TaxTMI 
TaxTMI 
2015 (10) TMI 2737
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....pital receipt in view of judgment of Hon'ble Andhra Pradesh High Court in the case of CIT vs. My Home Power Ltd. 365 ITR 82 and, therefore, not liable to tax. The Ld. A.O. has erred in holding it and thereby taxing it as revenue receipt." 4. At the threshold we note that the cross objections filed by the assessee are delayed as under : CO No. 136/BLPR/2015 in respect of ITA 109/BLPR/2011 : 1498 days. CO No. 137/BLPR/2015 in respect of ITA No. 71/BLPR2012: 1145 daqys CO No. 139/BLPR/2015 in respect of ITA No.216/BLPR/2015: 1341 days. Learned counsel of the assessee have prayed for condonation of the delay in filing of the cross objections. 5. We have heard both the counsel and perused the records. The learned counsel of the assessee while pleading that the condonation of delay in filing the cross objections has referred to the decision of Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. vs. CIT 229 ITR 383 for the proposition that the assessee is entitled to raise cross objection/additional ground in the matter not raised earlier. Learned counsel further submitted that following this very decision of Hon'ble Apex Court, ITAT, Mumbai in the case of Ultratech....
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....axable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of the item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/crossobjections before the Tribunal. The Tribunal should not be prevented from considering the questions of law arising in assessment proceedings, although not raised earlier. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) is too narrow a view to take of the powers of the Tribunal. Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from facts which are non record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider th....
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.... activity and the undertaking, generating and distributing power. That this activity to the best be treated as income incidental to the eligible business. That its genus lies in an efficient waste recovery system adopted by the assessee. That it does not qualify for deduction u/s 80IA.Learned CIT(Appeals), however, has held that the assessee is entitled for deduct ion u/s 80IA. For this proposition learned CIT(Appeals) has referred to several case laws and has also brought on record the process by which the income from carbon credit comes into existence. We may gainfully refer the following observation of learned CIT(Appeals) in ITA No. 109/BLPR/1011 in para 3.4.1 as under : " Perusal of the provisions of section 80IA reveals that any profits and gains derived by an undertaking from business of generation or generation and distribution of power is eligible for deduction under this section. Provision clearly indicates that the gains of the undertaking need not necessarily be from sale of power but the gains should be derived by an undertaking from business of generation of power. Business of generation of power includes generation or production of any article or thing which is bou....
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....ement Ltd. vs. AD. CIT (2014) 31 ITR 513 (Jaipur) 4. Am bika Cotton Mills Ltd. vs. DCIT (2013) 27 ITR 44 (Chhenai) 5. Sri Velayudhaswamy Spinning Mills (P) Ltd. vs. DCIT 27 ITR 106 (Chennai). 11. Per contra learned D.R. has submitted that the said receipt is a revenue receipt. For this proposition he has placed reliance upon the ITAT, Cochin Bench decision in the case of Appolo Tyres Ltd. vs. ACIT in ITA No. 4 of 2013 vide order dated March 7, 2014. Learned D.R. has extensively quoted from the said decision. The learned D.R. submitted that the Bench has taken into account all the fuses of the issue and has come to the conclusion that the amount received on account of carbon credit sale is a revenue receipt. The learned D.R. further dealt with the process by which carbon credit is generated. He claimed that the carbon credit is salable internationally and hence the same is revenue receipt. 12. Upon careful consideration we find that the issue as to whether the receipt on account of carbon credit sale is revenue or capital was considered by the ITAT, Hyderabad Bench in the case of My Home Power Ltd. vs. ACIT 21 ITR 186. After considering the issue elaborately the Tribunal in co....
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....onsideration received by the assessee is similar to consideration received by transferring of loom hours. The Supreme Court considered this fact and observed that taxability of payment received for sale of loom hours by the assessee is on account of exploitation of capital asset and it is capital receipt and not an income. Similarly, in the present case the assessee transferred the carbon credits like loom hours to some other concerns for certain consideration. Therefore, the receipt of such consideration cannot be considered as business income and it is a capital receipt. Accordingly, we are o the opinion that the consideration received on account of carbon credits cannot be considered as income as taxable in the assessment year under consideration. Carbon credit is not an offshoot of business but an offshoot of environmental concerns. No asset is generated in the course of business but it is generated due to environmental concerns. Credit for reducing carbon emission or greenhouse effect can be transferred to another party in need of reduction of carbon emission. It does not increase profit in any manner and does not need any expenses. It is a nature of entitlement to reduce carb....
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....t directly linked with the power generation. Hence Hon'ble High Court concluded that on the sale of excess carbon credits the income was received and the same was capital receipt and it cannot be business receipt or income. 13. Now we find that the Hon'ble High Court has held that the receipt on account of carbon credit sale is a capital receipt on the facts and circumstances of the said case. The facts leading to the emergence of carbon credit in the cases we are adjudicating are also the same. There is no dispute that the process by which carbon credit is generated by the assessee in this case is different from the one dealt with in the case of the assessee "My Home Power Ltd.". Now we have a situation where on similar facts there is Hon'ble High Court decision holding that in these facts the carbon credit sales are capital receipts. There are several Tribunal decisions which have followed this decision. Learned D.R. has only been able to point out before us the decision of ITAT, Cochin Bench in the case of Appolo Tyres Ltd. vs. ACIT (supra) wherein it has been held hat carbon credit sale is a revenue receipt. Now it is settled law in the order of judicial precedence that the de....