JAIBALAJI BUSINESS CORPORATION PVT. LTD.,PRINCIPAL COMMISSIONER OF INCOME TAX, PUNE-4 vs. PRINCIPAL COMMISSIONER OF INCOME TAX, PUNE

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ITA 119/PUN/2021Status: DisposedITAT Pune21 July 2022AY 2016-173 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the PCIT's order was justified regarding the difference between agreement and stamp duty values due to lack of verification by the Assessing Officer. However, it found the PCIT's order unjustified concerning the Renewable Energy Certificate income, as it was considered a capital receipt not chargeable to tax.

What were the facts?

The assessee appealed against an order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263. The PCIT had initiated proceedings on two issues: a difference between agreement value and stamp duty, and the taxability of income from Renewable Energy Certificates.

What were the issues?

Whether the PCIT's revisionary order under Section 263 was justified for both issues raised, specifically concerning the adequacy of the Assessing Officer's inquiry and the classification of income as capital receipt.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, PUNE

Before: SHRI INTURI RAMA RAO & SHRI S.S. VISWANETHRA RAVI

For Appellant: Ms. Vinita Shah
For Respondent: Shri Abhinay S. Kumbhar

आदेश / ORDER

PER S.S. VISWANETHRA RAVI, JM :

1.

This appeal by the assessee against the order dated 31-03-2021 passed u/s. 263 of the Act by the Principal Commissioner of Income Tax-4, Pune (“PCIT”) for assessment year 2016-17.

2.

At the outset, we note that the PCIT initiated 263 proceedings by issuing notice to the assessee on two issues. One issue is that difference of value between agreement and stamp duty to an extent of Rs.3,45,60,500/- and held the order of AO passed u/s. 143(3) of the Act is erroneous and prejudicial to the interest of revenue for lack of verification. The ld. AR fairly conceded that the assessee is not interested to contest the issue. Therefore, taking into consideration such submissions, we hold the order of PCIT is justified in holding the assessment order dated 28-08-2018 in respect of non-verification of details regarding the agreement value and stamp duty value is held to be erroneous and prejudicial to the interest of revenue.

3.

Regarding second issue about the claim of income from sale of Renewable Energy Certificate of Rs.46,90,000/- as exempt, the PCIT for lack of enquiry held the assessment order is erroneous and prejudicial to the interest of revenue, but however, it was contended by the assessee before the PCIT that the entire income as derived from sale of Renewable Energy Certificate is capital receipt and not chargeable to tax. We note that the assessee placed reliance on several case laws by contending the sale of carbon credits is to be considered as capital receipt. The CIT(A) reproduced such case laws in the impugned order at Page No. 8. It is not disputed by the ld. DR that the income derived from sale of Renewable Energy Certificate is not chargeable to tax, since, it is a capital receipt not chargeable to tax could not be held as a point for consideration for initiating proceedings u/s. 263 of the Act. Therefore, the order of PCIT on this issue on holding the assessment order dated 28-08-2018 is erroneous and prejudicial to the interest of revenue is not justified.

4.

In the result, the appeal of assessee is partly allowed.

Order pronounced in the open court on 21st July, 2022.

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