Dismissed

The Pr Commissioner of v. M/S Bhoruka Power

Karnataka HC24 Jan 2023ITA/58/2020

Case brief

AI extract

What is this about?

The High Court of Karnataka dismissed the Income Tax Appeal filed by the Commissioner of Income Tax. The Court held that the Tribunal was justified in favor of the assessee regarding disallowance under Section 14A, nature of carbon credit as revenue, and setting aside Section 80IA disallowance.

What did the court decide?

The appeal is dismissed; substantial questions of law answered in favour of the Assessee.

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

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ITA No. 58/2020

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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. 58 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 LAVELLE ROAD ST. MARKS ROAD BENGALURU-560 001 …RESPONDENT

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(BY SHRI. BALARAM R. RAO, ADVOCATE)

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ITA No. 58/2020

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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.1225/BANG/2018, FOR THE ASSESSMENT YEAR 20112012, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ALLOW THE APPEAL, SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.1225/BANG/2018 DATED: 31/07/2019 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-C CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), BENGALURU AND ETC.

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THIS ITA, COMING ON FOR FINAL 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.1225/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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1 Income tax Appellate Tribunal, Bengaluru Bench

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ITA No. 58/2020

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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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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

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2 ITA No.133/2015 DD 15.02.2021

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ITA No. 58/2020

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Vs. Subhash Kabini Power Corporation Ltd.³ holding the questions of law in assessee’s favour.

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