TaxTMI 
TaxTMI 
2015 (6) TMI 512
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....er and sale of transformers. For the assessment year under consideration, the assessee filed return of income declaring income of Rs. 49,36,258 after claiming deduction under section 80-IA of the Income-Act, 1961 (the Act) of Rs. 43,21,191, under the normal provisions of the Act and admitted income of Rs. 98,18,339 under section 115JB of the Act under the minimum alternate tax provisions. The case of the assessee has been picked up for scrutiny and during the course of scrutiny the Assessing Officer, apart from others, considered the issue of income from the sale of carbon credits. 3. During the assessment proceedings the Assessing Officer had issued a show-cause notice calling upon the assessee to show cause as to why the income of Rs. ....
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....to its profit and loss account. It is perhaps only an afterthought to have credited this amount to the sister company and record it as other income in the books of the sister company, M/s. Rayalaseema Green Steloys Ltd., which has got huge losses in its books which was set off against this income. The above accounting of this transaction of the company is not in accordance with the accounting principles or with the provisions of the Income-tax Act and hence, this income of Rs. 5,60,00,000 is now credited to the profit and loss account and brought to tax. Though the company claims deduction under section 80-IA of the income from generation of power, the benefit cannot be applied to this income from sale of carbon credits for the reasons desc....
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....t prejudice, even if the proceeds of carbon credits are treated as revenue receipt, the Assessing Officer erred in bringing to tax the said income. The Assessing Officer failed to appreciate that income from sale of carbon credits is intricately connected to the business of power generation and, therefore, the assessee is eligible to claim deduction under section 80-IA of the Act in respect of proceeds from sale of carbon credits. 4. The finding of the Assessing Officer in respect of crediting Sree Raayalaseema Green Steloy Ltd., with the proceeds of carbon credits are in correct and unsustainable and ought to have allowed the same again as expenditure for getting the steam from the sister company. 7. The Comm....
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....;s case for the assessment year 2003-04 in I. T. A. No. 457/ACIT 3(2)/CIT(A)-IV/2011-12 where he had allowed the appeal in his order dated September 20, 2013 following the decision in the case of My Home Power Ltd. v. Deputy CIT [2013] 21 ITR (Trib) 186 (Hyd). The decision of the Income-tax Appellate Tribunal in that case was later upheld by the High Court with the following remarks in its order in I. T. T. A. No. 60 of 2014, dated February 19, 2014 (CIT v. My Home Power Ltd. [2014] 365 ITR 82 (AP) (page 83)) : "We have considered the aforesaid submission and we are unable to accept the same, as the learned Tribunal has factually found that 'carbon credit is not an offshoot of bu....