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HC-KAR NC: 2025:KHC-D:9331-DB ITA No. 100006 of 2019
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 29TH DAY OF JULY, 2025 PRESENT THE HON'BLE MR. JUSTICE S.SUNIL DUTT YADAV AND THE HON'BLE MR. JUSTICE VIJAYKUMAR A.PATIL INCOME TAX APPEAL NO.100006 OF 2019 BETWEEN: 1. THE PRINCIPAL COMMISSIONER OF INCOME TAX, NAVANAGAR, HUBBALLI.
ASST. COMMISSIONER OF INCOME TAX, CIRCLE-3(1), BENGALURU. - APPELLANTS (BY SRI. THIRUMALESH M.M. AND SMT. ROOPA R.A., ADVOCATES)
AND: THE VRL LOGISTICS LTD., VARUR, POST: CHABBI, HUBBALLI TALUKA-581207. PAN: AABCV 3609 C - RESPONDENT
THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT PRAYING TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, BENGALURU IN I.T.A. NO. 2783/BANG/2017 DATED 05.09.2018 AND CONFIRM THE ORDER DATED 31.03.2016 PASSED BY THE ASST. COMMISSIONER OF INCOME TAX OFFICER CIRCLE-3(1) HUBBALLI FOR THE A.Y. 2013-14 & ETC.
THIS INCOME TAX APPEAL COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: THE HON'BLE MR. JUSTICE S.SUNIL DUTT YADAV AND THE HON'BLE MR. JUSTICE VIJAYKUMAR A.PATIL
RAKESH S HARIHAR Digitally signed by RAKESH S HARIHAR Location: High Court of Karnataka, Dharwad Bench Date: 2025.08.04 11:44:55 +0530
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HC-KAR NC: 2025:KHC-D:9331-DB ITA No. 100006 of 2019
ORAL JUDGMENT (PER: THE HON'BLE MR. JUSTICE S.SUNIL DUTT YADAV)
The appeal has been filed under Section 260-A of the Income Tax Act challenging the order passed in I.T.A. No. 2783/Bang/2017 relating to assessment year 2013-14. It is noticed that the tax effect in the appeal in terms of the memo dated 29.07.2025 is Rs.1.95 crores, raising 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 law in holding that the sum of Rs.6,03,64,952/- received by the assessee-company, on the sale of Certified Emission Reduction (CER) or Carbon Credits is a capital receipt, ignoring the fact that the assessee company itself has shown the said amount as a revenue receipt, under the head ‘profits and gains of business or profession’, having credited the said amount in its P&L account under the head, ‘Revenue from operations’ and sub-head, ‘Sale of goods’?
Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in law in treating the receipts from sale of CERs as capital receipt, not exigible to tax as revenue
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HC-KAR NC: 2025:KHC-D:9331-DB ITA No. 100006 of 2019
receipts, without appreciating the fact that such income from Carbon Credits is admittedly a benefit arising out of the business of the assessee, and would fall within the definition of “Income” u/s. 2(24)(vd) read with Section 28(iv) of the Act?
Whether, on the facts and in the circumstances of the case and in law, the Tribunal has failed to appreciate that the income on the sale of CERs is “attributable to” the business of the assessee, but is not the direct source of income from the industrial undertaking of the assessee and thus, cannot be treated as profit “derived from” the industrial undertaking whereby, the assessee is not entitled for claim of deduction u/s 80IA of the Act in respect of sale of CERs.
Learned counsel for the appellants has filed a memo which reads as under: “That the appellant has filed the above appeal challenging the ITAT order. As per the Circular No. 09/2024 dated 17.09.2024 the above matter falls under the Below Monetary Limit, i.e., 2 crore and the tax effect is Rs.1.95 crores. Hence the matter needs to be withdrawn as per the Circular.”
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HC-KAR NC: 2025:KHC-D:9331-DB ITA No. 100006 of 2019
Copy of the circular dated 17.09.2024 of the Central Board of Direct Taxes is enclosed. In the light of the subject matter of the appeal being below monetary limit in terms of the Circular, the proceedings cannot be continued. Accordingly, the appeal stands disposed off.
The substantial questions of law raised above are kept open to be adjudicated in appropriate proceedings.
Sd/- (S.SUNIL DUTT YADAV) JUDGE
Sd/- (VIJAYKUMAR A.PATIL) JUDGE BVV, CT:VP LIST NO.: 1 SL NO.: 43