Madras High Court
The Principal Commissioner Of ... vs M/S.Lanco Tanjore Power Co. Ltd on 16 February, 2021
TCA.No.149 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 16.2.2021
CORAM
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MS.JUSTICE R.N.MANJULA
Tax Case Appeal No.149 of 2021
The Principal Commissioner of Income
Tax, Chennai. ...Appellant
Vs
M/s.Lanco Tanjore Power Co. Ltd. ...Respondent
APPEAL under Section 260A of the Income Tax Act, 1961 against
the order dated 12.10.2017 passed by the Income Tax Appellate
Tribunal, Madras 'D' Bench, Chennai made in I.T.A.No.1321/Mds/2017
for the assessment year 2010-11.
For Appellant: Mr.Karthik Ranganathan, SC
For Respondent : Mr.R.Vijayaraghavan for
M/s.Subbaraya Aiyer Padmanabhan
Judgment was delivered by T.S.SIVAGNANAM,J
This appeal has been filed by the Revenue under Section 260A of
the Income Tax Act, 1961 ('the Act' for brevity) challenging the order
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dated 12.10.2017 in I.T.A.No.1321/Mds/2017 on the file of the Income
Tax Appellate Tribunal, Chennai, 'D' Bench ('the Tribunal' for brevity)
for the assessment year 2010-11.
2. The Revenue has filed this appeal by raising the following
substantial question of law:
“Whether, on the facts and
circumstances of the case, the Tribunal is
legally correct in holding that the sale of
carbon emission reduction (CER) also known
as carbon credits is to be considered as capital
receipt and not liable to tax?”
3. We have heard Mr.Karthik Ranganathan, learned Standing
Counsel appearing for the appellant/Revenue and Mr.R.Vijayaraghavan,
learned counsel appearing on behalf of M/s.Subbaraya Aiyer
Padmanbhan, learned counsel accepting notice for the respondent/
assessee.
4. It is not in dispute that the substantial question of law raised
in this appeal has been answered against the Revenue in the decision
rendered by us in the case of S.P.Spinning Mills Pvt. Ltd. Vs.
ACIT, Salem [TCA.No.451 of 2018 dated 19.1.2021].
5. The relevant portions in the said judgment read thus :
“28. Insofar as substantial question of
law no.4 is concerned, it deals with carbon
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credit. The question, as to the manner in
which carbon credit receipt has to be treated,
has been considered by several High Courts
and it has been held that the receipt should be
treated as a capital receipt. In this regard, it
would be beneficial to refer to the decision in
the case of CIT vs. Subhash Kabini Power
Corporation Ltd., [(2016) 385 ITR 0592
(Karn.)]. In the said decision, the Karnataka
High Court approved the view taken by the
ITAT, Hyderabad Bench, which decision was
upheld by the High Court of Andhra Pradesh in
the case of CIT vs. My Home Power Ltd.
[(2014) 365 ITR 0082 (AP)], which was
subsequently followed by the ITAT, Chennai
and Jaipur Benches. The operative portion of
the judgment reads as follows:-
“11. The decision has been upheld by the
Hon’ble Andhra Pradesh High Court. This
decision has been subsequently followed by
the ITAT Chennai and Jaipur Benches. There is
no decision either from the Hon’ble Supreme
Court or from the Hon’ble jurisdictional High
Court. These decisions indicate that sale of
carbon credit would result capital receipt which
is not taxable. When we confronted the
learned DR with regard to this position, it was
contended that the position as on the day
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when the assessment order was passed, is to
be seen and on that day these orders were not
available. Therefore, the assessee cannot claim
the benefit of these orders. However, we do
not concur with this proposition of the learned
CIT, because the Full Bench of the Hon’ble
Punjab & Haryana High Court in the case of
Aruna Luthra reported in 254 ITR 76 has held
that a Court decide a dispute between the
parties. The case can involve decision on facts.
It can also involve a decision on point of law.
Both may have bearing on the ultimate result
of the case. When a Court interprets a
provision, it decides as to what is the meaning
and effect of the words used by the
Legislature, it is the declaration regarding the
statute. In other words the judgment declares
as to what the legislature had said at the time
of promulgation of the law, the declaration
is.........., this was the law, this is the law, this
is how the provision shall be construed.
Therefore, he cannot plead that the view taken
by the Tribunal and upheld by the Hon’ble
Andhra Pradesh High Court could be
considered as if applicable from the date of the
decision. In the decision only the position of
the law as to how receipts from sale of carbon
credits are to be treated, has been explained.
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One of the argument raised by the DR was
that at this stage, the additional ground ought
not to be permitted to be raised. It is pertinent
to mention here that basically, it is not a
separate ground, it is a limb of arguments,
which is affecting the ultimate tax liability of
the assessee. The Hon’ble Supreme Court in
the case of NTPC Ltd (Supra) has held that the
Tribunal had jurisdiction to examine a question
of law which arose from the fact as found by
the Income Tax authorities and having a
bearing on the tax liability of the assessee. As
far as the nature of the receipt from sale of
carbon credit is concerned, it is available from
the assessment stage. It is not disputed even
by the learned Commissioner, the dispute is,
whether it has been derived from the eligible
industrial undertaking for qualifying the grant
of deduction u/s 80IA. The learned
Commissioner felt that this receipt has not
been derived from the industrial undertaking
which will be eligible for grant of deduction u/s
80IA and the Assessing Officer committed an
error in including the receipt in the eligible
profit. Those facts are already on the record. It
is to be seen, whether the receipt is of capital
nature or of a revenue nature. Even in case
the order of the CIT is upheld, then, in law, it
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will affect the computation of income,
ultimately because the receipt will not be
taxable, it will not come under the ambit of
computation of income. Simultaneously it will
be excluded from the deduction u/s 80IA as
well as of the total income. The result will
remain as it is. It is a revenue neutral case.
Therefore, in view of the ratio laid down by the
Hon’ble jurisdictional High Court in the case of
Gopala Gowda (Supra), the second condition
for taking action u/s 263 does not exist. The
assessment order is not prejudicial to the
interests of the Revenue. In view of the above
discussion, we allow the appeal of the
assessee and quash the impugned order of the
learned CIT passed u/s 263 of the Income Tax
Act.”
The aforesaid shows that, so far as the
question as to whether, the income by sale of
carbon credit could be termed as capital
receipt or profit, is concerned, the Tribunal has
considered the decision of the Hyderabad
Bench and it has further taken note of the fact
that decision of the Tribunal of Hyderabad
Bench was carried before the Andhra Pradesh
High Court and the said decision was not
interfered with. The Tribunal, in its decision
has also referred to the decision of the Apex
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Court with regard to power under Section 263
of the Income Tax Act, 1961 (hereinafter
referred to as “the Act”) of the revisional
authority.
4. In our view, the principal question, which
may arise is, as to whether by sale of carbon
credit capital receipt is generated or a profit
out of the business activity of the assessee.
More or less, in a similar case, the Apex Court
had an occasion to consider such an issue in
the case of Commissioner of Income Tax v.
Maheshwari Devi Jute Mills Ltd. [(1965) 57 ITR
36 (SC)], wherein the question came up for
consideration before the Apex Court as to
whether by sale of loom-hours, the amount
received could be termed as capital receipt or
the income out of business. In the said
decision, the Apex Court held that the amount
received out of sale of loom-hours can be
termed as capital receipt and not income out
of business.
5. Subsequently, in a later decision of
the Apex Court, a question came up for
consideration in the case of M/s. Empire Jute
Co. Ltd. v. Commissioner of Income Tax
[(1980) 4 SCC 25] the question which arose
before the Apex Court was, if loom-hours are
purchased by the manufacturing mills, whether
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it can be termed as capital expenditure or
revenue expenditure. In the said decision, the
earlier decision of the Apex Court in the case
of Maheswari Devi Jute Mills (supra) was also
relied upon by the Revenue and after
considering the same, the Apex Court at
paragraph Nos. 4 and 5 observed thus:
“4. Now an expenditure incurred by an
assessee can qualify for deduction under
Section 10(2) (xv) only if it is incurred wholly
and exclusively for the purpose of his business,
but even if it fulfils this requirement, it is not
enough; it must further be of revenue as
distinguished from capital nature. Here in the
present case it was not contended on behalf of
the Revenue that the sum of Rs. 2,03,255 was
not laid out wholly and exclusively for the
purpose of the assessee’s business but the
only argument was and this argument found
favour with the High Court, that it represented
capital expenditure and was hence not
deductible under Section 10(2) (xv). The sole
question which therefore arises for
determination in the appeal is whether the
sum of Rs. 2,03,255 paid by the assessee
represented capital expenditure or revenue
expenditure. We shall have to examine this
question on principle but before we do so, we
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must refer to the decision of this Court in
Maheshwari Devi Jute Mills case since that is
the decision which weighed heavily with the
High Court, in fact, compelled it to negative
the claim of the assessee and hold the
expenditure to be on capital account. That was
a converse case where the question was
whether an amount received by the assessee
for sale of loom hours was in the nature of
capital receipt or revenue receipt. The view
taken by this Court was that it was in the
nature of capital receipt and hence not taxable.
It was contended on behalf of the Revenue,
relying on this decision, that just as the
amount realised for sale of loom hours was
held to be capital receipt, so also the amount
paid for purchase of loom hours must be held
to be of capital nature. But this argument
suffers from a double fallacy.
5. In the first place it is not a universally
true proposition that what may be capital
receipt in the hands of the payee must
necessarily be capital expenditure in relation to
the payer. The fact that a certain payment
constitutes income or capital receipt in the
hands of the recipient is not material in
determining whether the payment is revenue
or capital disbursement qua the prayer. It was
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felicitously pointed out by Macnaghten, J. in
Racecourse Betting Control Board v. Wildthat a
“payment may be a revenue payment from the
point of view of the payer and a capital
payment from the point of view of the receiver
and vice versa”. Therefore, the decision in
Maheshwari Devi Jute Mills case cannot be
regarded as an authority for the proposition
that payment made by an assessee for
purchase of loom hours would be capital
expenditure. Whether it is capital expenditure
or revenue expenditure would have to be
determined having regard to the nature of the
transaction and other relevant factors.”
Thereafter, the Apex Court while
considering the test to find out as to whether a
particular expenditure can be termed as capital
or revenue expenditure observed at paragraph
Nos. 8 and 9 as under:
“8. The decided cases have, from time to
time, evolved various tests for distinguishing
between capital and revenue expenditure but
no test is paramount or conclusive. There is no
all embracing formula which can provide a
ready solution to the problem; no touchstone
has been devised. Every case has to be
decided on its own facts keeping in mind the
broad picture of the whole operation in respect
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of which the expenditure has been incurred.
But a few tests formulated by the courts may
be referred to as they might help to arrive at a
correct decision of the controversy between
the parties. One celebrated test is that laid
down by Lord Cave, L.C., in Atherion v. British
Insulated and Halsby Cables Ltd. where the
learned law Lord stated:
When an expenditure is made, not only
once and for all, but with a view to bringing
into existence an asset or an advantage for the
enduring benefit of a trade, there is very good
reason (in the absence of special
circumstances leading to an opposite
conclusion) for treating such an expenditure as
properly attributable not to revenue but to
capital.
This test, as the parenthetical clause
shows, must yield where there are special
circumstances leading to a contrary conclusion
and, as pointed out by Lord Radcliffe in
Commissioner of Taxes v. Nchanga
Consolidated Copper Mines Ltd., it would be
misleading to suppose that in all cases,
securing a benefit for the business would be
prima facie capital expenditure “so long as the
benefit is not so transitory as to have no
endurance at all”. There may be cases where
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expenditure, even if incurred for obtaining
advantage of enduring benefit, may,
nonetheless, be on revenue account and the
test of enduring benefit may break down. It is
not every advantage of enduring nature,
acquired by an assessee that brings the case
within the principle laid down in this test. What
is material to consider is the nature of the
advantage in a commercial sense and it is only
where the advantage is in the capital field that
the expenditure would be disallowable on an
application of this test. If the advantage
consists merely in facilitating the assessee’s
trading operations or enabling the
management and conduct of the assessee’s
business to be carried on more efficiently or
more profitably while leaving the fixed capital
untouched, the expenditure would be on
revenue account, even though the advantage
may endure for an indefinite future. The test of
enduring benefit is therefore not a certain or
conclusive test and it cannot be applied blindly
and mechanically without regard to the
particular facts and circumstances of a given
case. But even if this test were applied in the
present case, it does not yield a conclusion in
favour of the Revenue. Here, by purchase of
loom hours no new asset has been created.
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There is no addition to or expansion of the
profit-making apparatus of the assessee. The
income-earning machine remains what it was
prior to the purchase of loom hours. The
assessee is merely enabled to operate the
profit-making structure for a longer number of
hours. And this advantage is clearly not of an
enduring nature. It is limited in its duration to
six months and, moreover, the additional
working hours per week transferred to the
assessee have to be utilised during the week
and cannot be carried forward to the next
week. It is, therefore, not possible to say that
any advantage of enduring benefit in the
capital field was acquired by the assessee in
purchasing loom hours and the test of
enduring benefit cannot help the Revenue.
9. Another test which is often applied is
the one based on distinction between fixed and
circulating capital. This test was applied by
Lord Haldane in the leading case of John Smith
& Son v. Moore where the learned law Lord
drew the distinction between fixed capital and
circulation capital in words which have almost
acquired the status of a definition.
He said:
Fixed capital (is) what the owner turns to
profit by keeping it in his own possession;
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circulating capital (is) what he makes profit of
by parting with it and letting it change
masters.
Now so long as the expenditure in
question can be clearly referred to the
acquisition of an asset which falls within one or
the other of these two categories, such a test
would be a critical one. But this test also
sometimes break down because there are
many forms of expenditure which do not fall
easily within these two categories and not
infrequently, as pointed out by Lord Radcliffe
in Commissioner of Taxes v. Nchanga
Consolidated Copper Mines Ltd., the line of
demarcation is difficult to draw and leads to
subtle distinctions between profit that is made
“out of” assets and profit that is made “upon”
assets or “with” assets. Moreover, there may
be cases where expenditure, though referable
to or in connection with fixed capital, is
nevertheless allowable as revenue
expenditure. An illustrative example would be
of expenditure incurred in preserving or
maintaining capital assets. This test is
therefore clearly not one of universal
application. But even if we were to apply this
test, it would not be possible to characterise
the amount paid for purchase of loom hours as
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capital expenditure, because acquisition of
additional loom hours does not add at all to the
fixed capital of the assessee. The permanent
structure of which the income is to be the
produce or fruit remains the same; it is not
enlarged. We are not sure whether loom hours
can be regarded as part of circulating capital
like labour, raw material, power etc., but it is
clear beyond doubt that they are not part of
fixed capital and hence even the application of
this test does not compel the conclusion that
the payment for purchase of loom hours was in
the nature of capital expenditure.”
After making the aforesaid observation,
at paragraph No. 10, the Apex Court, on the
basis of the facts of the said case concluded as
under:
“Similarly, if payment has to be made for
securing additional power every week, such
payment would also be part of the cost of
operating the profit-making structure and
hence in the nature of revenue expenditure,
even though the effect of acquiring additional
power would be to augment the productivity of
the profit-making structure. On the same
analogy payment made for purchase of loom
hours which would enable the assessee to
operate the profit-making structure for a
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longer number of hours than those permitted
under the working time agreement would also
be part of the cost of performing the income-
earning operations and hence revenue in
character.”
Accordingly, the payment made for
purchase of loom-hours by Jute Mill Company
was held to be Revenue expenditure.
6. At this stage, we may also refer to the
decision of the Andhra Pradesh High Court,
which has been relied upon by the Tribunal in
the impugned order. More or less, identical
question was raised and the Andhra Pradesh
High Court in the case of Commissioner of
Income Tax-IV v. My Home Power Ltd. [(2014)
46 Taxmann.com 314 (Andhra Pradesh), at
paragraph No. 3 observed thus:
“3. We have considered the aforesaid
submission and we are unable to accept the
same, as the learned Tribunal has factually
found that “Carbon Credit is not an offshoot of
business but an offshoot of environmental
concerns. No asset is generated in the course
of business but it is generated due to
environmental concerns.
“We agree with this factual analysis as
the assessee is carrying on the business of
power generation. The Carbon Credit is not
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even directly linked with power generation. On
the sale of excess Carbon Credits the income
was received and hence as correctly held by
the Tribunal it is capital receipt and it cannot
be business receipt or income. In the
circumstances, we do not find any element of
law in this appeal.”
The aforesaid shows that the Andhra
Pradesh High Court has confirmed the view of
the Tribunal that Carbon Credit is not an
offshoot of business, but an offshoot of
environmental concerns. No asset is generated
in the course of business, but it is generated
due to environmental concerns. It was also
found that the carbon credit is not even
directly linked with the power generation and
the income is received by sale of the excess
carbon credits. It was found that the Tribunal
has rightly held that it is capital receipt and not
business income.
7. As such, in our view, when the issue is
already covered by the decision of the Andhra
Pradesh High Court, wherein the view taken by
the Tribunal of Hyderabad Bench has been
followed in the present case, one may say that
no substantial question of law would arise for
consideration.”
29.The Hon'ble Division Bench of this
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Court in the case of PCIT vs. Arun Textiles Pvt.
Ltd.,[T.C.A.No.606 of 2016, dated 29.8.2016],
after referring to the decision in My Home
Power Ltd., (supra), dismissed the appeal filed
by the Revenue and confirmed the order
passed by the ITAT holding that sale of carbon
credits has to be considered as capital receipt
and accordingly, it is not taxable.
30. The argument of Ms.V.Pushpa,
learned Senior Standing Counsel is by referring
to the substantial questions of law framed by
the assessee and it is submitted that if the
receipts from sale of carbon credit has to be
treated as a capital receipt, then the assessee
could not have claimed it as a deduction under
Section 80IA of the Act and if the substantial
question of law as framed by the assessee is to
be answered, it should be answered against
the assessee.
31.In our considered view, there is a
slightly different approach that needs to be
adopted, as this Court exercises power under
Section 260A of the Act, while deciding the
substantial question of law. The assessee is
required to place all materials before the
Assessing Officer and make a full and true
disclosure of their entire financial. If any
query is raised by the Assessing Officer, the
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assessee is bound to answer. Thereafter, it is
the Assessing Officer, who has to apply the law
and complete the assessment. It has been
held that it is not for the assessee to assist the
Assessing Officer to complete the assessment
in a particular manner or to supply a draft
assessment order to the Assessing Officer. At
this juncture, it is beneficial to refer to the
decision in the case of CIT vs. India Express
(Madurai) Pvt. Ltd., [(1983) 104 ITR 705
(Madras)]. The reference to the High Court
was to decide the scope of the appellate
jurisdiction of the Income Tax Tribunal.
32.The Hon'ble Division Bench refers to
three decisions of the Hon'ble Supreme Court
in the case of Hukumchand Mills Ltd. vs. CIT
[(1967) 63 ITR 232 (SC)]; CIT vs.
Mahalakshmi Textile Mills Ltd., [(1967) 66 ITR
710]; and CIT vs. Nelliappan [(1967) 66 ITR
722 (SC)] wherein, the observations made by
the Hon'ble Supreme Court were referred to,
which are quoted hereunder:-
"In hearing an appeal, the Tribunal may
give leave to the assessee to urge grounds not
set forth in the memorandum of appeal, and in
deciding the appeal the Tribunal is not
restricted to the grounds set forth in the
memorandum of appeal or taken by leave of
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the Tribunal. The Tribunal was, therefore,
competent to allow the assessees to raise the
contention relating to the cash credits which
was not made the subject-matter of a ground
in the memorandum of appeal. It cannot be
said that in accepting the contention of the
assessee that the cash credits represented
income from the business withheld from the
books, the Tribunal made out a new case
inconsistent with the assessee's own plea. In
any event, the Tribunal is not precluded from
adjusting the tax liability of the assessee in the
light of its findings merely because the findings
are inconsistent with the case pleaded by the
assessees."
33.In Mahalakshmi Textile Mill's case, it
was held as hereunder:-
“Under sub-s. (4) of s. 33 of the Indian
Income-tax Act, 1922, the Appellate Tribunal is
competent to pass such orders on the appeal
"as it thinks fit". There is nothing in the
Income-tax Act which restricts the Tribunal to
the determination of questions raised before
the departmental authorities. All questions
whether of law or of fact which relate to the
assessment of the assessee may be raised
before the Tribunal. If' for reasons recorded by
the departmental authorities in rejecting a
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contention raised by the assessee, grant of
relief to him on another ground is justified, it
would be open to the departmental authorities
and the Tribunal, and indeed they would be
under a duty to grant that relief. The right of
the assessee to relief is not restricted to the
plea raised by him.”
34.After referring to the above decisions,
it was pointed out that the Appellate Tribunal
is competent to pass such orders on the
appeal, as it thinks fit and it would be the duty
of the Tribunal to decide all questions on fact
and law before it, even though it was not
raised by the departmental authorities. After
referring to the powers of the Tribunal and that
of this Court and the Hon'ble Supreme Court, it
was pointed out that based on the cardinal
principle, which has been incorporated as a
veritable constitutional provision, that no tax
can be levied or collected save under authority
of law.
35.It was further pointed out that the
task of an Appellate Authority under the taxing
statute, especially a non-departmental
authority like the Tribunal, is to address its
mind to the factual and legal basis of an
assessment for the purpose of properly
adjusting the taxpayer's liability to make it
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accord with the legal provisions governing his
assessment. Since be-all and end-all of the
statutory provisions, especially those relating
to the administration and management of
income tax is to ascertain the taxpayer's
liability correctly to the last pie, if it were
possible, the various provisions relating to
Appeal, Second Appeal, Reference and the like
can hardly be equated to a lis or dispute as
arises between two parties in a civil litigation.
36.It was further pointed out that
although the income-tax statute makes the
Department or its officers figure as parties in
the appeal proceedings, they are not in the
strict sense what are called by American
writers as parties to adversary proceedings.
This is so because, the very object of the
appeal is not to decide a point raised as a
dispute, but any point which goes into the
adjustment of the taxpayer's liability. In that
sense, a view prevails, even in England, that
the authorities sitting in an appeal in tax case,
cannot be regarded as deciding a lis, but they
are only engaged in an administrative act of
adjusting the taxpayer's liability.
37.Further, it was pointed out that under
our fiscal jurisprudence, we may regard the
Appellate Authorities as exercising quasi-
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judicial functions in the same sense, as a tax
officer does. But, even so, the proceedings
before them lack the basic elements of
adversary proceedings. It, therefore, follows
that the discussion and the scope of the
appellate jurisdiction of the Tribunal and the
other authorities under the tax code cannot be
pursued by drawing a parallel to civil litigation
with particular reference to appeal from
decrees, and the like. Further, it was pointed
out that in the case of Mahalakshmi Textile
Mills Ltd., the Hon'ble Supreme Court observed
that the Tribunal is not precluded from
“adjusting the tax liabilities” of the assessee in
the light of its findings merely because, the
findings are inconsistent with the case pleaded
by the assessee. The decision of the Hon'ble
Full Bench of this Court in the case of State of
Tamil Nadu vs. Arulmurugan & Co., [(1982) 51
STC 381] was referred to wherein, it was held
that the Appellate Authorities perform precisely
the same functions, as the assessing authority.
The above decision and the findings rendered
are a clear answer to the arguments raised
before us by the Revenue contending that
substantial question of law no.4, as framed has
to be decided against the assessee. We, thus,
have no hesitation to hold that the Tribunal
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failed to exercise its power in a proper
prospective as a final fact finding authority and
examining as to whether there is any
adjustment required to be made in the
assessee's tax liability qua the various
decisions of the Court, which have held that
receipt on account of sale of carbon credit is
capital in nature.
38.In the instant case, the assessee
while preferring appeal before the CIT(A), has
specifically raised a contention that the
receipts from sale of carbon credit is a capital
receipt and cannot be included in the taxable
income. Though this ground raised by the
assessee before the CIT(A) has been recorded
in the order, the CIT(A) did not take a decision
on the same. Similar ground was raised by
the assessee before the Tribunal, which was
not considered by the Tribunal, though the
Tribunal refers to all the decisions relied on by
the assessee, but would pin the assessee to his
claim made under Section 80IA of the Act and
accordingly, negatives it. This finding of the
Tribunal is wholly erroneous and perverse.
The Tribunal was expected to apply the law
and take a decision in the matter and if the
CIT(A) or the Assessing Officer had failed to
apply the law, then the Tribunal was bound to
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TCA.No.149 of 2021
apply the law. This is so because, in the light
of the decisions referred above, the receipt by
way of sale of carbon credit has been held to
be capital receipt. Therefore, it is of a little
consequence as to the claim made by the
assessee under Section 80IA of the Act or in
other words, the question of taking a decision
as to whether the deduction is admissible
under Section 80IA of the Act is a non-issue.
If the receipt from the sale of carbon credit is a
capital receipt, then it will go out of the
purview of the gross total income as defined
under Section 80B(5) of the Act, which
expression is found in Section 80IA of the Act.
Thus, if the receipts by sale of carbon credit
will not fall within the definition of total
income, the same cannot be included under
Section 80IA of the Act. Therefore, even if the
assessee has made such a claim, that cannot
be a reason for the Tribunal to non-suit the
assessee.
39.One more important factor to be
noted is that Section 115BBG of the Act was
introduced by Finance Act, 2017 with effect
from 01.04.2018, prior to which, there was no
such provision and Mr.V.S.Jayakumar, learned
counsel for the assessee would submit that the
assessees were under utter confusion as to
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TCA.No.149 of 2021
under which provision of the Act, they should
make a claim for deduction and having left
with no other option, had been making the
claim under Section 80IA of the Act and
merely because the assessee due to
uncertainty in the legal position, had made a
claim under Section 80IA of the Act that
cannot be a reason to deny a benefit granted
in favour of the assessee. The submission,
made by Mr.V.S.Jayakumar, learned counsel
for the appellant, in this regard, is well found
and accepted.
40.For the above reasons, substantial
question of law no.4 is answered in favour of
the assessee.”
6. Following the said judgment, the above tax case appeal is
dismissed and the substantial question of law raised is answered
against the Revenue. No costs.
16.2.2021
To
The Income Tax Appellate Tribunal, 'D' Bench, Chennai.
RS
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TCA.No.149 of 2021
T.S.SIVAGNANAM,J
AND
R.N.MANJULA,J
RS
TCA.No.149 of 2021
16.2.2021
https://www.mhc.tn.gov.in/judis/
