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2017 (8) TMI 1337 - HC - Income TaxSales tax subsidy received by the assessee in the form of sales tax exemption not to be included in book profit u/s 115JB - nature of receipt - MAT computation - Held that:- Sales tax subsidy received is nothing but capital investment by investing huge amount. [ See Commissioner of Income Tax Ajmer, New Central Revenue Building, Statue Circle, Jaipur (Raj) Versus Shri Cement Ltd - 2017 (8) TMI 1336 - RAJASTHAN HIGH COURT]. Eligibility to benefit under Section 80IA for the value of the goods or services - Held that:- a) the value adopted by the Assessee be it value as per independent third party trading transactions or as per Power Exchange (IEX etc.) or any other independent transaction (for the relevant period and which has taken place in the relevant area where the eligible unit is located) constitute ‘market value’ in terms of explanation to Section 80IA(8); (b) the value at which State Grid has sold power to the Cement Unit of the Assessee (average annual landed cost) also constitute ‘market value’ in terms of explanation to Section 80IA(8) but the value at which State Grid or third party has purchased power from the Power Unit of the Assessee, which represents its power which is sold when not required by the Cement Unit, does not constitute ‘market value’ in terms of 16 explanation to Section 80IA(8). It is the ‘principle’ and not the ‘quantum’ which is deciding factor; (c) where a basket of ‘market values’ are available for the relevant period and relevant geographical area where the eligible unit is situated, the assessee has discretion to adopt any one of them as market value; and (d) If the value adopted by the assessee is ‘market value’ as explained above, it is not permissible for Revenue to recompute the profits & gains of the eligible unit by substituting the said value (as adopted by the Assesse) by any other ‘market value’. Accordingly, we delete the disallowance on account of deduction u/s 80IA - Decided in favor of the assessee Sale proceeds received by the company from the sale of Certified Emission Reduction (CER) pertaining to Carbon Credit - revenue or capital receipt - Held that:- Receipt on account of Carbon Credit is capital in nature & neither chargeable to tax under the head Business Income nor liable to tax under the head Capital Gains. Our above view is also supported by the decision of Supreme Court in the case of Vodafone International Holdings Vs. UOI (2012 (1) TMI 52 - SUPREME COURT OF INDIA) wherein Supreme Court has held that treatment of any particular item in different manner in the 1961 Act and DTC serves as an important guide in determining the taxability of said item. Since DTC by virtue of the deeming provisions specifically provides for taxability of carbon credit as business receipt and Income Tax Act does not do so, our view gets duly fortified by the principles stated in the above decision of Supreme Court. This ground of the assessee is allowed
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