Eastman Spinning Mills (P) Ltd., Tiruppur v. DCIT, Tiruppur

ITA 1428/CHNY/2014 | 2010-2011
Pronouncement Date: 31-07-2014 | Result: Partly Allowed

Appeal Details

RSA Number 142821714 RSA 2014
Assessee PAN AAACE4595R
Bench Chennai
Appeal Number ITA 1428/CHNY/2014
Duration Of Justice 2 month(s) 9 day(s)
Appellant Eastman Spinning Mills (P) Ltd., Tiruppur
Respondent DCIT, Tiruppur
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 31-07-2014
Assessment Year 2010-2011
Appeal Filed On 22-05-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI . . . . !' # $% $& BEFORE DR. O.K.NARAYANAN VICE-PRESIDENT AND SHRI V.DURGA RAO JUDICIAL MEMBER $ ./ ITA NO. 1428/MDS/2014 # ' '' / ASSESSMENT YEAR : 2010-11 EASTMAN SPINNING MILLS (P) LTD. NO.16 17 KUMAR NAGAR SOUTH 2 ND STREET TIRUPUR 641 603. PAN AAACE4595R V. THE DEPUTY COMMISSIONER OF INCOME-TAX COMPANY CIRCLE TIRUPUR. ()*/ APPELLANT) ( -)*/ RESPONDENT) AND $ ./ ITA NO. 1676/MDS/2014 # ' '' / ASSESSMENT YEAR : 2010-11 THE DEPUTY COMMISSIONER OF INCOME-TAX TIRUPUR. V. EASTMAN SPINNING MILLS (P) LTD. TIRUPUR. ()*/ APPELLANT) ( -)*/ RESPONDENT) ASSESSEE BY : SHRI T. BANUSEKAR FCA DEPARTMENT BY : SHRI GURU BHASHYAM IRS JCIT $ 6 78 / DATE OF HEARING : 31 ST JULY 2014 9:' 6 78 / DATE OF PRONOUNCEMENT : 31 ST JULY 2014 - - ITA 1428 & 1676/14 2 / O R D E R PER DR.O.K.NARAYANAN VICE-PRESIDENT THESE ARE TWO CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2010- 11. THE APPEALS ARE DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME-TAX(APPEALS)-II AT COIMBATORE DATED 27.3.201 4 AND ARISE OUT OF THE ASSESSMENT COMPLETED UNDER SEC.143(3) OF THE INCOME-TAX ACT 1961. 2. IN THE APPEAL FILED BY THE ASSESSEE THE GROUND RAISED IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ER RED IN CONFIRMING THE EXCLUSION OF RECEIPTS FROM TRADING O F CARBON CREDIT AND INSURANCE CLAIM WHILE COMPUTING THE DEDUCTION U NDER SEC.80IA. 3. THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CAS E OF CIT VS. M/S. MY HOME POWER LTD. 2014 (6) TMI 82 H AS CONSIDERED THE ISSUE OF CARBON CREDIT FOR THE PURPO SE OF INCOME- TAX. THE COURT HAS HELD THAT THE INCOME RECEIVED ON SALE OF EXCESS CARBON CREDIT IS IN THE NATURE OF CAPITAL RE CEIPT AND IT - - ITA 1428 & 1676/14 3 CANNOT BE TREATED AS BUSINESS INCOME. THE LEARNED JOINT COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVEN UE HAS RELIED ON THE ORDER OF THE ITAT COCHIN RENDERED IN THE CASE OF APOLLO TYRES LTD. VS. ACIT 31 ITR (TRIB) 477 WHER EIN THE TRIBUNAL HAS HELD THAT RECEIPT ON SALE OF CARBON CR EDIT IS REVENUE IN NATURE. 4. WE ARE BOUND TO FOLLOW THE JUDGMENT OF THE HONB LE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. M/ S. MY HOME POWER LTD. AND HOLD THAT THE RECEIPTS IN THE HANDS OF THE ASSESSEE GENERATED OUT OF SALE OF EXCESS CARBON CRE DIT ARE IN THE NATURE OF CAPITAL RECEIPTS AND THEREFORE NOT INCLUDIBLE IN THE COMPUTATION OF TAXABLE INCOME. ONCE THE ENTIRE REC EIPTS ARE EXCLUDED FROM THE COMPUTATION OF INCOME ITSELF THE RE IS NO QUESTION OF ANY SEPARATE ARGUMENT OF SEC.80IA DEDUC TION. 5. AS FAR AS CARBON CREDIT RECEIPT IS CONCERNED TH E ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. THEREFORE THE ASSESSING OFFICER IS DIRECTED TO EXCLUDE THE CARBON CREDIT RE CEIPTS FROM THE COMPUTATION OF ASSESSEES INCOME. 6. AS FAR AS THE QUESTION OF INSURANCE CLAIM FOR TH E PURPOSE OF SEC.80IA IS CONCERNED THE SAME IS REJECTED AS NOT PRESSED. - - ITA 1428 & 1676/14 4 7. THE LEVY OF INTEREST UNDER SECTIONS 234B AND 234 C IS CONSEQUENTIAL AND THE ASSESSING OFFICER SHALL ACCOM MODATE THE CONSEQUENTIAL RELIEFS. 8. IN THE APPEAL FILED BY THE REVENUE THE GROUND R AISED IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ER RED IN HOLDING THAT THE ASSESSMENT YEAR 2005-06 IS THE FIR ST INITIAL ASSESSMENT YEAR IN WHICH THE ASSESSEE CLAIMED DEDUC TION UNDER SEC.80IA AND THEREFORE THE DEPRECIATION OF EARLIE R YEARS (WHICH ALREADY HAVE BEEN ABSORBED) CANNOT BE NOTIONALLY CA RRIED FORWARD AND CONSIDERED IN COMPUTING THE QUANTUM OF DEDUCTION UNDER SEC.80IA. 9. THIS ISSUE IS ALREADY COVERED BY THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT RENDERED IN THE CASE OF C IT V. VELAYUTHASAMY SPINNING MILLS 231 ITR 368. AS TH E REVENUE HAS FILED AN SLP BEFORE THE HONBLE SUPREME COURT THE REVENUE IS FREE TO KEEP SUCH ISSUES ALIVE AND FILE APPEALS BEFORE THE APPROPRIATE COURT. BUT AS ON TODAY THE ISSUE IS COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT WE FIND THAT THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS ) IS JUST AND PROPER IN LAW AS HE HAS RELIED ON THE JUDGMENT OF THE - - ITA 1428 & 1676/14 5 HONBLE MADRAS HIGH COURT RENDERED IN THE CASE OF C IT V. VELAYUTHASAMY SPINNING MILLS 231 ITR 368. 10. IN RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISM ISSED. ORDERS PRONOUNCED IN THE OPEN COURT AT THE TIME O F HEARING ON THURSDAY 31 ST JULY 2014 AT CHENNAI. SD/- SD/- ( . !' ) ( . . . ) (V.DURGA RAO) (DR. O.K.NARAYANAN) # $% /JUDICIAL MEMBER /VICE-PRESIDENT /CHENNAI < /DATED THE 31 ST JULY 2014. MPO* = 6 #7>? @?'7 /COPY TO: 1. )* /APPELLANT 2. -)* /RESPONDENT 3. A7 () /CIT(A) 4. A7 /CIT 5. ?B! #7# /DR 6. !' C /GF.