TMI Blog2020 (8) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [ 2016 (5) TMI 793 - KARNATAKA HIGH COURT] upheld the view taken by the Tribunal that receipts on account of carbon credit are capital receipts not chargeable to tax. Disallowance u/s. 14A r.w. Rule 8D - Assessee submitted that since the issue of disallowance u/s. 14A of the Act has not been examined either by the AO or the CIT(A) on the basis of availability of own funds of the assessee which have been utilized for making investments which are likely to yield tax free income and other relevant considerations, the issue should be remanded to the AO - HELD THAT:- Prayer for remanding the issue to the AO as put forth by the ld. counsel for the assessee has to be accepted as neither the AO or the CIT(Appeals) has examined this issue. In this regard, the ld. counsel for the assessee submitted that a perusal of balance sheet would show availability of own funds. We are of the view that this aspect can be looked into by the AO in the set aside proceedings. We hold and direct accordingly. - ITA No.1734/Bang/2016 - - - Dated:- 7-8-2020 - Shri N.V. Vasudevan, Vice President And Shri B R Baskaran, Accountant Member For the Appellant : Shri Pradeep Kumar, CIT(DR)(ITAT), Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not call for any specific adjudication. 3. As far as grounds No.2 3 are concerned, the issue is with regard to taxability on account of carbon credit. The assessee is a company engaged in the business of generation of hydro and wind power. The assessee was entitled to claim deduction u/s. 80IA of the Income-tax Act, 1961 [the Act] in respect of business of generation of power. The assessee claimed a sum of ₹ 20,74,42,471 as deduction u/s. 80IA of the Act. In the claim for deduction u/s. 80IA, the assessee also included receipt of ₹ 5,91,59,000 from sale of carbon credit. The AO held that receipt of account of sale of carbon credit is not derived from eligible business and denied the benefit u/s. 80IA of the Act, to the extent of receipt on account of sale of carbon credit. Alternatively, the assessee claimed that the receipt on account of carbon credit is a capital receipt not chargeable to tax. The AO, however, rejected this contention and held that it is a revenue receipt chargeable to tax. 4. On appeal by the assessee, the CIT(Appeals) allowed the alternative claim of the assessee following the decision of the Hon ble Andhra Pradesh High Court in CIT v. My ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and disallowed a sum of ₹ 2,91,230 as expenses attributable to earning of exempt income as per the following details:- A. Total amount of Direct interest/other expenses pertaining to tax-exempt investments U/R 8D(2)(i) NIL B. Total amount of indirect interest pertaining to tax-exempt investments 2,19,22,000 A.Y 09-10 A.Y 10-11 Average C. Average amount of tax exempt investments 37,14,000 83,98,000 60,56,000 D. Average amount of total assets 466,02,36,000 551,45,49,000 508,73,92,500 E. Proportionate indirect interest to be disallowed B x C/D 2,19,22,000 x 60,56,000/508,73,92,500 = 2,60,950 F. 0.5% of average amount of tax exempt i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest u/s 14 A Read with 8D is not applicable . B. Sec.14A will not apply if no exempt income is received or receivable during the relevant previous year - as per case law [2015] 378 TTR 33 in the case of Cheminvest Ltd. v. CIT , [Delhi], case law [2014] DTRJ 506 [Allh.HC) in the case of CIT v. Shivram Motors P Ltd, case law [2015] 372 ITR 97 in the case of CIT v. Corrtech Energy P Ltd. 6.2 With regard to the interest disallowance u/s. 14A of the IT Act, the appellant relied on the decision of the ITAT, Chennai Bench in the case of DCIT Vs. Amalgamations Ltd. in 43 ITR 540 (2015) wherein it is held that the investment made by the assessee purely incidental on account of business expediency will not be subject to disllowance of interest on the proportionate investment u/s. 14A. 6.3 The appellant contends that the investment made by the company in M/s. Bhoruka Energy Ltd an also M/s. PT Bhoruka, Indonesia are purely of business expediency. The proportionate interest disallowance as complied by the AO are not to be reckoned for disallowance u/s. 14A read with Rule 8D. Investment in M/s. P.T. Bhoruka, Indonesias is ₹ 46.84 lakhs even dividend received from M/s. PT Bho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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