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TMI Blog2015 (5) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... e liable to tax. 3. In so far as sale of carbon credit is concerned, counsel for the assessee submits that it is a capital receipt as held by the Hon'ble Andhra Pradesh High Court in the case of CIT Vs. My Home Power Ltd. in Tax Appeal No.60 of 2014 dated 19.02.2014. Counsel further submits that this Bench is holding that carbon credit is a capital receipt and not exigible to tax and not a business receipt for the purpose of section 80IA. He places a copy of on the decision of co-ordinate Bench of this Tribunal in the case of CNV Textiles Pvt. Ltd., Vs. DCIT., in ITA No.746/Mds/2014 dated 21.11.2014 . 4. Departmental Representative supports the orders of lower authorities. 5. Heard both sides. Perused orders of lower authorities. The co-ordinate Bench of this Tribunal in the case of C.N.V Textiles Pvt. Ltd., Vs. DCIT., in ITA No.746/Mds/2014 dated 21.11.2014 held as under:- "7. First we take up assessee's appeal I.T.A.No.746/Mds/2014. Its first ground is that the Assessing Officer and CIT(A) have wrongly treated its carbon credit receipts as 'revenue' receipts. The assessee itself seems to have included this sum of Rs. 13,44,581/- as 'revenue' receipts for claiming section 80I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction. This amount represents interest subsidy @ 5% separately accounted for as receipt instead of netting the same as against interest paid amount. It emerges from case law [2011] 11 taxmann.com 369 (P&H) CIT vs Shamlal Bansal that their lordships have held that a 'TUF' receipt is only a 'capital' receipt not liable to be treated as income u/s 4 as its objective is to enhance technology apparatus by assisting its machinery acquisition. A co-ordinate bench of the 'tribunal' in M/s Gloster Jute Mills Ltd. vs Addl. CIT - I.T.A.No. 687/Kol/2010 dated 2.7.2014 has toed the very view. In these circumstances, we accept the assessee's alternative ground and direct the Assessing Officer to treat this 'TUF' receipt of Rs. 7.58 lakhs as a 'capital' receipt in consequential computation." 10. Respectfully following the said decision, we hold that TUF is a capital receipt and not a revenue receipt and not entitled for deduction under section 80IA on such receipt. 11. Insofar as generation loss compensation receipt is concerned, counsel for the assessee submits that the issue is squarely covered by the co-ordinate Bench of this Tribunal in the case of C.N.V Textiles Pvt. Ltd., Vs. DCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year upto and including the assessment year for which the determination is to be made". 3.4 The plain import of this section which overrides every other provisions of the IT Act 1961 is that though losses pertaining to the eligible business is set off against the other business of the assessee, for the purpose of section 80IA(5) the losses of the earlier years of the eligible will have to be notionally brought forward and set off against the income if any of the eligible business for the succeeding assessment year. When such a course is adopted, it is seen that in this case the assessee would be left with unabsorbed. depreciation and business loss notionally brought forward which would make the eligible business /undertaking ineligible for claim u/s 80IA. 3.5 To this the assessee brought to notice the decision of the Honourable Madras High Court in the case of M/s Sri Velayuthaswamy Spinning Mills (P) Ltd v CIT [231 CTR 368(Mad.)] wherein the court held that losses already set off against other b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cised. If it is not exercised, the assessee will not be getting the benefit. Fifteen years is outer limit and the same is beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure activity etc. Sub-s. (5) deals with quantum of deduction for an eligible business. The words "initial assessment year" are used in subs.( 5) and the same is not defined under the provisions. It is to be noted that 'initial assessment year' employed in sub-s. (5) is different from the words "beginning from the year" referred to in sub-s. (2). Important factors are to be noted in sub-s. (5) and they are as under: "(1) it starts with non obstante clause which means it overrides all the provisions of the Act and other provisions are to be ignored; (2) it is for the purpose of determining the quantum of deduction; (3) for the assessment year immediately succeeding the initial assessment year; (4) it is a deeming provision; (5) fiction created that the eligible business is the only source of income; and (6) during the previous year relevant to the initial assessment year and every subsequent assessment year." From reading of the above, it is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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