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Shri P.K. Ganeshwar Versus The Dy. Commissioner of Income-tax Circle 1 Tirupur

2016 (4) TMI 1156 - ITAT CHENNAI

Carbon credit receipts - treated as ‘capital’ in nature - eligibility for deduction u/s 80IA - Held that:- Income from sale of carbon credits is ‘capital’ in nature and the said income is not eligible for deduction u/s 80IA of the Act. - I.T.A.No. 1583/Mds/2015 - Dated:- 1-4-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] Appellant by : Shri R.Kumar, Advocate Respondent by : Shri Ajith Kumar Verma, CIT O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIA .....

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1/Mds/2013 dated 17.7.2014. A copy of the order is placed on record. 4. The ld. DR strongly placed reliance on the orders of the lower authorities. 5. We have perused the order of the Co-ordinate Bench in assessee s own case for assessment year 2010-11. We find that the issue has been decided in favour of the assessee that carbon credit receipts have to be treated as capital in nature. While holding so, the Tribunal has observed as under: 5. In lower appellate proceedings, the assessee contended .....

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'tribunal' in Ambika Cotton Mills Ltd(supra). We find that the CIT(A) has rejected the same as under: 7.0 Carbon Credit - The Assessing Officer disallowed an amount of ₹ 45,83,739/- being carbon credit. However, a perusal of the assessment order and the submissions of the assessee would indicate that the assessee has admitted an amount of ₹ 1,18,78,061/- as revenue receipts in their return of income as under: Receipts in assessment year 2009-10 ₹ 72,94,322 Receipts in a .....

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he assessee cannot challenge the same in appeal to treat the same as capital receipts. 7.2 The assessee has admitted receipts from trading of carbon credit as revenue in nature and included them for computation under section 80IA. It is clearly spelt out in the section 80lA that profits and gains derived by undertaking or enterprise from any business referred to in sub section (4) is eligible for quantifying the deduction. 7.3 The qualifying word used is derived, and receipts from trading of car .....

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reen house gases by using non-conventional means but are not revenue derived from generation of electricity from WTGs. 7.4 It has been held in the case of CIT V Sterling Foods 237 ITR 579 (SC) that the word derived restricts the qualifying profits to the profits arising directly from the particular activity. 7.5 Hence considering the facts of the case and the decision of the honorable Supreme Court in sterling foods, revenue from sale of carbon credits cannot be treated as eligible for deduction .....

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in the relevant year and not in assessment year 2010-11. 8.0 In the result the appeal is partly allowed. Therefore, the assessee is in appeal. 6. We have heard both parties and gone through the case file. There is no dispute about the nature of receipts arising from sale of carbon credits as the decision of the Hyderabad bench of the 'tribunal' in My Home Power Ltd vs DCIT (supra) has been upheld by the hon'ble Andhra Pradesh high court vide order dated 19.2.2014 holding therein tha .....

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