2015 (5) TMI 808

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.... Income-tax Act, 1961 (in short the 'Act'). 2. The assessee's grounds reads as follows:             "2. The Commissioner (Appeals) erred in confirming the disallowance of the claim of Rs. 13,24,581/- being receipts from the sale of carbon credit, Rs. 7,58,000/- received as TUF interest subsidy and Rs. 10,00,569/- received towards generation loss compensation thus totalling Rs. 30,83,150/- under section 80lA of the Act.             3. The Commissioner (Appeals) erred in upholding the assessing officer's view that receipts by way of sale of carbon credit, interest subsidy received under TUF and generation loss compensatio....

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....eceived as carbon credit (CDM) by realisation of carbon credit sales is to be considered as Capital receipt and not income liable to tax.             i. My Home Power Ltd., Vs Dy CIT (2013) 21 ITR (Trib) 186 (Hyd)             ii. Ambika Cotton Mills Ltd., Vs Dy. CIT (2013) 27 ITR (Trib) 44 (Chn)             iii. Sri Velayudhasamy Spinning Mills P. Ltd., Vs Dy. CIT (2013) 27 ITR (Trib) 106 (Chn)." 3. Similarly, the Revenue challenges the CIT(A)'s order as under:               "2. The learned CIT (Appe....

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.... Rs. 7.58 lakhs and generation loss compensation receipts of Rs. 10,00,569/-. The Assessing Officer disallowed this entire deduction in assessment order dated 30.11.2012 holding it not covered by the expression 'derived' used in section 80IA(1). He further quoted section 80IA(5) to observe that assessee's losses pertaining to its eligible business already set off against other businesses in preceding assessment years would have to be notionally carried forward against income, if any, of the eligible business of the succeeding assessment years. This course of action did not leave any positive income due unabsorbed depreciation and business losses. The Assessing Officer rejected assessee's explanation based on the case law Velayudhaswamy Spin....

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.....No. 2091/ Mds/2013 dated 17.7.2014 has accepted a similar plea raised in lower appellate proceedings for treating sale of carbon credit receipts as 'capital' receipts instead of  'revenue' receipts already accounted. The Revenue fails to point out any distinction on facts. Thus, we accept the assessee's ground. The Assessing Officer is directed to frame necessary computation. 8. The assessee's second ground claims its 'TUF' receipts of Rs. 7.58 lakhs are also 'capital' receipts. The assessment as well as lower appellate treat the same as 'revenue' receipts not entitled for section 80IA deduction. This amount represents interest subsidy @ 5% separately accounted for as receipt instead of netting the same as against interest paid amo....