TaxTMI 
TaxTMI 
2020 (8) TMI 176
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....o law and the facts and circumstances of the case. 2. The Learned CIT(Appeals) erred in allowing the alternate plea of the assessee that the consideration received on sale of carbon credits was a capital receipt without appreciating that Certified Emission Reduction (CER) are not awarded as a subsidy but granted as an incentive for use of alternative fuel which is a revenue item; that they are not granted against or in lieu of any capital asset; that it is not granted in lieu of destruction or impairment of profit making apparatus; that it is not awarded for transfer of any capital asset nor granted as subsidy or compensation for partly meeting the cost of the plant and machinery and that according to AS-9, CERs are considered as inventor....
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....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 Rs. 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 Rs. 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 revenu....
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....iness but it is accrued due to 'world concern '. It has been made available assuming character of transferable right or entitlement only due to world concern. The source of carbon credit is world concern and environment. Due to that the assessee gets a privilege in the nature of transfer of carbon credits. Thus, the amount received for carbon credits has no element of profit or gain and it cannot be subjected to tax in any manner under any head of income." In CIT Vs. Subhash Kabini Power Corporation Ltd. 385 ITR 592 (Karn.), the Hon'ble Karnataka High Court upheld the view taken by the Tribunal that receipts on account of carbon credit are capital receipts not chargeable to tax. 8. In view of the aforesaid judgments, we do not fin....
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....source of income out of which investments were made and therefore no disallowance u/s. 14A of the Act should have been made. However, in the submission before the CIT(Appeals), the assessee submitted that investments were made in subsidiary company and one such company was an Indonesian company and divided received from the said company to the extent of Rs. 46.84 lakhs was chargeable to tax and not exempt. Investment was made in another company, M/s. Bhoruka Energy Ltd. owing to business exigencies and therefore no disallowance could have been made u/s. 14A of the Act. The CIT(Appeals) deleted the addition made by the AO. The submission made by the assessee before the CIT(Appeals) and the observations of the CIT(Appeals) are as follows:- ....
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....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 Rs. 46.84 lakhs even dividend ....