CIT v. Subhas Kabini Corporation Ltd.

Malpani Tea Corporation, Sangamner vs. Deputy Commissioner of Income-Tax, Circle - 3, Pune

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

Bench: Shri D. Karunakara Rao, Am & Shri Partha Sarathi Chaudhury, Jm आयकर अपील सं. / Ita No.2181/Pun/2017 िनधा"रण वष" / Assessment Year : 2014-15 Malpani Tea Corporation, S.No.150, Malpani House, Sangamner, Ahmednagar-422605. .......अपीलाथ" / Appellant Pan : Aacfd1713B बनाम / V/S. Dcit, Circle-3, ……""यथ" / Respondent Pune. Assessee By : Shri Nikhil Pathak Revenue By : Shri Pankaj Garg सुनवाई क" तारीख / Date Of Hearing : 14.11.2019 घोषणा क" तारीख / Date Of Pronouncement : 19.11.2019 आदेश / Order Per D. Karunakara Rao, Am: This Appeal Filed By The Assessee Is Against The Order Of The Cit(A)-2, Pune Dated 20.07.2017 For The Assessment Year 2014-15. 2. The Grounds Raised By The Assessee Are As Under :- “1] The Learned Cit(A) Erred In Holding That The Income On Sale Of Certified Emission Reduction / Carbon Credit Was Taxable As Profits & Gains Of The Assessee & Thereby, Erred In Confirming The Addition Of Rs.31,003 /- In The Hands Of The Assessee. 2] The Learned Cit (A) Failed To Appreciate That The Amount Received By The Assessee On Sale Of Certified Emission Reduction / Carbon Credit Was A Capital Receipt In The Hands Of The Assessee Which Was Not Taxable At All. 3] The Learned Cit(A) Erred In Holding That The Amount Received On Sale Of Certified Emission Reduction / Carbon Credit Was A Benefit Derived During The Course Of The Business Of The Assessee & Therefore, The Same Was Taxable U/S 28(Iv) R.W.S. 2(24)(Vd). 4] The Learned Cit(A) Failed To Appreciate That Certified Emission Reduction / Carbon Credit Was Received By The Assessee On Account Of Environmental Concerns & Not Arising Out Of The Business Carried Out & Hence, The Same Could Not Be Treated As An Income Of The Assessee U/S 28(Iv) R.W.S. 2(24)(Vd).

…reported in (2014) 365 ITR 82 (AP) holding the receipts to be capital in nature. This was further elaborated by the Division Bench of Karnataka High Court in the case of Commissioner of Income Tax v/s. Subhash Kabini Power Corporation Ltd. reported in (2016) 385 ITR 592 (Karn) and followed by lgc 2 of 3 (16) itxa- 1820.16ors.doc Allahabad High Court and Rajasthan High Court, (Allahabad High Court decision is in the case of Principal Commissioner of Income Tax v/s. L Sugar Factory Pvt. Ltd reported in (2017) 392 ITR 568 (All)). 5 In view of such consistent view of the different High Courts in the country, we see…