Sreepathy Paper & Boards (P) Ltd., ... vs Department Of Income Tax

ी ए. मोहन अलंकामणी, लेखा सद य एवं ी एस.एस. गोदारा, या#यक सद य केसम$

BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER

आयकर अपील सं./ITA No.2136/Mds/2014 #नधा%रण वष% / Assessment Year : 2010-11

The Assistant Commissioner of M/s Sreepathy Paper & Boards Income Tax, (P) Ltd., Company Circle I(2), v. 1680/31, Ramani Regency, 63-A, Race Course Road, Trichy Road, Ramanathapuram, Coimbatore. Coimbatore.

PAN : AAGCS 7439 C (अपीलाथ)/Appellant) (+,यथ)/Respondent)

अपीलाथ) क- ओर से/Appellant by : Shri A.V. Sreekanth, JCIT +,यथ) क- ओर से/Respondent by : Shri M. Narayanan, Retd. Addl. CIT

सन ु वाई क- तार ख/Date of Hearing : 26.02.2015 घोषणा क- तार ख/Date of Pronouncement : 04.03.2015

आदे श /O R D E R

PER S.S. GODARA, JUDICIAL MEMBER:

This Revenue's appeal for assessment year 2010-11

arises from order of the Commissioner of Income Tax (Appeals)-

I, Coimbatore, dated 06.05.2014 passed in Appeal No.002/13-14

-2- I.T.A. No. 2136/Mds/2014

allowing the assessee's claim of Section 80-IA deduction of

`1,08,96,944/- and also treating a sum of `14,86,186/- realized

from sale of carbon credits as capital receipts, in proceedings

under Section 143(3) of the Income-tax Act, 1961 (in short 'the

Act').

2. The assessee/a company manufactures paper and

boards. It had filed return of income on 5.10.2010 admitting total

income of `3,72,13,820/- under normal computation with book

profits of `9,45,45,569/-. The same was summarily processed.

The A.O. took up scrutiny. He found that the assessee had

claimed Section 80-IA deduction in respect of installation of

windmills amounting to `1,23,83,130/- including carbon credit

receipts of `14,86,186/-. He quoted Section 80-IA(5) of the Act

and observed in the assessment order dated 01.03.2013 that

profits and gains from eligible business have to be worked out as

if they are the only source of income of the concerned assessee

right from commencement of business and in subsequent years

upto the computation is made and business losses, depreciation

and investment loss of earlier years should be taken into account

for determining the impugned deduction even if the same had

-3- I.T.A. No. 2136/Mds/2014

been set off earlier against the profits from other sources. The

assessee placed reliance on the decision of the hon'ble Madras

high court in Velayudhaswamy Spinning Mills (P) Ltd. v. ACIT

(340 ITR 477). The Assessing Officer did not distinguish the

facts and only observed that the Revenue's SLP was pending

before the hon'ble' apex court. He would also hold that the

assessee's receipt from sale of carbon credits of `14,86,186/-

included in deduction amount stated hereinabove could not be

held to have been 'derived' from the eligible business under

Section 80-IA of the Act. He treated the said receipt as income

from 'other' sources. All this resulted in disallowance Section 80-

IA deduction of `1,08,96,944/-.

3. The assessee preferred an appeal. The CIT(Appeals)

follows a co-ordinate bench's decision in My Home Power Ltd. v.

DCIT (2013) 151 TTJ 616 (Hyd.) and holds that the carbon

credits receipts have to be treated as capital receipts. He refers

to case law of Velayudhaswamy Spinning Mills (P) Ltd. (supra)

for accepting Section 80-IA deduction. The assessee has

succeeded in the lower appellate proceedings. This leaves the

Revenue aggrieved.

-4- I.T.A. No. 2136/Mds/2014

4. We have heard both sides and perused the case file.

Facts of the case already stand narrated hereinabove. The

Revenue raises two substantive arguments in this case. The

first one being that the Assessing Officer had rightly disallowed

the assessee's deduction under Section 80-IA of the Act by

quoting sub-section (5) thereof. We reiterate that the hon'ble

jurisdictional high court (supra) has already held that unabsorbed

depreciation and losses of earlier assessment years already set

off against income from other sources need not be notionally

brought forward to be set off against profits of eligible business in

the initial assessment year of deduction. The Revenue's former

argument fails.

5. The Revenue's second plea is that the CIT(Appeals) has

wrongly treated the above stated amount of `14,86,186/-

realized from sale of carbon credits as a capital receipt. It has

come on record that the decision of the Hyderabad bench

(supra) of the 'tribunal' stands affirmed by the hon'ble Andhra

Pradesh high court in ITAT Appeal No. 60 of 2014 dated

19.02.2014. The Revenue fails to draw any distinction on facts

-5- I.T.A. No. 2136/Mds/2014

or law. Its latter argument is also declined. The CIT(Appeals)'s

order on both counts is upheld.

6. This Revenue's appeal is dismissed.

Order pronounced on Wednesday, the 4th of March, 2015

at Chennai.

sd/- sd/- (A.Mohan Alankamony) (S.S. Godara) (ए. मोहन अलंकामणी) (एस.एस. गोदारा) लेखा सद य/Accountant Member या#यक सद य/Judicial Member

चे नई/Chennai, th 3दनांक/Dated, the 4 March, 2015.

Kri.

आदे श क- +#त5ल6प अ7े6षत/Copy to: 1. अपीलाथ)/Appellant 2. +,यथ)/Respondent

3. आयकर आयु8त (अपील)/CIT(A)-I, Coimbatore

4. आयकर आयु8त/CIT-I, Coimbatore 5. 6वभागीय +#त#न ध/DR

6. गाड% फाईल/GF.