TaxTMI 
TaxTMI 
2025 (7) TMI 1030
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....read as under: 1.On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad both in the eye of law and on facts. Under the Normal Provisions of Income Tax Act 2. (i) On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 22,34,60,522/- made by the AO treating the sale proceeds of fly ash as income of the assessee while computing business income under the normal provisions of the Income Tax Act. (ii) That the abovesaid addition has been confirmed rejecting the contention of the assessee that the amount received is in the nature of obligation, which cannot be considered as income of the assessee. (iii) That the said addition has been confirmed rejecting the detailed submissions, explanations, and various judicial pronouncements' cited by the assessee in this regard. 3. (i) On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 1,04,71,362 / made by the AO treating the interest received on fly ash utilization reserve as income of the assessee while....
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....on Dtd. 03/11/2009 issued by the Ministry of Environment and Forest (MOEF), Government of India. 7. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in ignoring the contention of the assessee that the rule of consistency be applied as there was no change of facts during the year. 8. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the above additions by indulging in surmises and conjectures, only on the basis of presumption and assumption without considering the facts of the case in an appropriate manner. 9. The appellant craves leave to add, amend or alter any of the grounds of appeal., the assessee went in appeal before the ld. CIT(A) and reiterated what has been stated before the Assessing Officer. 4. In addition to the above, the assessee has filed an application praying for admission of additional ground of appeal which reads as under: "10. Without prejudice to the above, the learned CIT(A) has erred both on facts and in law in ignoring the fact that the addition made by the AO is otherwise eligible for deduction under section 8....
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....s relevant to provide the background of the issue. Fly-ash is generated by various thermal power plants producing electricity by burning coal. Fly-ash was a major environmental hazard, similar to the burning of 'parali' in Northern States of India post harvesting. 3. Accordingly, a Public Interest Litigation was filed before the Hon'ble Delhi High Court. The hon'ble Delhi High Court took cognizance of the issue of disposal of fly-ash, which had become hazardous and was causing serious environmental issues, and directed the Central Government to come out with a policy on how it intended to handle the large-scale generation of fly-ash by various thermal plants. 4. Pursuant to the direction of the Hon'ble Delhi High Court, the Government of India issued notification SO 763(E) dated 14.09.1999 in exercise of its power conferred under the Environment Act 1996. The notification is placed at PB page 297 of AY 2018-19. As per this notification, directions were issued to all manufacturer of clay bricks, tiles and blocks operating within a radius of 50 kilometers, from coal or lignite-based thermal power plants to use at least 25% fly ash by weight in the manufacture of....
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.... the amount from the sale of fly ash and keep it in a separate account, to be utilized only for the purpose of facilitating and achieving 100% fly ash utilisation. 8. Thus the onus is on the appellant company to address environmental concerns arising from the generation of fly ash by its thermal plants. Therefore the amount received from the sale of fly-ash was not a source of income for Appellant. On the contrary, it was an obligation imposed on the appellant company due to the fact that it generates fly-ash, which is hazardous and pollutes the environment. The appellant company was under an obligation, as per the notification, to submit regular reports to the Ministry of environment regarding the steps taken by the company to achieve fly-ash utilization and progress of as is evident from the report placed at PB Pages 144-150 of AY 2018-19. 9. Accordingly, the Assessing Officer and CIT(A) have erred in not appreciating the facts of the case and assuming that assessee is earning income from the sale of fly-ash. On the contrary, the Delhi High Court and the government of India have taken cognizance of the fact that thermal power plants are dumping flyash generated ....
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....m existing reserves or from the revenues of the undertaking a reserve to be called 'contingencies reserve." The Supreme Court held that funds appropriated as a contingency reserve under the Electricity (Supply) Act did not qualify as "diverted" income. The Court explained that even though the company was required to set aside a portion of its revenue, these funds still reached the electricity company and remained within its control. As the Court stated, "the monies in the contingencies reserve belonged to the electricity company," meaning that the reserve was merely an appropriation of profits rather than a diversion by overriding title. The said judgement has also been distinguished in the Madras High Court in the case of CIT Vs. Salem Co-Operative Sugar Mills Limited, [1998] 229 ITR 285. 14. Similarly, the case of SREI Infrastructure Finance Ltd V ACIT, 2015 (2) TMI 545 deals with the amount transferred to the special reserve pursuant to the provisions of section 45-IC of the Reserve Bank of India Act, 1934, Section 45-IC mandates that - "Every non-banking financial company shall create a reserve fund and transfer therein a sum not less than twenty per cent of its net prof....
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.... facilitation activities for use of fly ash until 100 percent fly ash utilization level is achieved; thereafter as long as 100% fly ash utilization levels are maintained, the thermal power station would be free to utilize the amount collected for other development programmes also and in case, there is a reduction in the fly ash utilization levels in the subsequent year(s), the use of financial return from fly ash shall get restricted to development of infrastructure or facilities and promotion or facilitation activities for fly ash utilization until 100 percent fly ash utilization level is again achieved and maintained". 17. Furthermore, we find that initially, the government imposed restriction on thermal power plants to make available fly-ash free of cost to manufacturers of fly ash-based products for a period of ten years. Later, the Government of India allowed thermal power plants to sell fly ash through the Gazette Notification dated 03.11.2009, issued under the Environment (Protection) Act, 1986. However, the permission to sell fly ash was not an unrestricted commercial right of the power plants-it was a conditional, government-created right subject to strict statutory con....