Lanco Tanjore Power Company Limited, CHENNAI V. DCIT, CHENNAI

ITA 1321/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6032 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 24-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS T H VIJAYALAKSHMI
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Capital receipt

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI , , ! ' BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./ ITA NO.1321/MDS/2017 /ASSESSMENT YEAR: 2010-11 M/S.LANCO TANJORE POWER CO. LTD., NO.25, G.N.CHETTY ROAD, T.NAGAR, CHENNAI-600 017. VS. THE DY. COMMISSIONER OF- INCOME TAX, CORPORATE CIRCLE-4(1), CHENNAI-600 034. [PAN: AACCA 4297 N ] ( & /APPELLANT) ( '(& /RESPONDENT) & ) / APPELLANT BY : MR.R.VIJAYARAGHAVAN, ADV. '(& ) /RESPONDENT BY : MRS.T.H.VIJAYALAKSHMI, CIT ) /DATE OF HEARING : 12.10.2017 ) /DATE OF PRONOUNCEMENT : 12.10.2017 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NO.1321/MDS/2017 IS AN APPEAL FILED BY THE ASS ESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-8, CHENNAI, IN ITA NO.35/2013-14 DATED 22.03.2017 FOR THE AY 2010- 11. 2. MRS.VIJAYALAKSHMI, CIT, REPRESENTED ON BEHALF OF THE REVENUE AND MR.R.VIJAYARAGHAVAN, ADV., REPRESENTED ON BEHALF OF THE ASSESSEE. ITA NO.1321/MDS/2017 :- 2 -: 3. AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE LD.AR THAT THE ONLY ISSUE IN THE ASSESSEES APPEAL WAS AGAINST THE ACTI ON OF THE LD.CIT(A) IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING THE ASSESSEES CLAIM OF DEDUCTION U/S.80IA IN RESPECT OF THE PROFITS DERIVE D FROM THE SALE OF CARBON EMISSION REDUCTION (CER) ALSO KNOWN AS CARBO N CREDITS. IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEE IS IN THE BUSINESS OF GENERATION OF ELECTRICITY AND THE ASSESSEE HAD CLAIMED DEDUCTI ON U/S.80IA IN RESPECT OF THE PROFITS DERIVED FROM THE SALE OF THE CARBON CREDITS. IT WAS A SUBMISSION THAT THE LD.CIT(A) HAD UPHELD THE ORDER OF THE AO BY FOLLOWING THE DECISION OF THE ITAT COCHIN BENCH IN THE CASE O F APOLLO TYRES LTD., REPORTED IN 149 ITD 756 (COCHIN). IT WAS A SUBMISS ION THAT NOW THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF MY HOME POWER LTD., REPORTED I N 365 ITR 82 (AP). IT WAS A SUBMISSION THAT AS PER THE DECISION OF THE HO NBLE ANDHRA PRADESH HIGH COURT, THE CARBON CREDITS WAS NOT AN OFFSHOOT OF BUSINESS BUT OFFSHOOT OF ENVIRONMENTAL CONCERNS. CONSEQUENTLY, THE SALE OF THE EXCESS CARBON CREDITS WAS CAPITAL RECEIPT. IT WAS A SUBMI SSION THAT THE AO MAY BE DIRECTED TO ASSESS THE BENEFIT OF CARBON CREDITS AS A CAPITAL RECEIPT. IT WAS A SUBMISSION THAT THIS IS AS PER GROUND NO.3 OF THE ASSESSEES APPEAL. 4. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE ORD ER OF THE AO AND THE LD.CIT(A). ITA NO.1321/MDS/2017 :- 3 -: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE DECISION OF THE HONBLE ANDHRA PRADESH HIGH COURT I N THE CASE OF MY HOME POWER LTD., IS ONLY DECISION ON THE ISSUE BY THE HO NBLE HIGH COURT AND THE REVENUE HAS NOT BEEN ABLE TO PLACE BEFORE US ANY OT HER CONTRARY DECISION. CONSEQUENTLY, RESPECTFULLY FOLLOWING THE DECISION O F THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF MY HOME POWER LTD ., REFERRED TO SUPRA, THE AO IS DIRECTED TO TREAT THE SALE OF THE CARBON CREDITS AS A CAPITAL RECEIPT. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 12, 2017, AT CHENNAI. SD/- SD/- ( ) ( CHANDRA POOJARI ) ! /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER /CHENNAI, 1 /DATED: OCTOBER 12, 2017. TLN ) '23 43 /COPY TO: 1. & /APPELLANT 4. 5 /CIT 2. '(& /RESPONDENT 5. 3 ' /DR 3. 5 ( ) /CIT(A) 6. /GF