A.P.Dhandhapaani, CHENNAI V. ACIT, Tiruppur

ITA 535/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86279 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-01-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 05-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: R KUMAR
• Keywords: Question of law; Capital receipt

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' $ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 535/MDS/2014 ( / ASSESSMENT YEAR: 2010-11) MR. A.P.DHANDHAPAANI 330/1, SRI GOKULAKRISHNA NAGAR, PALLADAM ROAD, TIRUPUR - 641 605. VS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-I, TIRUPUR. PAN:ADLPD2469G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. R.KUMAR, ADVOCATE /RESPONDENT BY : MR. S.DAS GUPTA, JCIT /DATE OF HEARING : 14 TH JANUARY, 2015 /DATE OF PRONOUNCEMENT : 30 TH JANUARY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, COIMBA TORE DATED 24.12.2013 FOR THE ASSESSMENT YEAR 2010-11. 2. COUNSEL FOR THE ASSESSEE SUBMITS THAT THOUGH SEV ERAL GROUNDS WERE RAISED, HE IS PRESSING FOR ONLY GROUND NO.4 WHICH IS AN ALTERNATIVE GROUND TAKEN BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) I.E. COMMISSIO NER OF INCOME TAX (APPEALS) ERRED IN NOT ACCEPTING THE ALT ERNATIVE CLAIM THAT RECEIPTS ON SALE OF CARBON CREDIT BEING CAPITAL 2 ITA NO.535/MDS/2014 RECEIPT ARE NOT LIABLE TO INCOME-TAX. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ISSUE IN APPEAL HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN VARIOUS CASES. HE PLACES A COPY OF THE ORDER OF THIS TRIBUNAL IN THE CASE OF P.K.GANESHWAR VS. ACIT IN ITA NO.2091/MDS/2013 DATED 17.7.2014 FOR THE ASSESSMENT YEAR 2010-11. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ISSUE IS SQUARELY COVERED BY THE SAID DECISION OF THE CO-OR DINATE BENCH OF THIS TRIBUNAL. 3. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER O F THE ASSESSING OFFICER. 4. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND THE DECISION RELIED ON. THE ASSESSING OFFICER W HILE COMPLETING THE ASSESSMENT DISALLOWED DEDUCTION UNDE R SECTION 80IA CLAIMED BY THE ASSESSEE ON THE INCOME FROM SALE OF CARBON CREDITS. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINED THE ACTION OF THE ASSESSING OFFICER IN TREATING CARBON CREDITS AS NOT ELIGIBLE FOR DEDUCTI ON UNDER SECTION 80IA. IN THE ALTERNATIVE, ASSESSEE CLAIMED THAT 3 ITA NO.535/MDS/2014 INCOME FROM SALE OF CARBON CREDIT IS CAPITAL RECEI PT AND NOT EXIGIBLE TO TAX. COMMISSIONER OF INCOME TAX (APPEAL S) HAS NOT ACCEPTED THE ALTERNATIVE CLAIM OF THE ASSESSEE. WE FIND THAT THE ISSUE IN THE APPEAL IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF P.K.GANESHWAR VS. ACIT IN ITA NO.2901/MDS/2013 D ATED 17.07.2014, WHEREIN THIS TRIBUNAL HELD THAT INCOME FROM SALE OF CARBON CREDITS IS CAPITAL RECEIPT NOT EXIGIBLE T O TAX. WHILE HOLDING SO, THE TRIBUNAL HELD AS UNDER:- 6. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE CASE FILE. THERE IS NO DISPUTE ABOUT THE NATURE OF RECEIPTS ARISING FROM SALE OF CARBON CREDITS AS THE DECISION OF THE HYDERABAD BENCH OF THE 'TRIBUNAL' IN MY HOME POWER LTD VS DCIT (SUPRA) HAS BEEN UPHELD BY THE HON'BLE ANDHRA PRADESH HIGH COURT VIDE ORDER DATED 19.2.2014 HOLDING THEREIN THAT THE SAME ARE NOT AN OFFSHOOT OF BUSINESS BUT ARISE FROM ENVIRONMENTAL CONCERNS. THEIR LORDSHIPS HAVE ALSO OBSERVED THAT THESE CARBON CREDITS ARE NOT DIRECTLY LINKED WITH POWER GENERATION. IN OTHER WORDS, IT HAS BEEN HELD AS CAPITAL AND NOT A REVENUE RECEIPT. IT IS TO BE SEEN THAT THE CIT(A) APPLIES ESTOPPEL PRINCIPLE AGAINST THE ASSESSEE. THE ASSESSEE HAD DECLARED THE CARBON CREDIT SALE RECEIPTS AS INCOME DUE TO THE FACT THAT IT IS OTHERWISE ENTITLE D FOR SECTION 80IA DEDUCTION. IN THE LOWER APPELLATE PROCEEDINGS, IT HAD SOUGHT TO WITHDRAW THE SAID DECLARATION. THE CIT(A) HAS NOT QUOTED ANY SPECIFIC PROVISION BARRING SUCH AN ALTERNATIVE PLEA. IN THESE FACTS ONLY, WE OBSERVE THAT AS THE SUBSTANTIAL QUESTION OF LAW HAS BEEN SETTLED AGAINST THE REVENUE ABOUT NATURE OF THE RECEIPT, 4 ITA NO.535/MDS/2014 THE ASSESSEE IS ENTITLED FOR ACCEPTANCE OF ITS ALTERNATIVE CLAIM. SO, WE ACCEPT THE RELEVANT GROUNDS AND HOLD THAT CARBON CREDIT RECEIPTS HAVE TO BE TREATED AS CAPITAL IN NATURE. 5. RESPECTFULLY FOLLOWING THE SAID DECISION, WE ALL OW GROUND NO.4 OF THE GROUNDS OF APPEAL OF THE ASSESSE E AND REJECT GROUND NO.2 OF GROUNDS OF APPEAL. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 30 TH DAY OF JANUARY, 2015 AT CHENNAI. SD/- SD/- ( . ) ( ( *+ ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDRA PRASAD ) - / ACCOUNTANT MEMBER * - / JUDICIAL MEMBER * /CHENNAI, / /DATED 30 TH JANUARY, 2015 SOMU 12 32 /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .