TMI Blog2013 (8) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... of hearing, the Authorized Representative for the assessee submits that the issue in the appeal is squarely covered by the decision of the co-ordinate Bench of this Tribunal in the case of M/s. Prabhu Spinning Mills P.Ltd. for the assessment year 2008-09 in ITA No.593/Mds/2013 dated 9.7.2013. 4. The Departmental Representative supports the order of the Assessing Officer. 5. Heard both sides. Perused the orders of lower authorities and the decision of the co-ordinate Bench of this Tribunal in ITA No.593/Mds/2013 dated 9.7.2013 for the assessment year 2008-09. The Commissioner of Income Tax (Appeals) following the decision of Tribunal in the assessee s own case for the assessment year 2007-08 in ITA No.1848/Mds/2011 dated 20.01.2012 allowed the claim of the assessee holding that expenditure on compact spinning system is allowable as revenue expenditure. We have gone through the order of the co-ordinate Bench of this Tribunal in the case of M/s. Prabhu Spinning Mills Pvt. Ltd. for the assessment year 2008-09 in ITA No.593/Mds/2013 dated 9.7.2013, wherein similar issue has been considered and held in favour of the assessee observing as under:- 6. We have heard the submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... frames. The conventional drafting system is replaced with the latest, state of the art gadget called Compact Spinning . This is a single piece gadget and this is fixed to each spindles. Each gadgets cost ₹ 4,100/- each because the assessee has purchased 37,296 such gadgets in 37 sets[batches] for ₹ 15.39 crores. Thus, it is not a machinery by itself but only an attachment to the existing machine. We have understood that this gadget cannot function independently. It functions only and only if it is fixed in the spindles. Each ring frame comes with conventional drafting gadget as we have understood from the pictograph and photographs produced by the ld. A.R. Therefore, in order to produce high quality of yarn, the conventional type is replaced with the latest, hi-tech gadget. It was brought to our notice and it was found for a fact that all the ring frames have not been replaced with the latest gadget. Only certain number of ring frames are fitted with this new gadget and the remaining continued to manufacture earlier quality of yarn catering to the requirement of lower strata of the society. Out of 50 ring frames, only 37 ring frames are fitted with this gadget and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue holding the expenditure incurred by the assessee on introducing Compact Spinning System as Revenue Expenditure. Accordingly, the appeal of the Revenue is dismissed. 6. Respectfully following the decision of the co-ordinate Bench of this Tribunal cited above, we reject the grounds of appeal of the Revenue. 7. In the result, the appeal of the Revenue is dismissed. ITA No.617/Mds/2013:- 8. This is an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-II, Coimbatore dated 30.01.2013. 9. The first issue raised in the appeal of the assessee is that the Commissioner of Income Tax (Appeals) erred in confirming Clean Development Mechanism receipts of ₹ 2,80,17,966/- as revenue receipts. 10. At the time of hearing, the Authorized Representative for the assessee submits that this issue is squarely covered by the decisions of the co-ordinate Bench of this Tribunal in the case of Sri Velayudhaswamy Spinning Mills P.Ltd. Vs. DCIT in ITA No.582/Mds/2013 and in the case of Sri Ambika Cotton Mills Ltd. Vs. DCIT in ITA No.1836/Mds/2012 . The copies of the said orders are placed at page 48 and 55 respectively in the paper bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rotocol. Transferable carbon credit is not a result or incidence of one's business and it is a credit for reducing emissions. The persons having carbon credits get benefit by selling the same to a person who needs carbon credits to overcome one's negative point carbon credit. The amount received is not received for producing and/or selling any product, bi-product or for rendering any service for carrying on the business. In our opinion, carbon credit is entitlement or accretion of capital and hence income earned on sale of these credits is capital receipt. For this proposition, we place reliance on the judgement of the Supreme Court in the case of CIT vs. Maheshwari Devi Jute Mills Ltd. (57 ITR 36) wherein held that transfer of surplus loom hours to other mill out of those allotted to the assessee under an agreement for control of production was capital receipt and not income. Being so, the consideration received by the assessee is similar to consideration received by transferring of loom hours. The Supreme Court considered this fact and observed that taxability of payment received for sale of loom hours by the assessee is on account of exploitation of capital asset and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the co-ordinate Bench, we hold that the CDM receipts are capital receipts. Accordingly, the order of the CIT(A) is set aside and the appeal of the assessee is allowed. 13. Respectfully following the above decision of the coordinate Bench of this Tribunal, we hold that the Clean Development Mechanism receipts are capital receipts. We therefore set aside the order of the Commissioner of Income Tax (Appeals) on this issue and allow this ground of appeal of the assessee. 14. The next issue in the grounds of appeal of the assessee is that the Commissioner of Income Tax (Appeals) failed to appreciate that expenditure incurred towards modernization and replacement of machinery is revenue expenditure and not capital expenditure. 15. The Assessing Officer while completing the assessment disallowed ₹ 1,36,97,608/- incurred towards modernization expenses in respect of autoconer treating the said expenditure as capital expenditure. The Commissioner of Income Tax (Appeals) sustained the disallowance made by the Assessing Officer following the decision of the Hon ble Supreme Court in the case of CIT Vs. Mangayarkarasi Mills P. Ltd. (315 ITR 114), against which the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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