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2017 (12) TMI 119 - AT - Income TaxCarbon credits - capital receipts OR business income - Held that:- Carbon credits are capital receipts and cannot be considered as business income. Accordingly, we uphold the order of the CIT(A) and dismiss the appeal of the revenue. See CIT. vs My Home Power Ltd. [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT]. Eligible for deduction u/s 80IA - generation of ash - Held that:- The ash is generated in process of generation of power from the manufacturing unit and it is not distinct and different from the activity of the manufacturing of power. The Ld.DR did not place any evidence to show that the assessee is not generating ash out of the manufacturing unit. Therefore, the sale proceeds of ash are directly derived from the generation of power and as such the same are eligible for deduction u/s 80IA. Accordingly, we set aside the orders of the lower authorities and direct the assessing officer to allow the deduction u/s 80IA on sale of ash. Accordingly, the appeal of the assessee on this ground is allowed. Exclusion of sale proceeds of carbon credits from the computation of book profit u/s 115JB - Held that:- The carbon credit is credited to the Profit & Loss account held to be capital receipts and not exigible to tax as held by Hon’ble jurisdictional High Court in My Home Power Ltd.[supra]. Hence respectfully following the view taken by the Coordinate Bench, we direct the AO to exclude the sale of carbon credits for the purpose of computation of book profits u/s 115JB of IT Act. Appeal of the assessee on this ground is allowed.
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