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2016 (2) TMI 233 - ITAT CHENNAI

2016 (2) TMI 233 - ITAT CHENNAI - TMI - Amount received from sale of CDM - revenue or capital receipt - Held that:- Amount received on sale of carbon credit is capital in nature and therefore we reverse the order of Commissioner of Income Tax (Appeals) on this issue allow the grounds raised by the assessee. See CIT Vs. My Home Power Ltd [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] - Decided in favour of the assessee

Entitlement for deduction under section 80IA - Held that:- The busin .....

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n relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee - I .T.A.Nos.747 & 1725/Mds/2014, I .T.A.No.1698/Mds/2014 - Dated:- 6-1-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER For The Assessee : Dr. Anita Sumanth, Advocate For The Revenue : Mr. A.B.Koli, JCIT ORDER These three appeals are filed by the assessee and Revenue against the orders of Commissioner .....

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erate or wanton and prays for condonation of delay. We have perused the reasons and are satisfied that there is a reasonable cause for the delay in filing of the appeal. In the interest of justice, we condone the delay in filing of the appeal and admitted for disposal. 3. The first common issue in the appeals of the assessee for the assessment years 2009-10 and 2010-11 is that Commissioner of Income Tax (Appeals) erred in confirming the order of assessment holding that conditions prescribed unde .....

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er of Income Tax (Appeals) on this issue. 5. The next issue in the grounds of appeal of the assessee for the assessment year 2009-10 is that Commissioner of Income Tax (Appeals) erred in holding that the amount received from sale of CDM as revenue receipt. 6. Counsel further submits that an identical issue has been decided by the Hon ble Andhra Pradesh High Court in the case of CIT Vs. My Home Power Ltd.(365 ITR 82) holding that income earned on sale of carbon credit is capital in nature by affi .....

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s. My Home Power Ltd.(supra) observing as under:- 5. Heard both sides. On going through the orders of lower authorities and the decision of the Hon ble Andhra Pradesh High Court in the case of CIT Vs. My Home Power Ltd.(supra), we find that the issue in these two appeals is squarely covered by the above decision. The Revenue could not point out any contrary decision to the above cited decision. The Hon ble Andhra Pradesh High Court in the case of My Home Power Ltd. (supra) while deciding the iss .....

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e for tax under any head of income under Income-tax Act, 1961 ? 2. Whether, in the facts and in the circumstances of the case and in law, the Income-tax Appellate Tribunal is correct in holding that there is no cost of acquisition or cost of production to get entitlement for the carbon credits, without appreciating that generation of carbon credits is intricately linked to the machinery and processes employed in the production process by the assessee? Sri J. V. Prasad, learned counsel appearing .....

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to environmental concerns". We agree with this factual analysis as the assessee is carrying on the business of power generation. The carbon credit is not even directly linked with power generation. On the sale of excess carbon credits the income was received and hence as correctly held by the Tribunal it is capital receipt and it cannot be business receipt or income. In the circumstances, we do not find any element of law in this appeal. 6. Respectfully following the said decision, we hold .....

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ioner of Income Tax (Appeals) on this issue allow the grounds raised by the assessee. ITA No.1698/Mds/2014: 10. The only issue in the appeal of the Revenue is that Commissioner of Income Tax (Appeals) erred in holding that assessee is entitled for deduction under section 80IA of the Act. 11. At the time of hearing, counsel for the assessee submits that this issue is covered by the decision of jurisdictional High Court in the case of Sri Velayudhaswamy Spinning Mills P.Ltd. Vs. (340 ITR 477) . He .....

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g Mills Pvt.Ltd. Vs. ACIT (supra) held that for the purpose of computing deduction under section 80IA, initial assessment year means the year in which the assessee begins to claim deduction under section 80IA of the Act. While holding so, the Hon ble High Court observed as under:- From reading of sub-s. (1) of s. 80-IA, it is clear that it provides that where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred .....

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t of 15 years. Option has to be exercised. 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 sub-s.(5) and the same is not defined under the provisions. It is to be noted that & .....

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ear; (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 clear that the 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 beg .....

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