Allowed

The Pr Commissioner of Income Tax v. M/S Bhoruka Power Corporation Ltd.

Karnataka HC24 Jan 2023ITA/56/2020

Case brief

AI extract

What is this about?

In an income tax appeal filed under Section 260-A of the Income Tax Act 1961, the High Court of Karnataka considered questions of law regarding Section 14A, Section 80IA, and the nature of carbon credit receipts. The Court relied on prior judgments to allow the appeal against the Revenue.

What did the court decide?

Appeal dismissed; substantial questions of law answered in favour of the Assessee and against the Revenue.

The Pr Commissioner of Income Tax Vs M/S Bhoruka… — Specific Performance | Karnataka HC (2023)

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ITA No. 56 of 2020

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 24^TH DAY OF JANUARY, 2023

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PRESENT

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THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR

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AND

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THE HON'BLE MR. JUSTICE G BASAVARAJA

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INCOME TAX APPEAL NO.56 OF 2020

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BETWEEN:

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Digitally signed by YASHODHA N Location: HIGH COURT OF KARNATAKA

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THE PR. COMMISSIONER OF INCOME-TAX CIT(A), CENTRAL CIRCLE C.R.BUILDING, QUEEN’S ROAD BENGALURU-560 001

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THE DY. COMMISSIONER OF INCOME-TAX CIRCLE-1(1)(2) PRESENT ADDRESS CENTRAL CIRCLE, C.R.BUILDING QUEENS ROAD BENGALURU-560 001 …APPELLANTS

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(BY SHRI. M. DILIP, STANDING COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL)

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AND:

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M/S. BHORUKA POWER CORPORATION LTD., NO.48, HITANADA BUILDING LAVELLA ROAD, ST.MARKS ROAD BENGALURU-560 001 …RESPONDENT

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(BY SHRI. BALARAM R. RAO, ADVOCATE)

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THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 31.07.2019 PASSED IN ITA NO.1227/BANG/2018, FOR THE ASSESSMENT YEAR 2013-2014 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ALLOW THE APPEAL AND SET ASIDE THE

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ITA No. 56 of 2020

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ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 1227/BANG/2018 DATED 31.07.2019 FOR ASSESSMENT YEAR 2013-2014 ANNEXURE-C CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE1(1), BENGALURU AND ETC.

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THIS ITA, COMING ON FOR HEARING, THIS DAY, P.S.DINESH KUMAR J. , DELIVERED THE FOLLOWING:

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JUDGMENT

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This appeal by the Revenue challenging the order dated 31.07.2019 in ITA No.1227/Bang/2018 passed by the ITAT¹ , "B" Bench, Bangalore, has been admitted to consider following questions of law:

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1. Whether on the facts and in the circumstances of the case and in law, the tribunal was justified in restricting the disallowance to the exempt income earned even though the assessing authority rightly disallowed under section 14A R/W Rule 8D as all the conditions were fully satisfied in the case of assessee?

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2. Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that receipt of carbon credit was capital in nature when both the assessee and Revenue had recognized it as Revenue in nature?

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1 Income tax Appellate Tribunal, Bengaluru Bench

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ITA No. 56 of 2020

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3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside disallowance made under section 80IA of the Act in respect of consideration from sale of carbon credit even though the same is not derived from the core activity of generation of power and consideration is a Revenue receipt which cannot be attributed towards profit derived from eligible business activity?

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Heard Shri M.Dilip, learned Standing Counsel for the appellants-Revenue and Shri Balaram R. Rao, learned Advocate for the respondent-Assessee.

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At the outset, Shri Balaram Rao submits that first issue involved in this appeal is covered by the decision of this Court in The Commissioner of Income Tax & another Vs. M/s Quest Global Engineering Services Pvt. Ltd.² and second and third issues in Commissioner of Income Tax-III Vs. Subhash Kabini Power Corporation Ltd,³ holding the questions of law in assessee’s favour.

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