THE PR. COMMISSIONER OF INCOME TAX vs. M/S BHORUKA POWER CORPORATION LTD.

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ITA/123/2021HC KarnatakaKAHC01008061202108 July 2021Bench: SATISH CHANDRA SHARMA,R. NATARAJ4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial questions of law framed were covered by a previous judgment of the same court. Therefore, the questions of law were answered against the revenue and in favour of the assessee.

What were the facts?

The Revenue appealed against an ITAT order that treated income from the sale of carbon credits as a capital receipt, not taxable. The appeal was filed with a significant delay.

What were the issues?

Whether income from the sale of carbon credits is a capital receipt or a revenue receipt, and whether the ITAT's order was perverse in classifying it as capital in nature.

Which sections of the Income-tax Act were involved?

Section 260-A

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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 8TH DAY OF JULY, 2021

PRESENT

THE HON’BLE MR. JUSTICE SATISH CHANDRA SHARMA

AND

THE HON’BLE MR. JUSTICE NATARAJ RANGASWAMY

I.T.A. NO.123/2021

BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME-TAX 5TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU – 560 095

2.

THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-1(1)(2), 2ND FLOOR BMTC BUILDING 6TH BLOCK, 80 FEET ROAD KORAMANGALA BENGALURU-560 095 .... APPELLANTS (BY SRI. ARAVIND .K.V, ADVOCATE)

AND:

M/S. BHORUKA POWER CORPORATION LTD. NO.48, LAVELLE ROAD BENGALURU – 560 001 PAN: AACCB 1422A

(RESPONDENT SERVED) ... RESPONDENT

THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL

2 QUESTIONS OF LAW AS STATED IN THIS APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGLAURU IN ITA NO.1734/Bang/2016 DATED 07.08.2020 FOR ASSESSMENT YEAR 2010-2011 ANNEXURE-C CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(2), BENGALURU.

THE APPLIATION-IA NO.1/2021 IS FILED UNDER SECTION 5 OF THE LIMITATION ACT FOR CONDONATION OF DELAY OF 55 DAYS IN FILING THIS APPEAL.

THIS I.T.A. COMING ON FOR ORDERS ALONG WITH IA NIO.1/2021 FILED FOR CONDONATION OF DEALY THIS DAY, NATARAJ RANGASWAMY J., DELIVERED THE FOLLOWING:

JUDGMENT

This appeal is filed belatedly and application-IA No.1/2021 is filed along with an affidavit praying to condone the delay of 55 days in filing.

2.

The order sheet reveals that, notice on this application-IA No.1/2021 was issued to the respondent. Though the notice was served, the respondent did not choose to enter his appearance or to file objections.

3.

The cause shown for the delay is accepted and the delay of 55 days in filing the appeal is condoned. Accordingly, IA No.1/2021 is allowed.

3 4. The appeal is admitted to consider the following substantial questions of law:- 1. Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that income from sale of carbon credit has to be considered as capital receipt and not liable to be taxed under any head of income under the provisions of the Act, when assessing authority rightly disallowed the claim made under Section 801-A of the Act as conditions set out in the said section were not satisfied by assessee as said income was not part of income from power generation and alternatively, the said income was revenue in nature and not capital in nature.

2.

Whether on the facts and in the circumstances of the case and in law, the Tribunal’s order can be said as perverse in nature in holding that sale consideration from carbon credit is capital in nature when the materials brought on record by assessing authority proves that it is Revenue in nature?”

5.

After hearing the learned counsel for the appellants, it is seen that the questions of law framed are fully covered by the judgment of this Court in the case of

4 CIT Vs. Subhash Kabini Power Corporation Limited [385 ITR 592 (KAR)]. 6. In that view of the matter, the questions of law framed by this Court are answered against the revenue and in favour of assessee. Consequently, this appeal is disposed of in terms of the judgment of this Court in the case of Subhash Kabini Corporation Limited (supra).

Sd/- JUDGE

Sd/- JUDGE

KGR*

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