TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 416
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....ents and other documents in support of sale of shares of UIL but as per the Investigation Wing database, the share of UIL was penny stock which was being used by entry operators to provide bogus accommodation entries in the guise of capital gains or losses. The ld. AO also referred to a report published by the Directorate of Income tax Mumbai, which listed UIL as a penny stock scrip to arrange bogus LTCG/ loss. The ld. AO therefore held that the loss of Rs. 1,89,53,757/- incurred on shares of UIL was not genuine and therefore added the same by way of cash credit u/s. 68 of the Act. 4. In the appellate proceedings, the ld. CIT(A) was pleased to confirm the order of the ld. AO. Being aggrieved by the order of the ld. CIT(A), the assessee is now in appeal before us. 5. The ld. AR submitted that the loss quantified by the ld. AO was factually incorrect. The ld. AR invited our attention to the statement giving the details of total short term capital loss of Rs. 1,89,53,757/- incurred during the year along with the stock ledger and supporting sample contract notes, which was placed at Pages31 to 80 of the Paperbook. He pointed out that the impugned loss figure was a summation of lo....
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....y manipulating the scrip of UIL, but none of these details were confronted to the assessee. It is seen that no show cause was also given to the assessee prior to making the impugned addition. Even the ld. CIT(A) i had confirmed the disallowance by citing judicial precedent(s) and without even looking into the facts of the given case. According to us, the assessee is entitled to a right of fair hearing, which requires that the material/ information/ statement sought to be used against the assessee ought to be confronted and the assessee be given sufficient opportunity to rebut the same. Hence, in all fairness, we set aside the issue involving the disallowance of loss incurred in shares of UIL back to the file of ld. AO to examine the same de novo after allowing the assessee opportunity of being heard. Needless to say, the ld. AO shall provide the relevant material along with the statement(s) which he intends to use against the assessee and the assessee shall also cooperate in the proceedings. This ground is therefore partly allowed for statistical purposes. 8. Ground No. 2 raised by the assessee pertains to the disallowance of penalty expenses of Rs. 34,71,274/-. 9. The ld. AO....
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....lowance of Rs. 48,74,376/- made u/s. 14A r.w.r 8D while computing the book profits u/s. 115JB of the Act. 13. After hearing the rival contentions and perusing the materials available on record, we find that the issue is settled in favour of the assessee by the decision of special Bench of this Tribunal at Delhi in case of ACIT Vs. Vireet Investment Pvt. Ltd (ITA No.502/Del/2012), wherein the Hon'ble Special Bench has held that the disallowance by the ld. AO u/s. 14A read with Rule 8D of the Rules is not required to be made to the book profit u/s. 115JB of the Act. Accordingly, we direct the ld. AO to delete the addition made to the book profit u/s. 115JB of the Act. The Ground No. 3of the assessee is therefore allowed. 14. In Ground No. 4(i) & (ii) raised in the appeal, the assessee is seeking exclusion of the incentive derived under the Status Holders Incentive Scheme ('SHIS') & Focus Product Scheme('FPS') from the computation of total income, claiming it to be in nature of capital receipt. The facts as noted are that, the assessee had received incentive amounting to Rs. 1,02,01,683/-under the SHIS & FPS Scheme of the Government of India for promoting and exploring new m....
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....or exclusion of incentive received under the FPS & SHIS Scheme by way of capital receipt, because of the complex legal position and the litigation surrounding this issue. According to the ld. AR, only when the impugned issue was adjudicated in assessee's favour by the Hon'ble Supreme Court in the case of PCIT v. Nitin Spinners Ltd. (supra) that, the assessee made this claim before the ld. CIT(A). We observe that the Hon'ble Gujrat High Court in the case of CIT v. Mitesh Impex (367 ITR 85) after considering the decisions rendered by the Hon'ble Apex Court in the case of NTPC v. CIT [1998] (229 ITR 383) and Goetze (India) Ltd. v. CIT [2006] (284 ITR 323) has held that, if a claim which is available in law is not raised either inadvertently or an account of erroneous understanding of complex legal position, such a relief cannot be shut up for all the times to come merely because it is raised for the first time in appellate proceedings in absence of a revised return filed before the Assessing Officer. 18. We further note that, on similar set of facts & circumstances, identical contention was also raised by the Revenue before the Hon'ble Calcutta High Court in the case of....
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...... The third issue involved in the instant appeal which requires adjudication is whether the action of the Tribunal entertaining/allowing the claim which was made by the assessee before the Assessing Officer by filing a revised computation instead of filing a revised return since the time to file the revised return had lapsed, for claiming to treat the incentive subsidies in question as capital receipts instead of revenue receipts as claimed in original return. The Assessing Officer had denied this claim. The Revenue has attacked the order of the Tribunal by relying on the decision in the case of Goetze (India) Ltd. v. CIT reported in [2006] 284 ITR 323 (SC). This case does not help the Revenue/appellant. In this case, the Supreme Court has made it clear that its decision was restricted to the power of the assessing authority to entertain a claim for deduction otherwise than by a revised return, and did not impinge on the power of the Appellate Tribunal under section 254 of the Income-tax Act, 1961. The Hon'ble Supreme Court in the said decision held as follows (page 324 of 284 ITR): "In the circumstances of the case, we dismiss the civil appeal. However, we m....
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....4. Thus, the issue is whether the Tribunal has the power /jurisdiction to examine such claim. The 3 judges bench of Hon'ble Supreme Court in the case of NTPC vs. CIT (supra) had considered precisely same question which reads as under:- .... 16. This principle laid down by the Hon'ble Supreme Court has been reiterated and explained further by the Hon'ble Jurisdictional High court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd.,(supra). After considering the judgment of Hon'ble Supreme Court in the case of Goetze India Ltd. vs. CIT reported in (2006) 157 taxmann.com 1 wherein, the Hon'ble High Court observed and held as under:- "21. It was then submitted by Mr. Gupta that the Supreme Court had taken a different view in Goetze (India) Limited v. Commissioner of Income-tax, (2006) 157 Taxman 1. We are unable to agree. The decision was rendered by a Bench of two learned Judges and expressly refers to the judgment of the Bench of three learned Judges in National Thermal Power Company Limited vs. Commissioner of Income- tax (supra). The question before the Court was whether the appellant-assessee could make a claim for deduction, other than by ....
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....ng officer had no jurisdiction to consider the claim made by the assessee in the revised return filed after the time prescribed by Section 139(5) for filing a revised return had already expired. 9. Therefore, we find no reason to interfere with the impugned judgment of the High Court. The appeal is, accordingly, dismissed." 19. Thus, this judgment in fact conversely speaking implies that the power can be exercised by the Tribunal u/s. 254 to consider the claim. .... 21. However, there is another judgment of the Hon'ble Supreme Court in the case of Wipro Ltd., vs. CIT reported in (2022) 140 txmann.com 223(SC), wherein, the Hon'ble Supreme Court held that the Tribunal can entertain any legal ground for the first time before the Hon'ble Supreme Court had referred to the three Judge Bench judgment of the Hon'ble Supreme Court in the case of NTPC Ltd., The relevant observation of the Hon'ble Supreme Court reads as under:- ..... 22. The aforesaid judgment of the Hon'ble Supreme Court clearly clinches the issue that the ITAT can entertain such a claim for the first time in terms of its claim u/s. 254, accordingly, we admit the legal issue ra....
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.... wherein it was held that the subsidies received by the assessee under the Foreign Trade Policy, is in the nature of capital receipt, not chargeable to tax. The relevant findings, relied upon by us, is as follows:- "8.3 We have considered the rival submissions of both the parties. From the facts as already discussed in the foregoing, it is noted that the FPS and VKGUY Schemes, in terms of which the subsidy was granted, was with the object to enhance the Indian export potential in the international market and generate employment opportunities. It was not granted to meet any cost of expenditure incurred by the assessee to make the exports. We note that the Hon'ble Rajasthan High Court in the case of Nitin Spinners Ltd. (supra) has considered similar scheme notified under the same Foreign Trade Policy. The Hon'ble High Court thereafter held that the incentive received under such Scheme was in the nature of capital receipt and therefore not taxable. The relevant findings of the Hon'ble High Court are noted to be as under: ..... 8.4 It is also noted that the SLP preferred by the Revenue against the above judgment of the Hon'ble High Court has s....
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....ndustries, Green products, Exports of products from North- East, Sports Goods and Toys sectors Government of India shall make concerted efforts to promote exports in these sectors by specific sectoral strategies that shall be notified from time to time" Further, the objective of subsidy under Status Holder Incentive Scrip (SHIS) is laid down in the policy as under: "With an objective to promote investment in upgradation of technology of some specified sectors as listed in Para 3.16.4 below, Status Holders shall be entitled to incentive scrip @ 1% the FOB Value of exports made during 2009-10 and during 2010-11 of these specified sectors in the form of duty credit. This shall be over and above the duty credit scrip claimed/availed under this chapter. " 45. In this regard, it is also relevant to note that the AO in its remand report dated 11/04/2019, forming part of the paper book from pages No. 117-120 after examining the submissions of the assessee and schemes and various facts placed on record noted that the salient objectives of the FPS/FMS/SHIS subsidy received under the Foreign Trade Policy is to increase percentage share of global trade by increasing ....
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....hus, when the objective of the aforesaid subsidies has been admitted to be to encourage industries by providing industrial growth, technological upgradation, and development, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue in treating the amount received by the assessee under the aforesaid schemes as capital receipt. As a result, grounds no. 9-13 raised in Revenue's appeal are dismissed." 8.5 Following the ratio laid down in the above decisions, we, in principle, find merit in the claim of the Ld. AR that the subsidies received by the assessee under the Foreign Trade Policy was in the nature of capital receipt not liable to tax." 24. Following these decisions, we accordingly accept the plea raised by the assessee and direct the AO to exclude the impugned incentives, being in nature of capital receipt, while computing the total income for the relevant year. 25. On the issue of treatment of these incentives while computing book profit u/s. 115JB, we find that the case of the assessee is squarely covered by the decision of the coordinate Bench of the Hon'ble ITAT, Kolkata in the case of DCIT Vs Century Plyboards (I) Ltd (supra) ....
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.... In this case since we have already held that in relevant assessment year 2010-11 the incentives 'Interest subsidy' and 'Power subsidy' is a 'capital receipt' and does not fall within the definition of 'Income' under section 2(24) of Income-tax Act, 1961 and when a receipt is not on in the character of income it cannot form part of the book profit under section 115JB of the Act, 1961. In the case of Appollo Tyres Ltd. (supra) the income in question was taxable but was exempt under a specific provision of the Act as such it was to be included as a part of the book profit. But where a receipt is not in the nature of income at all it cannot be included in book profit for the purpose of computation under section 115JB of the Income-tax Act, 1961. For the aforesaid reason, we hold that the interest and power subsidy under the schemes in question would have to be excluded while computing book profit under section 115 JB of the Income-tax Act, 1961." 47. We also rely on the decision of the coordinate bench of this Tribunal in the case of Sicpa India (P.) Ltd. (supra) wherein it has been held that the subsidy received by the assessee in form of exci....
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....eived to improve world atmosphere and environment by reducing carbon, heat and gas emissions. Carbon credits are made available to the taxpayer on account of saving of energy consumption and non-emission of hazardous gases into the atmosphere and not because of it s business. It has been held by various judicial authorities cited above that "carbon credit is an offshoot of environmental concern". We find that there are a plethora of judgments wherein it has been consistently held that income from sale of carbon credit is not chargeable to tax. We particularly take note of the decision of the Hon'ble Andhra Pradesh High Court in the case of CIT vs My Home Power Ltd [2014] 46 taxmann.com 314. It is noted that, the ld. AO had also not disputed the assessee's claim that, the sale of carbon credit is a capital receipt. The off-shoot of this issue is then, whether the receipts from sale of carbon credits, being in the nature of capital receipts, will form part of book profit u/s. 115JB or not. We find that this issue is no longer res integra. We note that Coordinate Benches of this Tribunal in the following cases have held that the receipts from sale of carbon credits being capital in na....
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....is rejected." 6.6 We, therefore, respectfully following the aforesaid ratio of Hon'ble High Court hold that Carbon credits being the capital receipts cannot be brought to tax as book profits and are, thus, liable to be excluded from the computation of book profits u/s. 115JB. The additional ground of appeal no.4 of the assessee is thus allowed." (II) DCM Shriram Industries Ltd. Vs. ACIT (ITA No. 1841/Del/2020) [ITAT Delhi] : "29. Another off-shoot of this issue is whether the receipts from RECs, being in the nature of capital receipts, will form part of book profit computed under section 115JB of the Act. We find, this issue has also been addressed by the Coordinate Bench in case of SRF Ltd. Vs. ACIT (supra) wherein it has been held as under: ........ 30. Thus, respectfully following the ratio laid down by Coordinate Bench, as aforesaid, we hold that the receipts from sale of RECs, being in the nature of capital receipts, should be excluded for the purpose of computing book profit under section 115JB of the Act. Grounds are allowed to the extent indicate above." (III) M/s Ramgad Minerals & Mining Ltd. Vs. ACIT (ITA Nos. 1270....