SRF LIMITED,NEW DELHI vs. ACIT, CIRCLE- 1, LTU, NEW DELHI

ITA 6693/DEL/2018Status: DisposedITAT Delhi07 February 2022AY 2006-0732 pages
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What did the Tribunal hold?

The Tribunal held that education cess is not a disallowable expenditure under Section 40(a)(ii) of the Income Tax Act, as it is not considered a tax. Consequently, the deduction for education cess was allowed.

What were the facts?

The assessee, SRF Limited, received Rs. 93,85,40,499 from the transfer of Certified Emission Reductions (CERs) or carbon credits. The assessee claimed these receipts as capital in nature, while the revenue authorities treated them as perquisite under Section 28(iv) and taxable as business income.

What were the issues?

The primary issues were whether the receipts from the transfer of CERs are capital or revenue in nature, and whether education cess is a disallowable expenditure.

Which sections of the Income-tax Act were involved?

Section 28(iv),Section 40(a)(ii),Section 37,Section 115JB

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Income Tax Appellate Tribunal, DELHI BENCH‘G’: NEW DELHI

Hearing: 11.11.2021Pronounced: 07.02.2022

PER SUDHANSHU SRIVASTAVA, JM:

This appeal is preferred by the assessee against order dated

20.08.

2018 passed by the Learned Commissioner of Income Tax

(Appeals)-22, New Delhi {CIT(A)} and pertains to Assessment Year 2006-

07.

The grounds of appeal raised by the assessee are as under:

1.

That on the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals)- 22, New Delhi erred in upholding that the receipt from transfer of Carbon Emission Reduction (“CER”) of Rs.93,85,40,499/- is perquisite under section 28(iv) of SRF Ltd. vs. ACIT

Income tax Act and chargeable to tax as profits and gains from business

The order continues below.

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