DCIT Vs JSW Steel Limited JSW Centre (ITAT Mumbai)
Infrastructure deductions, interest-free fund disallowance relief and consistent capital receipt treatment was allowable as deduction
Conclusion: For deduction on carbon credits, Section 80-IA deduction on the sale of CERs must be allowed; gains from the prepayment of deferred sales tax constituted capital receipts, meaning Commissioner’s relief required no interference. Regarding deduction of Creditor Write-Back Tax, based on the rule of consistency and identical relief granted by the ITAT in assessee’s prior assessment periods, addition under Section 28(iv) regarding the write-back of project creditors was ordered to be deleted.
Held: The issues arose for consideration was whether income from the sale of Certified Emission Reductions (CERs), gains from prepayment of Sales Tax deferrals, and the write-back of project creditors could be adjusted or exempted based on judicial consistency and prior Tribunal orders in the assessee’s own case. For AY 2013-14, assessee claimed a Section 80-IA deduction on income generated from selling Certified Emission Reductions (CERs). AO disallowed it purely because it was rejected in prior years, ignoring favorable ITAT decisions on the exact same issue for the assessee and its sister concern. For AY 2014-15 and 2015-16, the assessee treated gains from the prepayment of Sales Tax deferrals as non-taxable capital receipts. The AO treated these gains as taxable revenue receipts. Further, assessee wrote back long-standing project creditor liabilities into the Profit & Loss Account as provisions no longer required. AO taxed this write-back under Section 28(iv) as a ceased liability, ignoring past ITAT rulings that deleted identical additions for this specific assessee. It was held that regarding deduction on carbon credits, as the facts remained identical to prior years where binding ITAT decisions favored the assessee, judicial discipline dictated that the Section 80-IA deduction on the sale of CERs must be allowed. ITAT co-ordinate bench had already established in the assessee’s own case that gains from the prepayment of deferred sales tax constituted capital receipts, meaning the Commissioner’s relief required no interference. Regarding deduction of Creditor Write-Back Tax, based on the rule of consistency and identical relief granted by the ITAT in the assessee’s prior assessment periods, the addition under Section 28(iv) regarding the write-back of project creditors was ordered to be deleted.
