DCIT, Circle-1(1), Hyderabad, Hyderabad V. Astha Projects (India) Private Limited, Hyderabad, Hyderabad

ITA 1700/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6091 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 16-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Capital receipt

Judgement Text

1 ITA.NO.1700/HYD/2016 ASTHA PROJECTS (INDIA) PVT. LTD., HYDERABAD. IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA.NO.1700/HYD/2016 ASSESSMENT YEAR 2011-2012 THE DCIT, CIRCLE-1(1) HYDERABAD. VS. ASTHA PROJECTS (INDIA) P. LTD., HYDERABAD. PAN AAACA2831Q (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI K.J. RAO FOR ASSESSEE : SHRI S. RAMA RAO DATE OF HEARING : 15.03.2017 DATE OF PRONOUNCEMENT : 15.03.2017 ORDER PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY CIT(A)-1, HYDERABAD AND IT PERTAINS TO THE A. Y. 2011-2012. THOUGH THERE ARE SEVERAL GROUNDS, IN THE GROUNDS OF APPEAL FILED BY THE REVENUE, THE ISSUE IS LIMITED TO NATURE OF RECEIPT OF CL AIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPAN Y IS ENGAGED IN THE BUSINESS OF PRODUCTION OF POWER FROM HYDEL RESOURCES. ACCORDING TO THE ASSESSEE-COMPANY, IT IS ELIGIBLE TO C LAIM DEDUCTION UNDER SECTION 80IA OF THE ACT ON CARBON CREDITS WHICH ARE CERTIFIED BY THE INTERNATIONAL GOVERNING BODIES. THE CERS (CERTIFIE D EMISSION REDUCTION) ARISE ON ACCOUNT OF REDUCTION OF EMISSION O N CARBONDIOXIDE DURING THE REGULAR BUSINESS ACTIVITY AND HENCE, CERS FORM PART OF MAIN 2 ITA.NO.1700/HYD/2016 ASTHA PROJECTS (INDIA) PVT. LTD., HYDERABAD. BUSINESS ACTIVITY AND IT IS NOT AN INDEPENDENT TRANSACTIO N BUT INCIDENTAL TO GENERATION OF HYDEL POWER. DURING THE YEAR UNDER CO NSIDERATION, ASSESSEE SOLD CERS OF RS.1.90 CRORES. IT WAS CONTEND ED THAT IT IS A CAPITAL RECEIPT AND IN THE ALTERNATIVE IT IS ATTRIBUTABLE TO THE REGULAR BUSINESS OF THE ASSESSEE AND THEREFORE, ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA OF THE ACT. THE A.O. REJECTED THE CONTENTION OF THE ASSESSEE AND OBSERVED THAT IT IS A REVENUE RECEIPT AND IT IS NOT D ERIVED FROM AN ELIGIBLE BUSINESS AND HENCE, IT IS NOT ENTITLED TO DEDU CTION UNDER SECTION 80IA OF THE ACT. 3. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) TH AT THE AMOUNT RECEIVED ON SALE OF CARBON CREDITS IS A CAPITAL RECEIPT. IN THE ALTERNATIVE, IT WAS CONTENDED THAT IT IS ENGAGED IN THE BU SINESS OF GENERATING POWER THROUGH HYDEL RESOURCES ON ACCOUNT O F WHICH CARBON CREDITS WERE GENERATED AND THE INCOME DERIVED ON THE S ALE THEREOF SHOULD BE TREATED AS PART OF MAIN BUSINESS ACTIVITY AN D THUS, THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80IA OF THE ACT. RELIANCE WAS ALSO PLACED UPON THE DECISION OF THE JURISDICTION AL HIGH COURT BESIDES THE ASSESSEES OWN CASE BEFORE THE ITAT FOR TH E A.Y. 2009-2010 WHERE THE INCOME FROM SALE OF CERS WAS TREATED AS CAP ITAL ACCRETION. 4. LD. CIT(A) ACCEPTED THE MAIN CONTENTION OF THE ASSE SSEE AND HELD THAT THE RECEIPT ON ACCOUNT OF SALE OF CARBON CREDI T IS A CAPITAL RECEIPT. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE AS SESSEE, PLACED BEFORE US COPY OF THE ORDER OF THE ITAT B BE NCH, HYDERABAD IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009-2010 (ITA.N O.168/HYD/2013 DATED 20.08.2013) WHEREIN THE BENCH HELD THAT THE RECEIP T ON ACCOUNT OF SALE OF CARBON CREDITS SHOULD BE TREATED AS CAPITAL RECEIPT. LEARNED COUNSEL FOR THE ASSESSEE ALSO PLACED BEFORE US A COP Y OF THE ORDER OF THE 3 ITA.NO.1700/HYD/2016 ASTHA PROJECTS (INDIA) PVT. LTD., HYDERABAD. HONBLE HIGH COURT (ITTA.NO.690 OF 2014 DATED 20 TH NOVEMBER, 2014) TO SUBMIT THAT THE ORDER OF THE ITAT HAS BEEN CONFIRMED B Y THE HONBLE HIGH COURT. THE LD. D.R. FAIRLY AGREED THAT THE ISSUE S TANDS COVERED IN FAVOUR OF THE ASSESSEE. HOWEVER, HE RELIED UPON THE ORDER OF THE A.O. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE RECORD. SINCE THE VIEW CANVASSED BY THE AS SESSEE IS SUPPORTED BY THE DECISION OF THE ITAT AS WELL AS THE HO NBLE HIGH COURT IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009-10, THE V IEW TAKEN BY THE LD. CIT(A), BASED ON THE DECISION OF THE ITAT, DO NOT CALL FOR ANY INTERFERENCE AND WE, THEREFORE, CONFIRM THE ACTION OF TH E LD. CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 15.03.2017. SD/- SD/- (G. MANJUNATHA) (D.MANMOHAN) ACCOUNTANT MEMBER VI CE PRESIDENT HYDERABAD, DATED 15 TH MARCH, 2017. VBP/- COPY TO 1. THE DCIT, CIRCLE-1(1), 8 TH FLOOR, C BLOCK, I.T. TOWERS, A.C. GUARDS, MASAB TANK, HYDERABAD. 2. ASTHA PROJECTS (INDIA) PVT. LTD., PLOT NO.1071, ROAD NO.44, JUBILEE HILLS, HYDERABAD 500 033. 3. CIT(A)-1, 7 TH FLOOR, A-BLOCK, I.T. TOWERS, A.C. GUARDS, HYDERABA D. 4. PR. CIT-1, HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE.