ACIT, Coimbatore V. Sreepathy Paper & Boards (P) Ltd., Coimbatore

ITA 2136/CHNY/2014

• Counselvise Citation: 213621714 RSA 2014
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-02-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 14-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: M NARAYANAN RETD
• Keywords: Depreciation; Capital receipt; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , ! . . ' , # $ BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO.2136/MDS/2014 # % !&% / ASSESSMENT YEAR : 2010-11 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(2), 63-A, RACE COURSE ROAD, COIMBATORE. V. M/S SREEPATHY PAPER & BOARDS (P) LTD., 1680/31, RAMANI REGENCY, TRICHY ROAD, RAMANATHAPURAM, COIMBATORE. PAN : AAGCS 7439 C (()/ APPELLANT) (+,()/ RESPONDENT) () - . / APPELLANT BY : SHRI A.V. SREEKANTH, JCIT +,() - . / RESPONDENT BY : SHRI M. NARAYANAN, RETD. ADDL. CI T / ! - 0 / DATE OF HEARING : 26.02.2015 1& - 0 / DATE OF PRONOUNCEMENT : 04.03.2015 / O R D E R PER S.S. GODARA, JUDICIAL MEMBER: THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2010-11 ARISES FROM ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- I, COIMBATORE, DATED 06.05.2014 PASSED IN APPEAL NO .002/13-14 - - I.T.A. NO. 2136/MDS/2014 2 ALLOWING THE ASSESSEES CLAIM OF SECTION 80-IA DEDU CTION OF ` 1,08,96,944/- AND ALSO TREATING A SUM OF ` 14,86,186/- REALIZED FROM SALE OF CARBON CREDITS AS CAPITAL RECEIPTS, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (I N SHORT 'THE ACT'). 2. THE ASSESSEE/A COMPANY MANUFACTURES PAPER AND BOARDS. IT HAD FILED RETURN OF INCOME ON 5.10.2010 ADMITTING TOTAL INCOME OF ` 3,72,13,820/- UNDER NORMAL COMPUTATION WITH BOOK PROFITS OF ` 9,45,45,569/-. THE SAME WAS SUMMARILY PROCESSED. THE A.O. TOOK UP SCRUTINY. HE FOUND THAT THE ASSES SEE HAD CLAIMED SECTION 80-IA DEDUCTION IN RESPECT OF INSTA LLATION OF WINDMILLS AMOUNTING TO ` 1,23,83,130/- INCLUDING CARBON CREDIT RECEIPTS OF ` 14,86,186/-. HE QUOTED SECTION 80-IA(5) OF THE ACT AND OBSERVED IN THE ASSESSMENT ORDER DATED 01.03.20 13 THAT PROFITS AND GAINS FROM ELIGIBLE BUSINESS HAVE TO BE WORKED OUT AS IF THEY ARE THE ONLY SOURCE OF INCOME OF THE CONCER NED ASSESSEE RIGHT FROM COMMENCEMENT OF BUSINESS AND IN SUBSEQUE NT YEARS UPTO THE COMPUTATION IS MADE AND BUSINESS LOSSES, D EPRECIATION AND INVESTMENT LOSS OF EARLIER YEARS SHOULD BE TAKE N INTO ACCOUNT FOR DETERMINING THE IMPUGNED DEDUCTION EVEN IF THE SAME HAD - - I.T.A. NO. 2136/MDS/2014 3 BEEN SET OFF EARLIER AGAINST THE PROFITS FROM OTHER SOURCES. THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HON 'BLE MADRAS HIGH COURT IN VELAYUDHASWAMY SPINNING MILLS (P) LTD . V. ACIT (340 ITR 477). THE ASSESSING OFFICER DID NOT DISTI NGUISH THE FACTS AND ONLY OBSERVED THAT THE REVENUES SLP WAS PENDING BEFORE THE HON'BLE APEX COURT. HE WOULD ALSO HOLD THAT THE ASSESSEES RECEIPT FROM SALE OF CARBON CREDITS OF ` 14,86,186/- INCLUDED IN DEDUCTION AMOUNT STATED HEREINABOVE COU LD NOT BE HELD TO HAVE BEEN DERIVED FROM THE ELIGIBLE BUSIN ESS UNDER SECTION 80-IA OF THE ACT. HE TREATED THE SAID RECE IPT AS INCOME FROM OTHER SOURCES. ALL THIS RESULTED IN DISALLO WANCE SECTION 80- IA DEDUCTION OF ` 1,08,96,944/-. 3. THE ASSESSEE PREFERRED AN APPEAL. THE CIT(APPEA LS) FOLLOWS A CO-ORDINATE BENCHS DECISION IN MY HOME P OWER LTD. V. DCIT (2013) 151 TTJ 616 (HYD.) AND HOLDS THAT THE C ARBON CREDITS RECEIPTS HAVE TO BE TREATED AS CAPITAL RECE IPTS. HE REFERS TO CASE LAW OF VELAYUDHASWAMY SPINNING MILLS (P) LT D. (SUPRA) FOR ACCEPTING SECTION 80-IA DEDUCTION. THE ASSESSE E HAS SUCCEEDED IN THE LOWER APPELLATE PROCEEDINGS. THIS LEAVES THE REVENUE AGGRIEVED. - - I.T.A. NO. 2136/MDS/2014 4 4. WE HAVE HEARD BOTH SIDES AND PERUSED THE CASE FI LE. FACTS OF THE CASE ALREADY STAND NARRATED HEREINABOV E. THE REVENUE RAISES TWO SUBSTANTIVE ARGUMENTS IN THIS CA SE. THE FIRST ONE BEING THAT THE ASSESSING OFFICER HAD RIGH TLY DISALLOWED THE ASSESSEES DEDUCTION UNDER SECTION 80-IA OF THE ACT BY QUOTING SUB-SECTION (5) THEREOF. WE REITERATE THAT THE HON'BLE JURISDICTIONAL HIGH COURT (SUPRA) HAS ALREADY HELD THAT UNABSORBED DEPRECIATION AND LOSSES OF EARLIER ASSESSMENT YEARS ALREADY SET OFF AGAINST INCOME FROM OTHER SOURCES NEED NOT BE N OTIONALLY BROUGHT FORWARD TO BE SET OFF AGAINST PROFITS OF EL IGIBLE BUSINESS IN THE INITIAL ASSESSMENT YEAR OF DEDUCTION. THE REVE NUES FORMER ARGUMENT FAILS. 5. THE REVENUES SECOND PLEA IS THAT THE CIT(APPEAL S) HAS WRONGLY TREATED THE ABOVE STATED AMOUNT OF ` 14,86,186/- REALIZED FROM SALE OF CARBON CREDITS AS A CAPITAL R ECEIPT. IT HAS COME ON RECORD THAT THE DECISION OF THE HYDERABAD B ENCH (SUPRA) OF THE TRIBUNAL STANDS AFFIRMED BY THE HO N'BLE ANDHRA PRADESH HIGH COURT IN ITAT APPEAL NO. 60 OF 2014 DA TED 19.02.2014. THE REVENUE FAILS TO DRAW ANY DISTINCT ION ON FACTS - - I.T.A. NO. 2136/MDS/2014 5 OR LAW. ITS LATTER ARGUMENT IS ALSO DECLINED. THE CIT(APPEALS)S ORDER ON BOTH COUNTS IS UPHELD. 6. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 4 TH OF MARCH, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (S.S. GODARA) ( . ) ( . . ') / ACCOUNTANT MEMBER # /JUDICIAL MEMBER /CHENNAI, 3 /DATED, THE 4 TH MARCH, 2015. KRI. 4 - +#056 76&0 /COPY TO: 1. () /APPELLANT 2. +,() /RESPONDENT 3. / 80 () /CIT(A)-I, COIMBATORE 4. / 80 /CIT-I, COIMBATORE 5. 6!9' +#0# /DR 6. ':% ; /GF.