TMI Blog2016 (2) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 and C.O. No.128/M/2011 are filed by the assessee and the appeal ITA No.5932/M/2010 is filed by the Revenue. Since, the issues raised in these appeals are inter-connected and some issues are identical, therefore, for the sake of convenience, they are clubbed, heard together and disposed of in this consolidated order. Appeal wise adjudication is given in the following paragraphs of this order. Appeals for the AY 2007-2008 ITA No.5932/M/2010 (By Revenue) 2. This appeal filed by the Revenue on 28.7.2010 is against the order of the CIT (A)-16, Mumbai dated 15.3.2010 for the assessment year 2007-2008. In this appeal, Revenue raised the following ground which reads as under: On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in deleting the disallowances of claim u/s 80IA of the IT Act, 1961 amounting to ₹ 6,73,46,337/-, made by the AO in respect of the sale of Carbon Credit, without appreciating the facts and circumstances of the case and in law. 3. At the outset, Ld Counsel for the assessee submitted that the issue contested both by the assessee and the Revenue relates to the allowability of claim of deduction u/s 80IA of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave perused the said judgment of the Hon‟ble High Court of Andhra Pradesh in the case of My Home Power Ltd (supra) and for the sake of completeness of this order, held portion of the said judgment is extracted as under: ITAT have considered the aforesaid submission and ITAT are unable to accept the same, as the learned Tribunal has factually found that carbon credit is not an offshoot of business but an offshoot of environmental concerns. No asset is generated in the course of business but it is generated due to environmental concerns . ITAT 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. We have also perused the decision of the ITAT, Cochin Bench in the case of Arun Textiles (P) Ltd (supra), wherein the Tribunal extracted the relevant para from the above said judgment of the Hon‟ble High Court of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e earned on sale of these credits is capital receipt. For this proposition, we place reliance on the judgment of the Supreme Court in the case of CIT vs. Maheshwari Devi Jute Mills Ltd [1965] 57 ITR 36 (SC) .............In the present case, the assessee transferred the carbon credits like loom hours to some other concerns for certain consideration. Therefore, the receipt of such consideration cannot be considered as business income and it is a capital receipt. Accordingly, we are of the opinion that the consideration received on account of carbon credits cannot be considered as income taxable in the assessment year under consideration. ...............However, there is no cost of acquisition or cost of production to get this entitlement. Carbon credit is not in the nature of profit or in the nature of income. 7. The Hon‟ble Andhra Pradesh High Court in the appeal of the Revenue in ITTA No.60 of 2014 decided on February 19, 2014 My Home Power Ltd (supra) has upheld the view taken by the Hyderabad Bench in the case of My Home Power Ltd (supra). 7. Therefore, considering the above, it is now settled proposition in law that in principle the receipts on sale of carbon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s admitted and allowed in favour of the assessee. 11. In the result, the appeal of the Revenue is dismissed and the assessee s CO is partly allowed. ITA No.7716/M/2011 (AY 2008-2009) (By assessee) 12. This appeal filed by the assessee on 15.11.2011 is against the order of the CIT (A)-16, Mumbai dated 22.8.2011 for the assessment year 2008-2009. 13. In this appeal, the issue raised in the grounds relates to the allowability of the claim of deduction u/s 80IA(4) of the Act in respect of the receipts earned on sale of carbon credits. On this issue, during the first appellate proceedings, unlike in the AY 2007-2008, CIT (A) directed the AO to exclude the said receipts on the ground that the same are not derived from the eligible undertaking. CIT (A) denied the benefit of deduction u/s 80IA(4) of the Act. Now, the allowability or otherwise of the claim of deduction was already discussed by us while dealing with the similar issue raised in the AY 2007-2008. After hearing both the parties and on perusal of the relevant orders and the cited judgment of the Hon‟ble High Court of Andhra Pradesh in the case of My Home Power Ltd (supra), we held that the receipts on sa ..... 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