LANCO TANJORE POWER COMPANY LIMITED,CHENNAI vs. DCIT, CHENNAI

PDF · subscribers
ITA 1321/CHNY/2017Status: DisposedITAT Chennai12 October 2017AY 2010-113 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal followed the Andhra Pradesh High Court's decision in My Home Power Ltd., holding that Carbon Credits are not an offshoot of business but a capital receipt. Therefore, the sale of Carbon Credits should be treated as a capital receipt.

What were the facts?

The assessee, engaged in electricity generation, claimed deduction under Section 80IA for profits from the sale of Carbon Emission Reduction (CER) or Carbon Credits. The AO and CIT(A) disallowed this claim.

What were the issues?

Whether profits from the sale of Carbon Credits are eligible for deduction under Section 80IA, or if they constitute a capital receipt.

Which sections of the Income-tax Act were involved?

Section 80IA

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: SHRI CHANDRA POOJARI & SHRI GEORGE MATHAN

Hearing: 12.10.2017Pronounced: 12.10.2017

आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:

1.

the Order of the Commissioner of Income Tax (Appeals)-8, Chennai, in dated 22.03.2017 for the AY 2010-11.

2.

Mrs.Vijayalakshmi, CIT, represented on behalf of the Revenue and Mr.R.Vijayaraghavan, Adv., represented on behalf of the assessee.

ITA No.1321/Mds/2017 :- 2 -:

3.

At the time of hearing, it was submitted by the Ld.AR that the only issue in the assessee’s appeal was against the action of the Ld.CIT(A) in confirming the action of the AO in disallowing the assessee’s claim of deduction u/s.80IA in respect of the profits derived from the sale of Carbon Emission Reduction (CER) also known as Carbon Credits. It was submitted by the Ld.AR that the assessee is in the business of generation of electricity and the assessee had claimed deduction u/s.80IA in respect of the profits derived from the sale of the Carbon Credits. It was a submission that the Ld.CIT(A) had upheld the order of the AO by following the decision of the ITAT Cochin Bench in the case of Apollo Tyres Ltd., reported in 149 ITD 756 (Cochin). It was a submission that now the issue was squarely covered by the decision of the Hon’ble Andhra Pradesh High Court in the case of My Home Power Ltd., reported in 365 ITR 82 (AP). It was a submission that as per the decision of the Hon’ble Andhra Pradesh High Court, the Carbon Credits was not an offshoot of business but offshoot of environmental concerns. Consequently, the sale of the excess Carbon Credits was capital receipt. It was a submission that the AO may be directed to assess the benefit of Carbon Credits as a capital receipt. It was a submission that this is as per Ground No.3 of the assessee’s appeal.

4.

In reply, the Ld.DR vehemently supported the order of the AO and the Ld.CIT(A).

ITA No.1321/Mds/2017 :- 3 -:

5.

We have considered the rival submissions. As it is noticed that the decision of the Hon’ble Andhra Pradesh High Court in the case of My Home Power Ltd., is only decision on the issue by the Hon’ble High Court and the Revenue has not been able to place before us any other contrary decision. Consequently, respectfully following the decision of the Hon’ble Andhra Pradesh High Court in the case of My Home Power Ltd., referred to supra, the AO is directed to treat the sale of the Carbon Credits as a capital receipt.

6.

In the result, the appeal filed by the assessee stands allowed.

More judgments on Section 80IA

All 1,796 judgments and leading authorities on Section 80IA →

Recent GST High Court judgments

Search GST case law →