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2021 (9) TMI 349 - ITAT JAIPURRevision u/s 263 by CIT - amount received by the assessee company on sale of carbon/Voluntary Emission Reduction (CER/VER) certificates and renewable Energy Certificates (REC) which have been claimed exempt - As per the Pr. CIT, the said exemption was not allowable under any provisions of the Act and there is a complete failure on the part of the AO to examine the said exemption claimed by the assessee company - HELD THAT:- AO issued a specific show cause notice dated 28.09.2018 asking the assessee company to explain the carbon emission receipts as to how and under what statutory provisions the same has been claimed as exempt income when the same is in the nature of Revenue receipt. In response, the assessee company vide its submission dated 11.10.2018 has again reiterated its earlier submissions. In the instant case, AO has raised specific queries not once but twice, firstly as part of initial notice u/s 142(1) and thereafter, by way of a specific show-cause before passing the assessment order - assessee has also submitted its response explaining the factual as well as the legal position and the fact that the matter has been examined earlier by the Tribunal in assessee’s own case for A.Y 2007-08 and which has also been affirmed by the Hon’ble Rajasthan High Court - where the AO has taken into consideration the decision of the Tribunal as well as of jurisdictional High Court in assessee’s own case and find that identical facts and circumstances of the case are prevailing during the year under consideration, the opinion formed by the AO cannot be held as erroneous in nature. It is therefore not a case of lack of inquiry as held by the Pr. CIT rather it is a case where the AO has taken into consideration the factual and the legal position, the decision in assessee’s own case rendered by the Tribunal and affirmed by the Hon’ble High Court and also the fact that there is prospective amendment in the statue which is not applicable in the instant year - findings of the ld. Pr. CIT to the effect that there is a failure on the part by the AO to examine the claim of exemption by the assessee and the assessment order has been passed in a routine and perfunctionary manner cannot be sustained and is hereby set aside. Amount paid by assessee company to organize the event “Resurgent Rajasthan” in nature of assistance/contribution and no details/nature of expenditure/utilization by the nodal agency, was available on record - Government of Rajasthan also entered into various agreements with Fertilizers, Cement and Steel Industries to setup new plants or expand their manufacturing activities which will directly benefit the assessee in increasing its turnover and profits as the main raw material in Fertilizer industries is Rock Phosphate, in Cement Industry is Limestone and Gypsum - steel industry also uses limestone for its various manufacturing activities. These industries will be having huge power requirement and assessee is a major supplier of Lignite used in power plants in the State of Rajasthan. Accordingly there are several direct and indirect benefits to the assessee by incurring this expenditure. Copy of the publication of the State Government showing various partnerships/MOUs taking place in the Resurgent Rajasthan 2015 Summit is enclosed as Annexure-II. Thus the expenditure is incurred solely for the purpose of the business of the assessee. Even if by incurring the expenditure, third party is also benefited, the same is a allowable expenditure u/s 37(1) - reliance was placed on various Hon’ble Supreme Court and High Court decisions. It was accordingly submitted that where the Assessing Officer has made necessary inquiry/verification which he should have made and has applied his mind and has allowed the claim of the assessee, the order cannot be said to be erroneous in so far as prejudicial to the interest of the Revenue. In this second matter as well, the AO has raised specific queries not once but twice, firstly as part of initial notice u/s 142(1) and thereafter, by way of a specific show-cause before passing the assessment order. The assessee has also submitted its response explaining the factual position as to how the sponsorship payment to Bureau of Investment Promotion, the nodal agency for organizing Resurgent Rajasthan 2015 Summit has been incurred for the purposes of its business duly approved by its Board of Directors and its claim duly supported by various Court decisions, the opinion formed by the AO cannot be held as erroneous in nature. It is therefore not a case of lack of inquiry as held by the ld. Pr. CIT rather it is a case where the Assessing Officer has taken into consideration the factual and the legal position and then has decided to accept the claim of the expenditure so claimed by the assessee. Therefore, the findings of the ld. Pr. CIT to the effect that there is a failure on the part by the Assessing Officer to examine the claim of expenses by the assessee and the assessment order has been passed in a routine and perfunctionary manner cannot be sustained and is hereby set aside - Appeal of the assessee is allowed.
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