2016 (3) TMI 1458 - AT - Income Tax

Tribunal affirms CIT(A)'s decisions on Section 80IA deduction & carbon credit treatment. Revenue appeals dismissed.

The Assistant Commissioner of Income Tax, Circle II, 4, Trichy Versus M/s. Atlas Export Enterprises

The Tribunal upheld the CIT(A)'s decisions regarding the deduction under Section 80IA and the treatment of carbon credit receipts. The delay in filing the ... Deduction u/s 80IA - AO disallowed deduction as Department has filed SLP before the Hon’ble Supreme Court challenging the decision of Velayudhaswamy Spinning Mills P. Ltd. [2012 (10) TMI 1125 - SC ORDER] - HELD THAT:- As decided in Velayudhaswamy Spinning Mills & Others [2010 (3) TMI 860 - MADRAS HIGH COURT] eligible business were the only source of income during the previous year relevant to initial assessment year and every subsequent assessment years. When the assessee exercises the option, the only losses of the years beginning from initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of the assessee. Looking forward to a period of ten years from the initial assessment is contemplated. It does not allow the Revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though the same were set off against other income of the assessee and the set off against the current income of the eligible business, once the set off is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally. Fiction created in sub-section does not contemplate to bring set off amount notionally. Fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created - no infirmity in the order passed by the ld. CIT(A) and accordingly, the appeal filed by the Revenue is dismissed. Nature of receipt - carbon credit - revenue or capital receipt - HELD THAT:- We find that the issue of carbon credits receipts has been considered by the Coordinate Bench of the Tribunal in the case of My Home Power Ltd. [2012 (11) TMI 288 - ITAT HYDERABAD] and held that these receipts are capital receipts. We hold that the carbon credits receipts are capital in nature. So far as case law relied on by the DR in the case of Apollo Tyres Ltd. [2014 (1) TMI 33 - ITAT COCHIN] is concerned, once there is a judgment of is bounden duty of the Tribunal to follow the judgment of the High Court. We find no infirmity in the order passed by ld. CIT(A). Thus, the ground raised by the Revenue for both the assessment years are dismissed. Issues:1. Condonation of delay in filing appeals by the Revenue.2. Deduction under section 80IA of the Income Tax Act.3. Treatment of carbon credit receipts under section 80IA of the Act.Issue 1: Condonation of DelayThe appeals filed by the Revenue were found to be late by one day. The Assessing Officer filed an affidavit for condonation of delay, which was accepted. The delay was condoned, and the appeals were admitted for hearing.Issue 2: Deduction under Section 80IAThe Revenue appealed against the deduction claimed by the assessee under section 80IA of the Income Tax Act for the assessment years 2009-10 and 2010-11. The Assessing Officer disallowed the deduction citing an SLP filed by the Department before the Supreme Court. The CIT(A) directed the Assessing Officer to allow the claim based on the decision of the Jurisdictional High Court. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.Issue 3: Treatment of Carbon Credit ReceiptsThe Revenue disputed the deduction under section 80IA for profit from the sale of carbon credits. The CIT(A) allowed the claim based on a Tribunal decision treating carbon credit receipts as capital receipts. The Revenue relied on a different Tribunal decision, but the Tribunal upheld the CIT(A)'s decision following the High Court's judgment that carbon credit receipts are capital in nature. The appeals filed by the Revenue were dismissed based on these findings.In summary, the Tribunal upheld the CIT(A)'s decisions regarding the deduction under section 80IA and the treatment of carbon credit receipts. The delay in filing the appeals by the Revenue was condoned, and the appeals were dismissed based on the established legal principles and precedents cited in the judgments.