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2015 (11) TMI 1865 - AT - Income TaxDeduction u/s 80IA - sale of carbon credit as income derived from business of generation of power - whether expression “derived from” has a narrow meaning and different from the term “attributable to”? - CIT (A) has held that the profit was earned on sale of carbon credit only when power was generated and not otherwise and profit earned on sale of carbon credit was the gain derived from the business of generation of power, consequently, eligible for claiming deduction u/s 80IA (4) - HELD THAT:- We find that as we have already held that the receipt on account of carbon credit sale is a capital receipt and hence the same is not liable to tax. The adjudication of issue raised by the Revenue is only of academic interest. Accordingly we are not engaging under the same. Hence this ground raised by the Revenue is dismissed as infructuous. Disallowance of the claim of assessee u/s 80IA - allegation of the AO was that the electricity was transferred at higher rate to one of the Division which was eligible for deduction u/s 80IA - HELD THAT:- On the issue whether the tariff determined by State Electricity Board represents market value or not, a detailed verdict has already been pronounced by the Hon’ble Jurisdictional High Court. In the case of CIT Vs M/s. Godawari Power & Ispat Ltd. [2013 (10) TMI 5 - CHHATTISGARH HIGH COURT] as held CIT-A and the Tribunal had rightly computed the market value of the power after considering it with the rate of power available in the open market namely the price charged by the Board. There is no illegality in their orders. Disallowance u/s 14A r.w.r 8D - HELD THAT:- The formula of Rule 8D is to be applied only after considering the applicability of the main provisions of Section 14A of the Act. Due to this reason it is worth to restore this issue back to the file of the AO to first of all, determine whether the assessee has earned any dividend or exempted income from the alleged investment. If, no dividend is earned, then, next question is that whether any expenditure has been incurred to earn in connection with the investment made. If, expenditure is in the shape of interest, then, whether the assessee had sufficient self generated funds. For this reason, the assessee is directed to place on record that the investment has been made out of the self generated income to create interest-free funds. Hence, we deem it proper as well as justifiable to restore this issue back to the file of the AO to examine the facts afresh and then only apply the provisions of Section 14A of the IT Act as per law. Resultantly, this cross objection may be treated as allowed but, for statistical purposes only. Addition of subsidy received - revenue or capital receipt - CIT-A held that the subsidy was capital in nature, therefore, directed to delete the addition - HELD THAT:- We are of the view that this issue has been decided in the case of DCIT Vs Reliance Industries Ltd. [2003 (10) TMI 255 - ITAT BOMBAY-J] Respectfully following this precedence, we hereby confirm the findings of the learned CIT (A) and dismiss the ground of appeal of the Revenue.
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