TaxTMI 
TaxTMI 
TaxTMI 
2018 (6) TMI 1735
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..... 1. 96 crores. On 25. 09. 2013, the assessee revised the return for the second time disclosing income of Rs. 3. 57 cores. The AO completed the assessment on 28. 02. 2015, u/s. 143(3) of the Act, determining its income at Rs. 5. 53 crores. 2. First effective ground of appeal is about deleting the addition made on account of interest expenditure of Rs. 6. 09 crores. During the assessment proceedings the AO found that assessee has advanced share application money to M/s. Ascent Hydro Project Ltd. He directed the assessee to explain as to why interest expenses amounting to Rs. 11. 68 cores should not be disallowed. After considering the submission of the assessee, dated 23. 02. 2015, he observed that interest expendi - ture, incurred by the a....
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....judgment of Hon'ble Bombay High Court in the case of Reliance Utilities(313 ITR 340)he deleted the addition made by the AO. 4. During the course of hearing before us, the Departmental Representative (DR) argued that assessee had invested money for subscribing the debentures, that it had diverted the borrowed funds for making investment, that the AO had rightly made the addition. The Authorized Representative(AR )stated that the assessee had sufficient own funds, that no borrowed funds were utilised for making investment, that the AO had totaled up the advances made for the earlier years also for making the disallowance, that the substantial portion of loan were sanction in the year 2006-07, that the advances to AHPL were made for A. Y. 200....
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....he FAA. So, confirming his order we decide the first effective ground of appeal against the AO. 6. Second effective ground of appeal is about sale of Carbon Credits. It was agreed by the representatives of both the sides that the issue stands decided by the Tribunal in the appeal No. 5932/Mum/2010 and others dated 13. 01. 2016. We are reproducing paragraph no. 3-7 of said order:- "3. At the outset, Ld Counsel for the assessee submitted that the issue contested both by the assessee and the Revenue relates to the allowability of claim of deduction u/s. 80IA of the Act in respect of the receipts earned by the assessee on sale of 'carbon credits'. Referring to the impugned order of the CIT(A), Ld Counsel for the assessee submitted that the a....
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....n the case of Arun Textile (P) Ltd. vs. ACIT (2014) 36 ITR (Tribunal) 300 and held that the receipts on sale of carbon credits are capital in nature. In the process, the Chennai Bench relied on the judgment of the Hon'ble High Court of Andhra Pradesh in the case of My Home Power Ltd. (supra). Thus, such receipts are now outside the scope of income chargeable to tax. In view of this, the order of the CIT(A) is required to be reversed to that extent. 5. We have heard both the parties and perused the order of the Revenue Authorities as well as the decision cited before us on the issue relating to the chargeability of receipts on sale of carbon credits. In this regard, we have perused the said judgment of the Hon'ble High Court of Andhra Prad....
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....bad Bench of the Tribunal in the case of My Home Power Ltd. (supra) has held carbon credit as capital receipts. The relevant extract of the findings of the coordinate Bench are as under: "We have heard both the parties and perused the material on record. Carbon credit is in the nature of 'an element' received to improve world atmosphere and environment reducing carbon heat and gas emissions. The entitlement earned for carbon credits can, at best, be regarded as a capital receipt and cannot be taxed as revenue receipt. It is not generated or created due to carrying on business 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....
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.... 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 of the opinion that the consideration received on account of carbon credits cannot be considered as income taxable in the assessment year under consideration............. . However, there is no cost of acquisition or cost of production to get this entitlement. Carbon credit is not in the nature of profit or interest he nature of income. " 7. The Hon'ble Andhra Pradesh High Court in the appeal of the Revenue in ITA No. 60 of 2014 decided on February 19, 2014 My Home Power Ltd. (supra) has upheld the view taken by the Hyderabad Bench i....