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2015 (10) TMI 2808 - AT - Income TaxDeduction u/s.80IA - claim denied in respect of the profits relating to captive generation of power which could not be considered as profits “derived from” an identification industrial undertaking - Whether CIT(Appeals) erred in holding that the assessee was entitled to deduction u/s.80IA from the two power generating units situated in the main manufacturing plants producing news print and writing paper, set up for captive consumption as they did not qualify to be considered as separate industrial undertakings within the meaning of clause (iv) of sub-section (4) of sec 80IA? - HELD THAT:- As decided in own case [2011 (6) TMI 776 - ITAT CHENNAI] assessee is bound to succeed in these appeals. Its claim for deduction under Section 80-IA of the Act has to be allowed in respect of its power generated from TG-3 Boiler 4 and TG-4 Boiler 5 units as well. Initial assessment year referred to in section 80IA(5) - unabsorbed depreciation and carried forward losses of the earlier years which had already been set off against the other income to be carried forward and taken into consideration for the purpose of computation of deduction u/s.80IA - HELD THAT:- As decided in Velayudhaswamy Spinning Mills (P) Ltd [2010 (3) TMI 860 - MADRAS HIGH COURT] eligible business were the only source of income during the previous year relevant to initial assessment year and every subsequent assessment years. When the assessee exercises the option, the only losses of the years beginning from initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of the assessee. Looking forward to a period of ten years from the initial assessment is contemplated. It does not allow the Revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though the same were set off against other income of the assessee and the set off against the current income of the eligible business, Once the set off is taken place in earlier year against the other income of the assessee, the Revenue can not rework the set off amount and bring it notionally. Fiction created in sub-section does not contemplate to bring set off amount notionally. Fiction is created only for the limited purpose and the same can not be extended beyond the purpose for which it is created. Incentive on carbon credit is capital in nature - capital or revenue receipt - HELD THAT:- Similar issue was decided by the Andhra Pradesh High Court in the case of CIT v. My Home Power Ltd [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] wherein it was held that income received from sale of carbon credit is considered as capital receipt and not business receipt and not liable for tax under the Act. Accordingly, we agree with the finding of the Commissioner of Income-tax(Appeals) on this ground and dismiss the ground of appeal taken by the Revenue.
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