TMI Blog2017 (9) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... claiming deduction u/s 80IA of the Act. Considered in this light also, we find no error on the part of the CIT(A) in allowing the claim of the assessee. - Revenue appeal is dismissed Nature and taxability of Income earned on account of transfer of Carbon Credit - Revenue Income or capital receipts - Held That:- the receipt on account of Carbon Credit was a capital receipt not chargeable to tax.Therefore Tribunal affirm the order of CIT (A) - Appeal of revenue is dismissed. Disallowance interest expenditure u/s 14A -Held That:- Own funds comprising of Share Capital and Reserves & Surplus were much more than the investments in the exempt instruments and, therefore, CIT(A) made no mistake in deleting the disallowance of interest expenditure made u/s 14A of the Act. - Decided against Revenue - ITA NO. 2986/MUM/2015 - - - Dated:- 28-8-2017 - SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER For The Appellant : Shri Ajai Pratap Singh For The Respondent : Shri Shiv Prakash ORDER PER G.S. PANNU, AM : The captioned appeal by the Revenue is directed against the order of CIT(A)-50, Mumbai dated 28.02.2015 pertaining to the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, were required to be taken into consideration in view of Sec. 80IA(5) of the Act in order to work out the profits eligible for deduction u/s 80IA(4)(iv) of the Act. Accordingly, the Assessing Officer worked out the profits of the six respective units as per his interpretation of Sec. 80IA(5) of the Act and arrived at a figure of loss in respect of four out of the six units and consequently, denied assessee s claim for deduction to the extent of ₹ 5,25,99,585/-. Notably, this disallowance has been reduced to ₹ 4,02,23,291/- by the Assessing Officer on account of rectification of a mistake. 5. Before the CIT(A), assessee assailed the working of the Assessing Officer and pointed out that having regard to the provisions of Sec. 80IA(5) of the Act, as understood by the Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd., 340 ITR 477 (Mad) and other judicial pronouncements, only the losses of the years beginning from the initial year and the years subsequent to such initial year have to be taken into consideration while working out the profits eligible for deduction u/s 80IA(4)(iv) of the Act. Pertinently, the CIT(A) has relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year in which assessee opted to start claiming deduction in order to arrive at the profits eligible for deduction. So however, as per the assessee, it is only the losses starting from the initial year, i.e. the first year of claim of deduction and thereafter, which are required to be taken into consideration for arriving at profits eligible for deduction. Factually speaking, there is no dispute that so far as losses considered by the Assessing Officer are concerned, they have otherwise been absorbed against other incomes of the assessee in the respective years. The CIT(A) has upheld the stand of the assessee by relying on the judgment of the Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. (supra) and even before us, no contrary decision of any High Court has been relied upon by the Revenue. Apart therefrom, we find that the stand of the Revenue is clearly in contrast to the decision taken by the CBDT in its Circular no. 1/2016 dated 15.2.2016. The following portion of the CBDT Circular is relevant :- The matter has been examined by the Board. It is abundantly clear from sub-section (2) that an assessee who is eligible to claim deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer of Carbon Credit. At the assessment stage, the receipt of ₹ 2,01,68,049/- on account of transfer of Carbon Credit was considered as a revenue income and not eligible for the benefits of Sec. 80IA of the Act. Before the CIT(A), assessee, inter-alia , asserted that the said receipt was in the nature of a capital receipt not chargeable to tax as it was neither derived from business nor it was an off-shoot of the activity of business and that it was an off-shoot of environmental concerns and not connected with assessee s business. The CIT(A) relied upon the judgment of the Hon'ble Andhra Pradesh High Court in the case of My Home Power Limited, 365 ITR 82 (AP) and held that the receipt on account of Carbon Credit was a capital receipt not chargeable to tax. Against such a decision of the CIT(A), Revenue is in appeal before us. 9. Before us, although the Revenue has challenged the decision of CIT(A), but no decision contrary to that of the Hon'ble Andhra Pradesh High Court has been relied upon before us. Therefore, the decision of the Hon'ble Andhra Pradesh High Court relied upon by the CIT(A) is a binding decision in the absence of any other contrary decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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