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M/s. Sri Ganapathy Murugan Spinning Mills (P) Ltd. Versus The Deputy Commissioner of Income-tax, Company Circle, Tirupur.

2016 (1) TMI 716 - ITAT CHENNAI

Treatment of carbon credits as Revenue receipts and also not granting deduction u/s.80IA - Held that:- As decided in case of Arun Textiles Pvt. Ltd. v. DCIT [2015 (11) TMI 1055 - ITAT CHENNAI] the receipt from sale of carbon credits has to be considered as capital receipt and accordingly, it is not taxable. Thus, there is no question of considering the same for deduction u/s.80IA of the Act. - Decided in favour of assessee

Non- consideration of insurance claim as not eligible for dedu .....

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lating to receipt of interest subsidy and also the decision of the Tribunal, Hyderabad Bench in the case of M/s. Coromandel International Ltd. [2014 (12) TMI 220 - ITAT HYDERABAD ] is relating to granting of deduction u/s.80IB of the Act, in respect of excise duty refund. Accordingly, this ground of appeal by the assessee is dismissed. - Decided against assessee - ITA No. 1274/Mds/2014 - Dated:- 6-11-2015 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For Th .....

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issue was considered by this Tribunal in the case of Arun Textiles Pvt. Ltd. v. DCIT in ITA No.2174/Mds/2014 dated 19.6.2015, wherein it was held as under : 4. We have heard both the parties and perused the material on record. In our opinion, carbon credit is in the nature of an entitlement received to improve world atmosphere and environment reducing carbon, heat and gas emissions. The entitlement earned for carbon credits can, at best, be regarded as a capital receipt and cannot be taxed as a .....

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er under any head of income. It is not liable for tax for the assessment year under consideration in terms of sections 2(24), 28, 45 and 56 of the Income-tax Act, 1961. Carbon credits are made available to the assessee on account of saving of energy consumption and not because of its business. Further, in our opinion, carbon credits cannot be considered as a bi-product. It is a credit given to the assessee under the Kyoto Protocol and because of international understanding. Thus, the assessees w .....

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nt received is not received for producing and/or selling any product, bi-product or for rendering any service for carrying on the business. In our opinion, carbon credit is entitlement or accretion of capital and hence income earned on sale of these credits is capital receipt. The same view is supported by the following judicial precedents, which are relied on by the ld. AR: 1. CIT v. My Home Power Ltd. (2014)[365 ITR 82](AP) 2. My Home Power Ltd. v. DCIT (2013)[21 ITR(Trib) 186] (Hyd) 3. Ambika .....

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a Spinning Mills (P) Ltd. v. DCIT in ITA No.630/Mds/2013 for AY 2009-10 10.Adisankara Spinning Mills (P) Ltd. v. DCIT in ITA No. 631/Mds/2013 for AY 2009-10 11.Sri Shanmugavel Mills (P) Ltd. v. DCIT in ITA No. 619/Mds/2013 for AY 2009-10 12.Arun Textiles Pvt. Ltd. v. ACIT in ITA No.268/Mds/2014/ for AY 2009-10 13.India Dyeing Mills Pvt. Ltd. v. ACIT in ITA No.498/Mds/2014 for AY 2009-10 14.DCIT v. Sree Rayalaseema Green Energy Ltd. (2014) [36 ITR (Trib) 627] (Hyd) 15. Eastman Spinning Mills (P) .....

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round of appeal of the assessee is allowed. 5. Next ground in this appeal is with regard to non- consideration of insurance claim as not eligible for deduction u/s.80IA of the Act. 6. The facts of the issue are that the Assessing Officer has disallowed an amount of ₹ 5,34,448/- being insurance claim by the assessee from the 80lA computation. During the course of hearing before the lower authorities, the assessee has stated that there is no profit element included in the total profit as ins .....

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PB benefit received had to be credited against the cost of manufacture of goods/purchases debited to the Profit & Loss account. That such credit was not an independent source of profit. Further, the submission of the assessee is that payment of excise duty/customs duty on inputs consumed in manufacture of goods by an industrial undertaking eligible for deduction under section 80-1B was inextricably linked to the manufacturing operations of the eligible undertaking without which manufacturing .....

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tly to the manufacture/production of goods and therefore had to be regarded as profits derived from eligible undertaking qualifying for deduction under section 80-IB of the I.T. Act, 1961. 7. The CIT(Appeals) considered the judgment of the Supreme Court in the case of Liberty India v. CIT (317 ITR 218) and observed that the Supreme Court did not accept this contention of the assessee and held DEPB and Duty Drawback are only incentives and that the origin of the said receipt is on account of the .....

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