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2023 (12) TMI 713 - HC - Income TaxDisallowance u/s 14A r.w.r. 8D - expenditure incurred on earning exempt income - mandation of recording satisfaction by AO - ITAT deleted addition on the basis that relevant investments are out of assessee's old and own interest free funds, which exceeded tax free investments - HELD THAT:- The language of Section 14A of the Act is plain and clear. Before invoking Rule 8D, the Assessing Officer is obliged to indicate that having regard to the accounts of the assessee, he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to the income which does not form part of the total income under the Act. To put it in other words, the condition precedent of recording the requisite satisfaction which is a safeguard provided in Section 14A should not be overlooked before going to Rule 8. In such circumstances we are not impressed by the submission canvassed on behalf of the Revenue that once there are mixed funds, Rule 8 would be attracted automatically. We are of the view that the ITAT rightly relied on the decision of the Bombay High Court in the case of CIT Vs. Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] Whether Tribunal is justified in upholding that the disallowance made under section 14A read with Rule 8D cannot exceed the exempt income, in the absence of any such restriction being there in the relevant section or rule? - The aforesaid second question is squarely covered by the decision of this Court in the case of Correctch Energy Pvt. Ltd. [2014 (3) TMI 856 - GUJARAT HIGH COURT] In our opinion, no error not to speak of any error of law could be said to have been committed by the ITAT in this regard MAT adjustment on account of disallowance u/s.14A - HEDL THAT:- We hold that no addition in the book profit would be made on the basis of calculations worked out under section 14A of the Act. We allow this ground of appeal in both the years and delete the additions Deduction u/s.80IA(4) - GEB supplied power to its consumers - Tribunal was of the opinion that the market value of the electricity supplied by the CPP Unit to the general unit would be the same being charged by GEB from the consumers - HELD THAT:- Under sub-Section(8) of Section 80IA of the Act, if it is found that where any goods or services held for the purposes of the eligible business are transferred to any other business carried on by the assessee or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to the eligible business and in either case the consideration for such transfer does not correspond to the market value of such goods as on the date of the transfer, then for the purposes of deduction under Section 80IA in case of the eligible business as if the transfer had been made at the market value of such goods or services. It is in this context that the question of substituting the actual consideration by the market value comes into picture. Characterization of income - income from realization of carbon credits - revenue or capital in nature - realization from carbon credits has been treated by the assessee itself as revenue income and offered to tax and in fact in actualities they are revenue receipt - HELD THAT:- This issue is squarely covered by decision M/s. Alembic Ltd. [2017 (9) TMI 189 - GUJARAT HIGH COURT] held as decided in Subhash Kabini Power Corporation Ltd. [2016 (5) TMI 793 - KARNATAKA HIGH COURT] and My Home Power Limited [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] that receipts of carbon credit are in nature of revenue receipts. Following the decision of said two High Courts, this question is also not considered. Having considered the question of law and in light of the decision of the coordinate bench of this court which has been relied upon by the tribunal in the order under challenge, no substantial question of law arises for the consideration of this court - Revenue appeal dismissed.
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