAR BON CREDITS AND SHOWN IT IN THE P&L A/C TO AN EXTENT OF RS. 8,97 ,23,198/-. ASSESSING OFFICER (AO) DID NOT ALLOW THE EXEMPTION CLA IMED BY THE ASSESSEE ON THE REASON THAT ASSESSEE HAS ADOPTED IT AS REVENUE INCOME IN THE P&L A/C. 2. ON APPEAL BEFORE THE LD.CIT(A), LD.CIT(A) FOLLOWI NG THE HON'BLE JURISDICTIONAL HIGH COURT DECISION IN THE CAS E OF CIT VS. MY HOME POWER LTD., [365 ITR 82] HAS HELD THAT THE CARBON CREDIT IS CAPITAL RECEIPT AND IT CANNOT BE TREATED AS BUSINESS RE CEIPT OR INCOME. LD.CIT(A) ALSO FOLLOWED THE DECISION OF TH E ITAT IN ASSESSEES OWN CASE FOR AY. 2011-12, WHICH WAS DECI DED IN FAVOUR I.T.A. NO. 1270/HYD/2017 :- 2 - : OF ASSESSEE BY THE ITAT IN ITS ORDER IN ITA NO. 1102/ HYD/2016, DT. 17-02-2017. LD.CIT(A) ALSO CONSIDERED THE NEW SECTION U/S. 115BBG INTRODUCED W.E.F. 01-04-2018 AND STATED THAT THE S AID SECTION IS APPLICABLE PROSPECTIVELY AND CANNOT BE APPL IED TO THE IMPUGNED ASSESSMENT YEAR. REVENUE IS AGGRIEVED AND RAISED THE FOLLOWING GROUNDS: 2. THE LD.CIT(A) ERRED IN NOT UPHOLDING THE ADDITI ON MADE OF RS. 8,97,23,198/- BY AO, TREATING THE INCOME FROM SALE OF CARBON CREDITS AS REVENUE RECEIPTS. 3. THE LD.CIT(A) ERRED IN LAW IN HOLDING THAT THE R ECEIPTS ON SALE OF CARBON CREDITS ARE CAPITAL RECEIPTS AND ARE NOT OF REVENUE IN NATURE AND THEREBY HOLDING THAT SAME ARE NOT TAXABLE IN THE HA NDS OF THE ASSESSEE. GROUND NOS. 1 & 4 ARE GENERAL IN NATURE. 3. AFTER CONSIDERING THE RIVAL CONTENTIONS, IT IS TO BE HELD THAT CARBON CREDITS ARE TO BE TREATED AS CAPITAL IN NATURE A ND HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MY HO ME POWER LTD., (SUPRA) HAD HELD THAT IT CANNOT BE CONSIDERED AS B USINESS RECEIPT. SINCE THE LD.CIT(A) ORDER IS IN ACCORDANCE WITH THE PRINCIPLES LAID DOWN BY THE HON'BLE JURISDICTIONAL H IGH COURT AND ALSO CONSIDERING THE NEW SECTION INTRODUCED FOR TAXIN G THE CARBON CREDITS W.E.F. 01-04-2018, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE WELL REASONED ORDER OF THE LD.CIT(A). THERE IS NO MERIT IN REVENUE GROUNDS. HENCE, DISMISSED. 4. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DECEMBER, 2017 SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMB ER HYDERABAD, DATED 29 TH DECEMBER, 2017 TNMM I.T.A. NO. 1270/HYD/2017 :- 3 - : COPY TO : 1. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE- 3(1), HYDERABAD. 2. M/S. RAIN CII CARBON (VIZAG) LIMITED, 34, RAIN C ENTRE, SRINAGAR COLONY, HYDERABAD. 3. CIT(APPEALS)-3, HYDERABAD. 4. PR.CIT-3, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.