TMI Blog2015 (1) TMI 1287X X X X Extracts X X X X X X X X Extracts X X X X ..... is appeal is filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) Tiruchirapalli dated 22.10.2013 for the assessment year 2010-11. 2. None appeared on behalf of the assessee despite service of notice and since the issues involved in this appeal of the Revenue are squarely covered, we proceed to dispose off this appeal, after hearing the Departmental Representative. 3. The first issue in the grounds of appeal of the Revenue is that Commissioner of Income Tax (Appeals) ought to have taken into consideration that losses from windmill business for the assessment years 2006-07 207-08 have to be set off only against profit from windmill business of the assessment year 2010-11. 4. Departmental Representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity is not existing, then the question of getting the benefit of carbon credits will not arise at all in the instant case . However, the Assessing Officer has denied deduction u/s.80IA and treated the sale of carbon credits as not forming part of profits from the industrial undertakings generating power. The AR of the appellant placed his reliance on the ratio held in M/s. Velayuthaswamy Spinning Mills (P) Ltd. Vs. ACIT 340 ITR 477 where the jurisdictional High Court held that depreciation already absorbed out of the income in other sources of income cannot be resurrected and readjusted in arriving at the profits from eligible business and requested for granting the deduction claimed by the appellant. The Assessing Officer considering the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm) are almost similar to the facts mentioned in the above decisions. The income which the assessee firm gets by sale of the carbon credits is only incidental to the business of the firm and not direct income as the main business of the windmills is evidently generation of electricity. Since it is eligible to get the benefit of the carbon credits, due to the fact that there is a special scheme developed by the United National Framework Convention on Climate Change (UNFCCC) having liaison with various countries including India for working out the formula to work out the unit/carbon credits to be awarded to the windmill for the purpose of reduction of carbon emission. The windmills will be given awarded units called carbon credit propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s could be seen from the above paras the Assessing Officer while completing the assessment treated the income from sale of carbon credit as income attributable to business and not business income of the assessee and disallowed the deduction claimed by the assessee under section 80IA on such income. The assessee preferred appeal before the Commissioner of Income Tax (Appeals) contending that the income from sale of carbon credit is inextricably linked to the windmill and is income derived from the windmill for the purpose of deduction under section 80IA of the Act. In the alternative, it was contended that sale of carbon credits is a capital receipt and it is not taxable placing reliance on the decision of the ITAT., Hyderabad Bench in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 issue in favour of the assessee held as under:- This appeal is sought to be referred and admitted against the judgment and order of the learned Tribunal, dated November 2, 2012 (My Home Power Ltd. v. Deputy err [2013] 21 ITR (Trib) 186 (Hyd)), on the following substantial questions of law: 1. Whether in the facts and in the circumstances of the case and in law, the Income- tax Appellate Tribunal is correct in holding that the sale of carbon credits is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6. Respectfully following the said decision, we hold that amount received on sale of carbon credit is capital in nature and therefore we reverse the orders of Commissioner of Income Tax (Appeals) and the Assessing Officer on this issue. 12. Respectfully following the above decision of the co- ordinate Bench of this Tribunal cited above and the judgement of Hon ble Andhra Pradesh High Court in the case of My Home Power Ltd. (supra), we sustain the order of the Commissioner of Income Tax (Appeals) in holding that the income from sale of carbon credit is capital receipt. 13. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on January, the 30th day of January, 2015 at Chennai. - - TaxT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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