2015 (11) TMI 1826

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....t the CIT(Appeals) has erred in deleting the addition made on account of disallowance u/s.80IA amounting to Rs. 4,39,70,580/-. 3. The facts of the case are that the assessee company engaged in the business of spinning cotton yarn and generation of electricity through wind mill filed its return of income for the assessment year 2011-12 admitting a total income of Rs. 5,99,38,380/- on 27.9.2011. The case was selected for scrutiny and the assessment was completed as under: "Returned income   Rs. 5,599,38,380/- Add: Disallowance of     Carbon credit Rs. 22,63,123   Deduction u/s.80IA Rs. 4,39,70,580 Rs. 4,62,33,703/- Income assessed   Rs. 10,61,72,083/-" 3.1 The AO disa....

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....s High Court in Velayudhaswamy Spinning Mills P. Ltd. (supra). Therefore, this Tribunal do not find any infirmity in the orders of the CIT(A) and according the same are confirmed. 5. The assessee has raised the following grounds in the cross objection: "2. a) The Honourable Commissioner of Income tax (Appeals) erred in holding that the CDM receipts are not capital receipts and consequently not exempt from tax. b) Assuming but not accepting that the receipts from CDM are not capital but revenue in nature, the Honourable Commissioner of Income tax (Appeals) ought to have appreciated that CDM receipts being the one which has been received on account of the power generated through windmills would also qualify for the benefi....

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....f sections 2(24), 28, 45 and 56 of the Income-tax Act, 1961. Carbon credits are made available to the assessee on account of saving of energy consumption and not because of its business. Further, in our opinion, carbon credits cannot be considered as a bi-product. It is a credit given to the assessee under the Kyoto Protocol and because of international understanding. Thus, the assessees who have surplus carbon credits can sell them to other assessees to have capped emission commitment under the Kyoto carbon credits can sell them to other assessees to have capped emission commitment under the Kyoto Protocol. Transferable carbon credit is not a result or incidence of one's business and it is a credit for reducing emissions. The persons havin....