Case Law Details
Satia Industries Ltd Vs National Faceless Assessment Centre (ITAT Amritsar)
ITAT Amritsar held that transfer of REC (Renewable Energy Certificate) is capital in nature and not liable to tax under business income as the income is offshoot from environmental concern not from offshoot of business concern.
Facts- The assessee-company is manufacturer of writing and printing paper, having factory premises in the village of Rupana, situated at Muktsar Sahib. The assessee-company has a co-generation captive power division also, in which electricity is generated from renewable source i.e. bio-fuel, re-include rice husk, unlike other companies which utilized fossil fuels, i.e., coal and diesel and the same is consumed by the paper division. The generation of power from renewable energy resources helps reduce emissions of carbon/ heat, and gases in environment.
During the impugned year, the assessee earned by sale/transfer of REC/ESCs amounting to Rs.17,77,26000/-. The assessee claimed this amount u/s 115BBG of the Act and paid the tax @ 10% during filing of return U/s 139 of the Act. During the assessment proceeding the assessee amended its claim related to income earned from the sale/transfer of RECs/ESCs as capital receipt and recomputed the tax by claiming exemption of tax on said income.
AO issued a draft assessment order by rejecting the same. The assessee filed a petition before the Dispute Resolution Panel (DRP). As per the direction of DRP the said amount was taken as business income of assessee.
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