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TMI Blog2025 (4) TMI 1462X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble ITAT was justified in holding that no addition of Rs. 42,16,04,786/- is called for on account of sale of fly ash and cenosphere? B. Whether on the facts, circumstances and law of the case, the Hon'ble ITAT was right in accepting the prevalence of Gazette Notification issued by the Ministry of Environment and Forest over the provision of the Income tax Act 1961? C. Whether on the facts, circumstances and law of the case, the Hon'ble ITAT was correct in ignoring the decision of the Supreme Court in the case of Tuticorin Alkali Chemicals vs. Commissioner of Income tax: 141 CTR 387 (SC) wherein it has been held "it is well settled that tax is attracted at the point when the income is earned. Taxability of income is not dependent upon its destination or the manner of its utlilisation. It has to be seen whether at the point of accrual, the amount is of revenue nature...."?" FACTUAL CONTEXT 3. The respondent [Assessee] is a public sector company and a wholly owned subsidiary of National Thermal Power Corporation Limited [NTPC]. The Assessee is, inter alia, engaged in the business of trading energy. During the relevant year, it was also engaged in trading fly ash and relate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject of the same was to conserve the top soil and minimize environment pollution. 11. The aforesaid notification requires all thermal plants to utilize the fly ash generated from the power plants in specified manner. Article 2 of the said notification is set out below: "2. Utilisation of ash by Thermal Power Plants. All coal or lignite based thermal power plants shall utilise the ash generated in the power plants as follows:- (1) Every coal or lignite based thermal power plant shall make available ash, for at least ten years from the date of publication of this notification, without any payment or any other consideration, for the purpose of manufacturing ash-based products such as cement, concrete blocks, bricks, panels or any other material or for construction of roads, embankments, dams, dykes or for any other construction activity. (2) Every coal or lignite based thermal power plant commissioned subject to environmental clearance conditions stipulating the submission of an action plan for full utilisation of fly ash shall, within a period of nine years from the publication of this notification, phase out the dumping and disposal of fly ash on land in accordance with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed thermal power plants would be free to sell fly ash to user agencies subject to certain conditions including that pond ash be made available free of any charge on as is where is basis to manufacturers of bricks, blocks or tiles, farmers and the Central and State road construction agencies, Public Works Department, and to agencies engaged in backfilling or stowing of mines. At least 20% of dry ESP fly ash was required to be made available free of charge to units manufacturing fly ash or clay-fly ash bricks, blocks and tiles. It further provided that all coal or lignite based thermal power plants are required to achieve a target of fly ash utilization as stipulated in the said notification. The target of using at least 50% fly ash generation was require to be achieved in the first year and the target of 100% utilization of fly ash was require to be achieved within five years from the date of notification. 13. The said notification was further amended by a Notification dated 03.11.2009. Paragraph 6 of the Notification dated 03.11.2009 reads as under: "(6) The amount collected from sale of fly ash and fly ash based products by coal and/or lignite based thermal power stations or th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .03.2015 was transferred to NTPC. 17. Mr Chandra, the learned counsel for the Revenue referred to the aforementioned fly ash utilization fund and submitted that the Assessee had debited cost of fly ash products amounting to Rs. 2,23,11,593/-; cost of employee benefits expense amounting to Rs. 4,02,19,471/- and administration and other expenses amounting to Rs. 4,28,91,315/- to the fund. He contended that the Assessee had, thus, recovered part of its general expenses from the sale proceeds of fly ash and therefore, could not claim that it had not earned any income. He contended that the sale proceeds were required to be accounted for and such expenses which were otherwise allowable under the Act were required to be debited for determining the assessable income. He contended that the learned PCIT had examined the record and concluded that the Assessee's income from sale of fly ash was not included in the total income chargeable to tax. 18. Mr Jain, learned counsel appearing for the Assessee contended that the Assessee had produced all relevant material to establish that it had not included the expenses that were debited to the fly ash utilization fund as a part of its general expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of sale of fly ash, which was provided by NTPC. In Commissioner of Income-Tax v. New Horizon Sugar Mills Pvt. Ltd.: (2000) 244 ITR 738, the Madras High Court had upheld the decision of the learned ITAT holding that the amount set apart towards Molasses Storage Reserve Fund is required to be excluded from the total income of the assessee. The said decision was rendered bearing in mind the Molasses Control (Amendment) Order dated 06.02.1972, which required that the amount for construction of molasses storage tank was to be kept separately. The assessee had no power to spend the said amount, the same was required to be spent only in accordance with the directions issued by the Government. The appeal preferred against the said order was also dismissed by the Supreme Court, in view of the orders passed in similar matter permitting the Revenue to withdraw the appeals. 23. In the facts of the present case as well, the Assessee was not free to utilize the sale proceeds of fly ash as the same was required to be used for specified purposes, which as stated above, did not result in the Assessee acquiring any asset. 24. In view of the above, we find no infirmity with the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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