DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(1)(2), BANGALORE vs. M/S BHORUKA POWER CORPORATION LIMITED , BANGALORE

PER BEENA PILLAI, JUDICIAL MEMBER : Present appeals has been filed by Revenue against consolidated order dated 05/12/17 passed by Ld.CIT(A)-1, Bangalore for assessment years under consideration, on following grounds of appeal:

3. On the facts and in circumstances of the case and in law, the LD. CIT(A) erred in deleting the addition made by the AO in respect of the carbon credits by treating it as capital receipt though the same should have been held as revenue receipt not eligible for deduction u/s 80 la of the I.T. Act, 1961.

4. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the Ld. CIT (A) be reversed and that of the Assessing Officer be restored. 5. The appellant craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of appeal. 2011-12) 1. The order of the Learned CIT (Appeals), in so far as it is prejudicial to the interest of revenue, is opposed to law and the facts and circumstances of the case. 2. The Ld. CIT (A) erred in allowing the assessee's appeal on the issue of disallowance made u/s 14A r. w. Rule 8D as the said matter has not reached ITA Nos.1224-1227(B)/2018 3 finality due to pendency of SLP before the Hon'ble Apex Court against the decision of Hon'ble High Court of Delhi in the case of M/s Cheminvest Ltd (378 ITR 33 (Del)).

3. On the facts and in circumstances of the case and in law, the LD. CIT(A) erred in deleting the addition made by the AO in respect of the carbon credits by treating it as capital receipt though the same should have been held as revenue receipt not eligible for deduction u/s 80 la of the I.T. Act, 1961.

3.On the facts and in circumstances of the case and in law, the LD. CIT(A) erred in deleting the addition 4 made by the AO in respect of the carbon credits by treating it as capital receipt though the same should have been held as revenue receipt not eligible for deduction u/s 80 la of the I.T. Act, 1961. 4.For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the Ld. CIT (A) be reversed and that of the Assessing Officer be restored.

4. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the Ld. CIT (A) be reversed and that of the Assessing Officer be restored. -1227(B)/2018 5 5. The appellant craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of appeal. 2. Impugned order passed by Ld.CIT (A) is consolidated order for years under consideration. It is submitted that issues raised by revenue under these appeals are common on identical facts. We thus dispose of these appeals by way of common order. 2.1 It is also been submitted by both parties that, all these appeals filed by revenue raises common grounds relating to disallowance of expenses under section 14 A read with Rule 8D deleted by Ld.CIT (A) and Carbon Credit income that has been held as revenue receipt by Ld.CIT (A). 3. At the outset, assessee submitted that the issue relating to carbon credit income has been decided by Hon’ble Karnataka High Court in case of Subash Kabini Power Corporation Ltd reported in (2016) 385 ITR 592. 4. Next issue that has been raised by revenue is in respect of disallowance under section 14 A read with Rule 8D (2) (ii) and (iii) of rules. Admittedly, assessee has earned exempt income for assessment year 2009-10, 2012-13. For assessment years 2011-12 and 2013-14 there has been no exempt income earned by assessee. It is observed that, Ld.CIT (A) while deciding issue analyzed annual reports of assessee for years under consideration as under: -1227(B)/2018 6 S.No. Source of A Y A Y AY AY 2013- funds 2009-10 2011-12 2012-13 14 1 Shareholders 1410 1410 1410 1410 fund 2 Reserve and 13091 13 997 20522 21673 surplus 3. Profit for year 3099 2636 3192 1032 (after tax) 4. Investment 37.14 88.98 325.25 325.25 It is observed that Ld.CIT (A) analysed disallowance under section 14 A to be computed read with Rule 8D(iii) having regard to annual accounts for years under consideration. There is categorical observation by Ld.CIT (A) that assessee had sufficient funds to make investments during years under consideration and there has been no interest-bearing fund that has been utilized for the same. Further any disallowance under Rule 8D2(iii) could be made only in respect of such investment that yielded exempt income. Thus in our considered opinion we do not find any infirmity in such observations of Ld. CIT (A) for assessment year 2011-12 and 2013-14. 5. Coming to disallowance computed by Ld.AO under section 14 A read with Rule 8D (iii) of the Act, Ld.CIT (A) held disallowance to be justified for assessment year 2009-10 and 2011-12, whereas he deleted disallowance computed under rule 8D(iii), as there was no exempt income following decision of Hon’ble Delhi High Court in case of M/s Cheminvest Ltd reported in 378 ITR 33. 5.1 We do not find any infirmity in the aforestated observations of Ld. CIT (A) and accordingly the same is upheld. -1227(B)/2018 7 Accordingly grounds raised

by revenue in all the years under consideration are dismissed as discussed hereinabove.

6. In the result appeal filed by revenue stands dismissed. Order pronounced in the open Court on 31st July, 2019.