TMI Blog2022 (1) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee - unfortunately CER market crashed in 2012 and as a result, these credits could not be realized and the assessee had to forgo the credits ultimately. Accordingly, the income after adjusting exchange difference was reversed by reducing the opening balance of Accumulated Profit Loss Account and the claim was made in the computation of income. The said accounting treatment was in accordance with the applicable accounting standards. Logically also, when the provision was created in earlier years, the same was by way of credit to Profit Loss account. Accordingly, when the same has been reversed, the same has been adjusted from the accumulated balance of Profit Loss Account. Thus, it was a case when a provision of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Circular No. 17/2019 dated 08/08/2019 [F.No.279/Misc. 142/2007-TTJ(Pt.). This recent circular further enhances the monetary limit fixed in earlier Circular No.3 of 2018 dated 11/07/2018 issued by CBDT as amended on 20/08/2018. Hence, the appeal stand dismissed with a liberty to revenue to seek recall of the appeal, if at a later stage, it is found that the matter is covered by any exceptions provided in any of the circular or in case the tax effect in any of the appeals exceeds the prescribed monetary limit. The appeal stands dismissed. - ITA No.2720/Chny/2018 And ITA No.2704/Chny/2018 - - - Dated:- 21-1-2022 - Hon ble Shri V. Durga Rao, Judicial Member And Hon ble Shri Manoj Kumar Aggarwal, Am For the Assessee : Shri R.Sivaraman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the same was not ultimately realized and therefore, claimed as deduction. However, Ld. AO noted that to claim deduction u/s 36(1)(vii) r.w.s. 36(2), the income should be declared in earlier years and the same should be written-off in the books. Since the assessee did not write-off the receivables in the books of accounts, the same was added back to its income. 4. During appellate proceedings, the assessee, inter-alia, submitted that the write-back is in accordance with the guidance note on Accounting for self generated certified emission reductions issued by The Institute of Chartered Accountants of India. It was explained that renewable energy projects such as bio-mass power projects, wind power projects were eligible for availing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idance note of ICAI on Certified Emission reductions. Further, in the annual report for the year ended 31.03.2013, CER income was reduced from the opening balance of Profit Loss Account. Thus, the relevant entry was made in the Balance Sheet in accordance with the transitional provision of the guidance note. Thus, CER income booked in earlier years was reversed during the year and the same was claimed as deduction. Since, it was case of reversal of income and not writing-off of bad debts, the provisions of Sec.36(1)(vii) r.w.s. 36(2) were not applicable. 5. The Ld. CIT(A) observed that in terms of guidance note, these CERs were in the nature of inventory and the same were required to be disclosed at cost in Balance Sheet. The accountin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of factual matrix, it could be seen that the assessee has earned Carbon Credits in earlier years on the basis of wind-mill power generated during FYs 2007-08, 2008-09 2009-10. Recognizing the same in its books of accounts, the assessee booked income of ₹ 305.59 Lacs in AY 2010-11. This is an undisputed fact that this income has been offered to tax in earlier years. The credits earned by the assessee could be sold at prevailing market prices. In AY 2010- 11, the assessee credited CDM revenue account and debited CDM revenue receivable account and booked income in that year. The CDM revenue receivable account was shown on asset side as amount receivable which would have liquidated upon sale of Carbon Credits by the assessee. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income to tax, in our opinion, would entitle him to claim the expenditure if ultimately the receipts could not be realized by the assessee. The same is based on the principal of equity and natural justice. Therefore, on the given facts and circumstances, we would hold that the claim made by the assessee was an allowable deduction. The Ld. AO is directed to grant the deduction as claimed by the assessee. Resultantly, the appeal stand allowed. Revenue s Appeal 7. While framing the assessment, Ld. AO computed interest disallowance u/s 36(1)(iii) for ₹ 125.66 Lacs. Upon further appeal, Ld. CIT(A) deleted the same by following appellate orders of earlier years. Aggrieved, the revenue is in further appeal before us. 8. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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