Heard The Learned Counsel Appearing For Both Sides, Whojointly Submitted That The Issue Raised In This Appeal Hasalready Been Decided In Favour Of The Assessee, v. Assistantcommissioner Of Income Tax [(2021) 433 Itr 61 (Mad), Therelevant Passage Of Which Is Profitably, Extracted Below

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 25.11.2021 CORAM THE HONOURABLE MR.JUSTICE R.MAHADEVANAND THE HONOURABLE MR.JUSTICE MOHAMMED SHAFFIQ Principal Commissioner of Income Tax Company Circle-VI(1)Chennai. .. Appellant/Respondent M/s. Chemplast Sanmar LimitedNo.9, Cathedral RoadChennai – 600 086. Tax Case Appeal filed under Section 260A of the Income TaxAct, 1961 against the order of the Income Tax Appellate Tribunal'D' Bench, Chennai dated 09.04.2021 in M.P. No. 94/Chny/2020 inITA No.2807/Chny/2017 for the assessment year 2010-11, madeagainst the order dated 28.09.2017 in ITA.No.32 of 2010-2011 bythe Commissioner of Income Tax(A)-17, Chennai against theAssessment order dated 15.02.2013 in GI No/PAN No.AAACC 3000F bythe Deputy Commissioner of Income Tax, Larger Payer Unit,Chennai for the assessment year 2010-2011. This tax case appeal has been filed by the appellant /Revenue, against the order of the Tribunal dated 09.04.2021, inM.P. No. 94/Chny/2020 in ITA No.2807/Chny/2017 relating to theassessment year 2010-11, raising the following substantialquestion of law:- https://hcservices.ecourts.gov.in/hcservices/ “1. Whether on the facts and circumstances of the caseand in law, the Tribunal is legally correct in holdingthat the sale of Carbon Emission Reduction (CER) alsoknown as Carbon Credits is to be considered as capitalreceipt and not liable to tax?” 2.Heard the learned counsel appearing for both sides, whojointly submitted that the issue raised in this appeal hasalready been decided in favour of the assessee, by a decision ofthis court in S.P. Spinning Mills (P) Ltd. v. AssistantCommissioner of Income Tax [(2021) 433 ITR 61 (Mad), therelevant passage of which is profitably, extracted below: “28.Insofar as substantial question of law no.4 isconcerned, it deals with carbon credit. The question,as to the manner in which carbon credit receipt has tobe treated, has been considered by several High Courtsand it has been held that the receipt should be treatedas a capital receipt. In this regard, it would bebeneficial to refer to the decision in the case of CITvs. Subhash Kabini Power Corporation Ltd., [(2016) 385ITR 0592 (Karn.)]. In the said decision, the KarnatakaHigh Court approved the view taken by the ITAT,Hyderabad Bench, which decision was upheld by the HighCourt of Andhra Pradesh in the case of CIT vs. My HomePower Ltd. [(2014) 365 ITR 0082 (AP)], which wassubsequently followed by the ITAT, Chennai and JaipurBenches. The operative portion of the judgment reads asfollows:- “11. The decision has been upheld by the Hon’bleAndhra Pradesh High Court. This decision has beensubsequently followed by the ITAT Chennai and JaipurBenches. There is no decision either from the Hon’bleSupreme Court or from the Hon’ble jurisdictional HighCourt. These decisions indicate that sale of carboncredit would result capital receipt which is nottaxable. When we confronted the learned DR with regardto this position, it was contended that the position ason the day when the assessment order was passed, is tobe seen and on that day these orders were notavailable. Therefore, the assessee cannot claim thebenefit of these orders. However, we do not concur withthis proposition of the learned CIT, because the FullBench of the Hon’ble Punjab & Haryana High Court in thecase of Aruna Luthra reported in 254 ITR 76 has heldthat a Court decide a dispute between the parties. Thecase can involve decision on facts. It can also involvea decision on point of law. Both may have bearing on the ultimate result of the case. When a Courtinterprets a provision, it decides as to what is themeaning and effect of the words used by theLegislature, it is the declaration regarding thestatute. In other words the judgment declares as towhat the legislature had said at the time ofpromulgation of the law, the declaration is..........,this was the law, this is the law, this is how theprovision shall be construed. Therefore, he cannotplead that the view taken by the Tribunal and upheld bythe Hon’ble Andhra Pradesh High Court could beconsidered as if applicable from the date of thedecision. In the decision only the position of the lawas to how receipts from sale of carbon credits are tobe treated, has been explained. One of the argumentraised by the DR was that at this stage, the additionalground ought not to be permitted to be raised. It ispertinent to mention here that basically, it is not aseparate ground, it is a limb of arguments, which isaffecting the ultimate tax liability of the assessee.The Hon’ble Supreme Court in the case of NTPC Ltd(Supra) has held that the Tribunal had jurisdiction toexamine a question of law which arose from the fact asfound by the Income Tax authorities and having abearing on the tax liability of the assessee. As far asthe nature of the receipt from sale of carbon credit isconcerned, it is available from the assessment stage.It is not disputed even by the learned Commissioner,the dispute is, whether it has been derived from theeligible industrial undertaking for qualifying thegrant of deduction u/s 80IA. The learned Commissionerfelt that this receipt has not been derived from theindustrial undertaking which will be eligible for grantof deduction u/s 80IA and the Assessing Officercommitted an error in including the receipt in theeligible profit. Those facts are already on the record.It is to be seen, whether the receipt is of capitalnature or of a revenue nature. Even in case the orderof the CIT is upheld, then, in law, it will affect thecomputation of income, ultimately because the receiptwill not be taxable, it will not come under the ambitof computation of income. Simultaneously it will beexcluded from the deduction u/s 80IA as well as of thetotal income. The result will remain as it is. It is arevenue neutral case. Therefore, in view of the ratiolaid down by the Hon’ble jurisdictional High Court inthe case of Gopala Gowda (Supra), the second conditionfor taking action u/s 263 does not exist. Theassessment order is not prejudicial to the interests of the Revenue. In view of the above discussion, we allowthe appeal of the assessee and quash the impugned orderof the learned CIT passed u/s 263 of the Income TaxAct.” The aforesaid shows that, so far as the questionas to whether, the income by sale of carbon creditcould be termed as capital receipt or profit, isconcerned, the Tribunal has considered the decision ofthe Hyderabad Bench and it has further taken note ofthe fact that decision of the Tribunal of HyderabadBench was carried before the Andhra Pradesh High Courtand the said decision was not interfered with. TheTribunal, in its decision has also referred to thedecision of the Apex Court with regard to power underSection 263 of the Income Tax Act, 1961 (hereinafterreferred to as “the Act”) of the revisional authority. The aforesaid shows that, so far as the questionas to whether, the income by sale of carbon creditcould be termed as capital receipt or profit, isconcerned, the Tribunal has considered the decision ofthe Hyderabad Bench and it has further taken note ofthe fact that decision of the Tribunal of HyderabadBench was carried before the Andhra Pradesh High Courtand the said decision was not interfered with. TheTribunal, in its decision has also referred to thedecision of the Apex Court with regard to power underSection 263 of the Income Tax Act, 1961 (hereinafterreferred to as “the Act”) of the revisional authority. 4. In our view, the principal question, which mayarise is, as to whether by sale of carbon creditcapital receipt is generated or a profit out of thebusiness activity of the assessee. More or less, in asimilar case, the Apex Court had an occasion toconsider such an issue in the case of Commissioner ofIncome Tax v. Maheshwari Devi Jute Mills Ltd. [(1965)57 ITR 36 (SC)], wherein the question came up forconsideration before the Apex Court as to whether bysale of loom-hours, the amount received could be termedas capital receipt or the income out of business. Inthe said decision, the Apex Court held that the amountreceived out of sale of loom-hours can be termed ascapital receipt and not income out of business. 5. Subsequently, in a later decision of the ApexCourt, a question came up for consideration in the caseof M/s. Empire Jute Co. Ltd. v. Commissioner of IncomeTax [(1980) 4 SCC 25] the question which arose beforethe Apex Court was, if loom-hours are purchased by themanufacturing mills, whether it can be termed ascapital expenditure or revenue expenditure. In the saiddecision, the earlier decision of the Apex Court in thecase of Maheswari Devi Jute Mills (supra) was alsorelied upon by the Revenue and after considering thesame, the Apex Court at paragraph Nos. 4 and 5 observedthus: “4. Now an expenditure incurred by an assesseecan qualify for deduction under Section 10(2) (xv) onlyif it is incurred wholly and exclusively for the purpose of his business, but even if it fulfils thisrequirement, it is not enough; it must further be ofrevenue as distinguished from capital nature. Here inthe present case it was not contended on behalf of theRevenue that the sum of Rs. 2,03,255 was not laid outwholly and exclusively for the purpose of theassessee’s business but the only argument was and thisargument found favour with the High Court, that itrepresented capital expenditure and was hence notdeductible under Section 10(2) (xv). The sole questionwhich therefore arises for determination in the appealis whether the sum of Rs. 2,03,255 paid by the assesseerepresented capital expenditure or revenue expenditure.We shall have to examine this question on principle butbefore we do so, we must refer to the decision of thisCourt in Maheshwari Devi Jute Mills case since that isthe decision which weighed heavily with the High Court,in fact, compelled it to negative the claim of theassessee and hold the expenditure to be on capitalaccount. That was a converse case where the questionwas whether an amount received by the assessee for saleof loom hours was in the nature of capital receipt orrevenue receipt. The view taken by this Court was thatit was in the nature of capital receipt and hence nottaxable. It was contended on behalf of the Revenue,relying on this decision, that just as the amountrealised for sale of loom hours was held to be capitalreceipt, so also the amount paid for purchase of loomhours must be held to be of capital nature. But thisargument suffers from a double fallacy. 5. In the first place it is not a universally trueproposition that what may be capital receipt in thehands of the payee must necessarily be capitalexpenditure in relation to the payer. The fact that acertain payment constitutes income or capital receiptin the hands of the recipient is not material indetermining whether the payment is revenue or capitaldisbursement qua the prayer. It was felicitouslypointed out by Macnaghten, J. in Racecourse BettingControl Board v. Wildthat a “payment may be a revenuepayment from the point of view of the payer and acapital payment from the point of view of the receiverand vice versa”. Therefore, the decision in MaheshwariDevi Jute Mills case cannot be regarded as an authorityfor the proposition that payment made by an assesseefor purchase of loom hours would be capitalexpenditure. Whether it is capital expenditure orrevenue expenditure would have to be determined having regard to the nature of the transaction and otherrelevant factors.” Thereafter, the Apex Court while considering thetest to find out as to whether a particular expenditurecan be termed as capital or revenue expenditureobserved at paragraph Nos. 8 and 9 as under: “8. The decided cases have, from time to time,evolved various tests for distinguishing betweencapital and revenue expenditure but no test isparamount or conclusive. There is no all embracingformula which can provide a ready solution to theproblem; no touchstone has been devised. Every case hasto be decided on its own facts keeping in mind thebroad picture of the whole operation in respect ofwhich the expenditure has been incurred. But a fewtests formulated by the courts may be referred to asthey might help to arrive at a correct decision of thecontroversy between the parties. One celebrated test isthat laid down by Lord Cave, L.C., in Atherion v.British Insulated and Halsby Cables Ltd. where thelearned law Lord stated: When an expenditure is made, not only once and forall, but with a view to bringing into existence anasset or an advantage for the enduring benefit of atrade, there is very good reason (in the absence ofspecial circumstances leading to an oppositeconclusion) for treating such an expenditure asproperly attributable not to revenue but to capital. This test, as the parenthetical clause shows, mustyield where there are special circumstances leading toa contrary conclusion and, as pointed out by LordRadcliffe in Commissioner of Taxes v. NchangaConsolidated Copper Mines Ltd., it would be misleadingto suppose that in all cases, securing a benefit forthe business would be prima facie capital expenditure“so long as the benefit is not so transitory as to haveno endurance at all”. There may be cases whereexpenditure, even if incurred for obtaining advantageof enduring benefit, may, nonetheless, be on revenueaccount and the test of enduring benefit may breakdown. It is not every advantage of enduring nature,acquired by an assessee that brings the case within theprinciple laid down in this test. What is material toconsider is the nature of the advantage in a commercialsense and it is only where the advantage is in the capital field that the expenditure would bedisallowable on an application of this test. If theadvantage consists merely in facilitating theassessee’s trading operations or enabling themanagement and conduct of the assessee’s business to becarried on more efficiently or more profitably whileleaving the fixed capital untouched, the expenditurewould be on revenue account, even though the advantagemay endure for an indefinite future. The test ofenduring benefit is therefore not a certain orconclusive test and it cannot be applied blindly andmechanically without regard to the particular facts andcircumstances of a given case. But even if this testwere applied in the present case, it does not yield aconclusion in favour of the Revenue. Here, by purchaseof loom hours no new asset has been created. There isno addition to or expansion of the profit-makingapparatus of the assessee. The income-earning machineremains what it was prior to the purchase of loomhours. The assessee is merely enabled to operate theprofit-making structure for a longer number of hours.And this advantage is clearly not of an enduringnature. It is limited in its duration to six monthsand, moreover, the additional working hours per weektransferred to the assessee have to be utilised duringthe week and cannot be carried forward to the nextweek. It is, therefore, not possible to say that anyadvantage of enduring benefit in the capital field wasacquired by the assessee in purchasing loom hours andthe test of enduring benefit cannot help the Revenue. 9. Another test which is often applied is the onebased on distinction between fixed and circulatingcapital. This test was applied by Lord Haldane in theleading case of John Smith & Son v. Moore where thelearned law Lord drew the distinction between fixedcapital and circulation capital in words which havealmost acquired the status of a definition. He said: Fixed capital (is) what the owner turns to profitby keeping it in his own possession; circulatingcapital (is) what he makes profit of by parting with itand letting it change masters. Now so long as the expenditure in question can beclearly referred to the acquisition of an asset whichfalls within one or the other of these two categories,such a test would be a critical one. But this test also sometimes break down becausethere are many forms of expenditure which do not falleasily within these two categories and notinfrequently, as pointed out by Lord Radcliffe inCommissioner of Taxes v. Nchanga Consolidated CopperMines Ltd., the line of demarcation is difficult todraw and leads to subtle distinctions between profitthat is made “out of” assets and profit that is made“upon” assets or “with” assets. Moreover, there may becases where expenditure, though referable to or inconnection with fixed capital, is neverthelessallowable as revenue expenditure. An illustrativeexample would be of expenditure incurred in preservingor maintaining capital assets. This test is thereforeclearly not one of universal application. But even ifwe were to apply this test, it would not be possible tocharacterise the amount paid for purchase of loom hoursas capital expenditure, because acquisition ofadditional loom hours does not add at all to the fixedcapital of the assessee. The permanent structure ofwhich the income is to be the produce or fruit remainsthe same; it is not enlarged. We are not sure whetherloom hours can be regarded as part of circulatingcapital like labour, raw material, power etc., but itis clear beyond doubt that they are not part of fixedcapital and hence even the application of this testdoes not compel the conclusion that the payment forpurchase of loom hours was in the nature of capitalexpenditure.” After making the aforesaid observation, atparagraph No. 10, the Apex Court, on the basis of thefacts of the said case concluded as under: After making the aforesaid observation, atparagraph No. 10, the Apex Court, on the basis of thefacts of the said case concluded as under: “Similarly, if payment has to be made for securingadditional power every week, such payment would also bepart of the cost of operating the profit-makingstructure and hence in the nature of revenueexpenditure, even though the effect of acquiringadditional power would be to augment the productivityof the profit-making structure. On the same analogypayment made for purchase of loom hours which wouldenable the assessee to operate the profit-makingstructure for a longer number of hours than thosepermitted under the working time agreement would alsobe part of the cost of performing the income earningoperations and hence revenue in character.” Accordingly, the payment made for purchase ofloom-hours by Jute Mill Company was held to be Revenueexpenditure. 6. At this stage, we may also refer to thedecision of the Andhra Pradesh High Court, which hasbeen relied upon by the Tribunal in the impugned order.More or less, identical question was raised and theAndhra Pradesh High Court in the case of Commissionerof Income Tax-IV v. My Home Power Ltd. [(2014) 46Taxmann.com 314 (Andhra Pradesh), at paragraph No. 3observed thus: “3. We have considered the aforesaid submissionand we are unable to accept the same, as the learnedTribunal has factually found that “Carbon Credit is notan offshoot of business but an offshoot ofenvironmental concerns. No asset is generated in thecourse of business but it is generated due toenvironmental concerns. “We agree with this factual analysis as theassessee is carrying on the business of powergeneration. The Carbon Credit is not even directlylinked with power generation. On the sale of excessCarbon Credits the income was received and hence ascorrectly held by the Tribunal it is capital receiptand it cannot be business receipt or income. In thecircumstances, we do not find any element of law inthis appeal.” The aforesaid shows that the Andhra Pradesh HighCourt has confirmed the view of the Tribunal thatCarbon Credit is not an offshoot of business, but anoffshoot of environmental concerns. No asset isgenerated in the course of business, but it isgenerated due to environmental concerns. It was alsofound that the carbon credit is not even directlylinked with the power generation and the income isreceived by sale of the excess carbon credits. It wasfound that the Tribunal has rightly held that it iscapital receipt and not business income. 7. As such, in our view, when the issue is alreadycovered by the decision of the Andhra Pradesh HighCourt, wherein the view taken by the Tribunal ofHyderabad Bench has been followed in the present case,one may say that no substantial question of law wouldarise for consideration.” 29.The Hon'ble Division Bench of this Court in thecase of PCIT vs. Arun Textiles Pvt. Ltd.,[T.C.A.No.606of 2016, dated 29.8.2016], after referring to thedecision in My Home Power Ltd., (supra), dismissed theappeal filed by the Revenue and confirmed the orderpassed by the ITAT holding that sale of carbon creditshas to be considered as capital receipt andaccordingly, it is not taxable. 30. The argument of Ms.V.Pushpa, learned SeniorStanding Counsel is by referring to the substantialquestions of law framed by the assessee and it issubmitted that if the receipts from sale of carboncredit has to be treated as a capital receipt, then theassessee could not have claimed it as a deduction underSection 80IA of the Act and if the substantial questionof law as framed by the assessee is to be answered, itshould be answered against the assessee. 30. The argument of Ms.V.Pushpa, learned SeniorStanding Counsel is by referring to the substantialquestions of law framed by the assessee and it issubmitted that if the receipts from sale of carboncredit has to be treated as a capital receipt, then theassessee could not have claimed it as a deduction underSection 80IA of the Act and if the substantial questionof law as framed by the assessee is to be answered, itshould be answered against the assessee. 31.In our considered view, there is a slightlydifferent approach that needs to be adopted, as thisCourt exercises power under Section 260A of the Act,while deciding the substantial question of law. Theassessee is required to place all materials before theAssessing Officer and make a full and true disclosureof their entire financial. If any query is raised bythe Assessing Officer, the assessee is bound to answer.Thereafter, it is the Assessing Officer, who has toapply the law and complete the assessment. It has beenheld that it is not for the assessee to assist theAssessing Officer to complete the assessment in aparticular manner or to supply a draft assessment orderto the Assessing Officer. At this juncture, it isbeneficial to refer to the decision in the case of CITvs. India Express (Madurai) Pvt. Ltd., [(1983) 104 ITR705 (Madras)]. The reference to the High Court was todecide the scope of the appellate jurisdiction of theIncome Tax Tribunal. 32.The Hon'ble Division Bench refers to threedecisions of the Hon'ble Supreme Court in the case ofHukumchand Mills Ltd. vs. CIT [(1967) 63 ITR 232 (SC)];CIT vs. Mahalakshmi Textile Mills Ltd., [(1967) 66 ITR710]; and CIT vs. Nelliappan [(1967) 66 ITR 722 (SC)]wherein, the observations made by the Hon'ble SupremeCourt were referred to, which are quoted hereunder:- "In hearing an appeal, the Tribunal may giveleave to the assessee to urge grounds not set forth inthe memorandum of appeal, and in deciding the appeal the Tribunal is not restricted to the grounds set forthin the memorandum of appeal or taken by leave of theTribunal. The Tribunal was, therefore, competent toallow the assessees to raise the contention relating tothe cash credits which was not made the subject-matterof a ground in the memorandum of appeal. It cannot besaid that in accepting the contention of the assesseethat the cash credits represented income from thebusiness withheld from the books, the Tribunal made outa new case inconsistent with the assessee's own plea.In any event, the Tribunal is not precluded fromadjusting the tax liability of the assessee in thelight of its findings merely because the findings areinconsistent with the case pleaded by the assessees." 33.In Mahalakshmi Textile Mill's case, it washeld as hereunder:- “Under sub-s. (4) of s. 33 of theIndian Income-tax Act, 1922, the Appellate Tribunal iscompetent to pass such orders on the appeal "as itthinks fit". There is nothing in the Income-tax Actwhich restricts the Tribunal to the determination ofquestions raised before the departmental authorities.All questions whether of law or of fact which relate tothe assessment of the assessee may be raised before theTribunal. If' for reasons recorded by the departmentalauthorities in rejecting a contention raised by theassessee, grant of relief to him on another ground isjustified, it would be open to the departmentalauthorities and the Tribunal, and indeed they would beunder a duty to grant that relief. The right of theassessee to relief is not restricted to the plea raisedby him.” 34.After referring to the above decisions, it waspointed out that the Appellate Tribunal is competent topass such orders on the appeal, as it thinks fit and itwould be the duty of the Tribunal to decide allquestions on fact and law before it, even though it wasnot raised by the departmental authorities. Afterreferring to the powers of the Tribunal and that ofthis Court and the Hon'ble Supreme Court, it waspointed out that based on the cardinal principle, whichhas been incorporated as a veritable constitutionalprovision, that no tax can be levied or collected saveunder authority of law. 35.It was further pointed out that the task of anAppellate Authority under the taxing statute,especially a non-departmental authority like the Tribunal, is to address its mind to the factual andlegal basis of an assessment for the purpose ofproperly adjusting the taxpayer's liability to make itaccord with the legal provisions governing hisassessment. Since be-all and end-all of the statutoryprovisions, especially those relating to theadministration and management of income tax is toascertain the taxpayer's liability correctly to thelast pie, if it were possible, the various provisionsrelating to Appeal, Second Appeal, Reference and thelike can hardly be equated to a lis or dispute asarises between two parties in a civil litigation. 36.It was further pointed out that although theincome-tax statute makes the Department or its officersfigure as parties in the appeal proceedings, they arenot in the strict sense what are called by Americanwriters as parties to adversary proceedings. This is sobecause, the very object of the appeal is not to decidea point raised as a dispute, but any point which goesinto the adjustment of the taxpayer's liability. Inthat sense, a view prevails, even in England, that theauthorities sitting in an appeal in tax case, cannot beregarded as deciding a lis, but they are only engagedin an administrative act of adjusting the taxpayer'sliability. 37.Further, it was pointed out that under ourfiscal jurisprudence, we may regard the AppellateAuthorities as exercising quasi judicial functions inthe same sense, as a tax officer does. But, even so,the proceedings before them lack the basic elements ofadversary proceedings. It, therefore, follows that thediscussion and the scope of the appellate jurisdictionof the Tribunal and the other authorities under the taxcode cannot be pursued by drawing a parallel to civillitigation with particular reference to appeal fromdecrees, and the like. Further, it was pointed out thatin the case of Mahalakshmi Textile Mills Ltd., theHon'ble Supreme Court observed that the Tribunal is notprecluded from “adjusting the tax liabilities” of theassessee in the light of its findings merely because,the findings are inconsistent with the case pleaded bythe assessee. The decision of the Hon'ble Full Bench ofthis Court in the case of State of Tamil Nadu vs.Arulmurugan & Co., [(1982) 51 STC 381] was referred towherein, it was held that the Appellate Authoritiesperform precisely the same functions, as the assessingauthority. The above decision and the findings rendered are a clear answer to the arguments raised before us bythe Revenue contending that substantial question of lawno.4, as framed has to be decided against the assessee.We, thus, have no hesitation to hold that the Tribunalfailed to exercise its power in a proper prospective asa final fact finding authority and examining as towhether there is any adjustment required to be made inthe assessee's tax liability qua the various decisionsof the Court, which have held that receipt on accountof sale of carbon credit is capital in nature. are a clear answer to the arguments raised before us bythe Revenue contending that substantial question of lawno.4, as framed has to be decided against the assessee.We, thus, have no hesitation to hold that the Tribunalfailed to exercise its power in a proper prospective asa final fact finding authority and examining as towhether there is any adjustment required to be made inthe assessee's tax liability qua the various decisionsof the Court, which have held that receipt on accountof sale of carbon credit is capital in nature. 38.In the instant case, the assessee whilepreferring appeal before the CIT(A), has specificallyraised a contention that the receipts from sale ofcarbon credit is a capital receipt and cannot beincluded in the taxable income. Though this groundraised by the assessee before the CIT(A) has beenrecorded in the order, the CIT(A) did not take adecision on the same. Similar ground was raised by theassessee before the Tribunal, which was not consideredby the Tribunal, though the Tribunal refers to all thedecisions relied on by the assessee, but would pin theassessee to his claim made under Section 80IA of theAct and accordingly, negatives it. This finding of theTribunal is wholly erroneous and perverse. The Tribunalwas expected to apply the law and take a decision inthe matter and if the CIT(A) or the Assessing Officerhad failed to apply the law, then the Tribunal wasbound to apply the law. This is so because, in thelight of the decisions referred above, the receipt byway of sale of carbon credit has been held to becapital receipt. Therefore, it is of a littleconsequence as to the claim made by the assessee underSection 80IA of the Act or in other words, the questionof taking a decision as to whether the deduction isadmissible under Section 80IA of the Act is a non-issue. If the receipt from the sale of carbon credit isa capital receipt, then it will go out of the purviewof the gross total income as defined under Section 80B(5) of the Act, which expression is found in Section80IA of the Act. Thus, if the receipts by sale ofcarbon credit will not fall within the definition oftotal income, the same cannot be included under Section80IA of the Act. Therefore, even if the assessee hasmade such a claim, that cannot be a reason for theTribunal to non-suit the assessee. 39.One more important factor to be noted is thatSection 115BBG of the Act was introduced by Finance https://hcservices.ecourts.gov.in/hcservices/ Act, 2017 with effect from 01.04.2018, prior to which,there was no such provision and Mr.V.S.Jayakumar,learned counsel for the assessee would submit that theassessees were under utter confusion as to under whichprovision of the Act, they should make a claim fordeduction and having left with no other option, hadbeen making the claim under Section 80IA of the Act andmerely because the assessee due to uncertainty in thelegal position, had made a claim under Section 80IA ofthe Act that cannot be a reason to deny a benefitgranted in favour of the assessee. The submission, madeby Mr.V.S.Jayakumar, learned counsel for the appellant,in this regard, is well found and accepted. 40.For the above reasons, substantial question oflaw no.4 is answered in favour of the assessee.” 3.Following the above decision, this tax case appeal standsdismissed and the substantial question of law is answeredagainst the Revenue. No costs. Sd/- Assistant Registrar(CS-IV) //True Copy// Maya Sub Assistant Registrar To 1. The Income Tax Appellate Tribunal 'D' Bench, Chennai 2. The Principal Commissioner of Income Tax Company Circle-VI(1) Chennai. 3. The Deputy Commissioner of Income Tax, Larger Payer Unit, Chennai. 4. The Commissioner of Income Tax(A)-17, Chennai. TCA No. 525 of 2021 KSM(CO)RLP(27/12/2021)