Shalivahana Green Energy Ltd., Hyderabad, Hyderabad V. Jt. CIT, Circle-3(1), Hyd, Hyderabad

ITA 673/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6210 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 08-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 11-05-2016
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 673/HYD/2016 ASSESSMENT YEAR: 2009-10 SHALIVAHANA GREEN ENERGY LTD., SECUNDERABAD [PAN: AALCS2217B] VS JT. COMMISSIONER OF INCOME TAX, CIRCLE-3(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SHRI K.J. RAO, DR DATE OF HEARING : 08-09-2016 DATE OF PRONOUNCEMENT : 14-09-2016 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF T HE LD. COMMISSIONER OF INCOME TAX (APPEALS)-3, HYDERABAD D ATED 23-02-2016 ON THE ISSUE OF DENIAL OF DEDUCTION U/S. 80IA OF THE INCOME TAX ACT [ACT] ON THE INCOME RECEIVED FROM SALE OF CARBON CREDITS. 2. ASSESSEE IS IN THE BUSINESS OF GENERATION OF ELECTR ICITY USING BIOMASS IN WHICH ASSESSEE BECAME ELIGIBLE FOR CERTAI N CARBON EMISSION REDUCTION CERTIFICATES [CERC] POPULARLY KNOWN AS CARBON CREDITS. ASSESSEE HAD INCOME FROM SUCH CAR BON CREDITS TO THE TUNE OF RS. 18,31,077/- ON WHICH 80IA DEDUCTION WA S CLAIMED. ASSESSING OFFICER (AO) DID NOT ALLOW 80IA DEDUCTION O N THE GROUND THAT SUCH DEDUCTION IS ALLOWABLE ONLY TO THE COMPANIES E NGAGED IN I.T.A. NO. 673/HYD/2016 SHALIVAHANA GREEN ENERGY LTD., :- 2 -: INFRASTRUCTURE DEVELOPMENT AND FURTHER HELD THAT INCOME FROM CARBON CREDITS IS NOT DERIVED FROM THE BUSINESS. 2.1. ASSESSEE RAISED OBJECTION BEFORE THE LD. CIT(A) AND ALSO FILED ADDITIONAL GROUNDS THAT SALE OF CARBON CREDIT WAS TO BE TREATED AS CAPITAL RECEIPT, THEREFORE, SHOULD NOT HAVE TAXED AT AL L. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS HAS HELD AS UNDER: 6. IT IS PERTINENT TO MENTION THAT THE HON'BLE IT AT, HYDERABAD, B-BENCH IN CASE OF MY HOME POWER LTD., V S. DCIT IN ITA NO. 1114/HYD/2009 HELD THAT THE RECEIPT FROM SA LE OF CARBON CREDIT WAS CAPITAL RECEIPT THEREFORE NOT TAXABLE. THE DECISION OF HON'BLE ITAT WAS CONFIRMED BY HON'BLE AP HIGH COURT IN THE CASE OF CIT VS. MY HOME POWER LTD 365 ITR 82 WHEREIN IT WAS HELD THAT RECEIPT ON SALE OF CARBON CREDIT IS CAPITAL RECEIPT . THEREFORE THE HON'BLE HIGH COURT HELD THAT THE RECEIPT IS A CAPIT AL RECEIPT, THEREFORE NOT TAXABLE, THEREFORE THIS GROUND OF APP EAL BECOMES INFRUCTUOUS AND TREATED AS DISMISSED. 3. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 2. THE LEARNED CIT ERRED IN NOT CONSIDERING THE AD DITIONAL GROUND OF APPEAL RAISED BY THE APPELLANT. 3. THE LEARNED CIT OUGHT TO HAVE DECIDED THE APPEAL HOLDING THAT THE AMOUNT OF RS. 18,31,077/- REPRESENTING SALE OF CARBON CREDITS IS A CAPITAL RECEIPT AND, THEREFORE, NOT TAXABLE AS RE VENUE INCOME. GROUND NOS. 1 & 4 ARE GENERAL IN NATURE. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM OF TH E OPINION THAT LD. CIT(A) WHILE ACCEPTING THAT AMOUNT IS A CAPITAL R ECEIPT AND THEREFORE NOT TAXABLE, WRONGLY CONSIDERED THAT GROUND AS INFRUCTUOUS AND TREATED AS DISMISSED. IN FACT WHEN THE AMOUNT IS I.T.A. NO. 673/HYD/2016 SHALIVAHANA GREEN ENERGY LTD., :- 3 -: NOT TAXABLE AT ALL, QUESTION OF TREATING IT AS INCOME DOE S NOT ARISE. THEREFORE, WHETHER A DEDUCTION U/S. 80IA IS ALLOWED O R THE AMOUNT IS EXCLUDED FROM THE COMPUTATION OF INCOME, THE RESULT W OULD BE SAME. ASSESSEES ALTERNATE GROUND SHOULD HAVE BEEN CONSIDERED AND NECESSARY RELIEF SHOULD HAVE BEEN ALLOWED BY TH E CIT(A). BE THAT AS IT MAY, SINCE THE SALE AMOUNT OF CARBON CREDITS WAS ALREADY HELD BY HON'BLE AP HIGH COURT AS A CAPITAL RECEIPT, INCLUSION OF THE SAME IN THE TOTAL INCOME COMPUTATION DOES NOT ARISE. THEREFORE, ALLOWING GROUNDS OF ASSESSEE, I DIRECT THE AO TO EXCLUDE THE AMOUNT FROM THE COMPUTATION OF INCOME ITSELF. THE CL AIM OF 80IA ON THIS AMOUNT DOES NOT ARISE IN THIS CASE. I A LLOW THE GROUNDS OF ASSESSEE BY MODIFYING THE ORDER OF CIT(A) ACCORDINGLY. 5. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH SEPTEMBER, 2016 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 14 TH SEPTEMBER, 2016 TNMM I.T.A. NO. 673/HYD/2016 SHALIVAHANA GREEN ENERGY LTD., :- 4 -: COPY TO : 1. SHALIVAHANA GREEN ENERGY LTD., SECUNDERABAD C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMAYATNAGAR, HYDERABAD. 2. JOINT COMMISSIONER OF INCOME TAX, CIRCLE-3(1), HYDERABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-3, HYDERABAD 4. PR. COMMISSIONER OF INCOME TAX-3, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.