Case Number: ITA 5892/DEL/2019
Appellant: SRF Limited, New Delhi
Respondent: ACIT, Circle-1, LTU, New Delhi
Assessment Year: 2008-09
Case Filed On: 2019-07-05
Order Type: Final Tribunal Order
Date of Order: 2023-01-23
Pronounced On: 2023-01-23
Summary:
The case of SRF Limited vs ACIT, Circle-1, LTU, New Delhi pertains to a tax dispute for the assessment year 2008-09. The appellant, SRF Limited, contested the tax demand raised against it by the ACIT, Circle-1, LTU, New Delhi. The case was subsequently brought before the Income Tax Appellate Tribunal (ITAT) for resolution.
Background:
SRF Limited, located in New Delhi, was involved in a tax dispute with the Income Tax Department regarding the assessment year 2008-09. The primary issue was the tax treatment of the receipts from the sale of Carbon Emission Reductions (CER) Certificates/Carbon Credits, which the company sought to classify as capital receipts not liable for tax.
Grounds of Appeal:
Tribunal Proceedings:
During the hearing, the tribunal reviewed the relevant material and heard the arguments from both sides. The tribunal noted that similar cases, such as My Home Power Ltd. vs DCIT and Gujarat Fluoro Chemicals Ltd., had been decided in favor of the assessee, classifying the receipts from the sale of CERs as capital receipts not liable for tax.
The tribunal also considered the arguments from the department’s representative, who defended the order of the lower tax authorities. However, the tribunal observed that the case law relied upon by the revenue had been overruled by higher courts or the same court in later judgments.
Tribunal’s Decision:
The tribunal concluded that the receipts from the sale of CERs should be classified as capital receipts not liable for tax. The tribunal referred to several judicial precedents, including the judgments in My Home Power Ltd. and Gujarat Fluoro Chemicals Ltd., which supported the appellant’s claim.
The tribunal also noted that the introduction of section 115BBG in the Income Tax Act, effective from assessment year 2018-19, corroborated the appellant’s position that CERs are not regular business receipts but capital receipts arising from environmental concerns.
Regarding the calculation of book profit under section 115JB, the tribunal held that capital receipts should not be included in the book profit. The tribunal cited the judgment in Ankit Metal & Power Ltd. and L.H. Sugar Factory Pvt. Ltd., which supported this position.
Conclusion:
In conclusion, the tribunal ruled in favor of SRF Limited, classifying the receipts from the sale of CERs as capital receipts not liable for tax. The tribunal also held that these receipts should be excluded from the calculation of book profit under section 115JB.
Order Pronouncement:
Order was pronounced in the open court on 23rd January 2023.
—
(N.K. BILLAIYA)
ACCOUNTANT MEMBER
(ANUBHAV SHARMA)
JUDICIAL MEMBER
Copy forwarded to:
SRF Limited vs ACIT, Circle-1, LTU, New Delhi – Tax Dispute for Assessment Year 2008-09
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform