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

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.

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.

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.

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