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2015 (5) TMI 808 - AT - Income TaxDisallowance of deduction under section 80IA - sale of carbon credit, TUF interest subsidy receipt and generation loss compensation receipt - Held that - Co-ordinate bench of the tribunal in P.K.Ganeshwr vs ACIT 2015 (5) TMI 809 - ITAT CHENNAI has accepted a similar plea raised in lower appellate proceedings for treating sale of carbon credit receipts as capital receipts instead of revenue receipts already accounted. The Revenue fails to point out any distinction on facts TUF receipts is a capital receipt and not a revenue receipt and not entitled for deduction under section 80IA on such receipt. See CIT vs Shamlal Bansal 2011 (1) TMI 409 - PUNJAB AND HARYANA HIGH COURT Generation loss compensation receipt is eligible for deduction under section 80IA of the Act Aas relyin on Magnum Power Generation Ltd. vs DCIT 2010 (5) TMI 605 - ITAT DELHI . Entitlement to claim deduction under Section 80-IA - Held that - The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee
Issues Involved:
1. Disallowance of claim of receipts from the sale of carbon credit, TUF interest subsidy, and generation loss compensation under section 80IA of the Income-tax Act. 2. Treatment of carbon credit receipts, TUF receipts, and generation loss compensation as either revenue or capital receipts. 3. Eligibility for deduction under section 80IA based on the nature of receipts. 4. Treatment of losses from eligible business set off in preceding assessment years for carrying forward. Analysis: Issue 1: Disallowance of Claim under Section 80IA: The appeals by the assessee and the Revenue were directed against the order of the Commissioner of Income-tax (Appeals) for the assessment year 2010-11. The Assessing Officer disallowed the deduction claim of the assessee, which included receipts from the sale of carbon credit, TUF interest subsidy, and generation loss compensation, under section 80IA. The disallowance was based on the interpretation that these receipts were not 'derived' from the generation of electricity by the windmill. Issue 2: Treatment of Receipts as Revenue or Capital: The assessee contended that the receipts from the sale of carbon credit, TUF interest subsidy, and generation loss compensation should be treated as capital receipts and not income liable to tax. The assessee cited various cases and legal principles to support this argument. The Tribunal accepted the assessee's contention and directed the Assessing Officer to frame necessary computations accordingly. Issue 3: Eligibility for Deduction under Section 80IA: The Revenue challenged the CIT(A)'s order allowing deduction under section 80IA claimed by the assessee. The Revenue argued that the eligible undertaking should be the only source of income for computing the deduction under section 80IA. However, the Tribunal upheld the CIT(A)'s decision based on legal precedents and directed the Revenue to treat the receipts as capital receipts for consequential computation. Issue 4: Treatment of Losses from Eligible Business: The Revenue's appeal focused on whether losses from the eligible business already set off in preceding assessment years should be notionally carried forward. The Tribunal referred to the Velayudhaswamy case and rejected the Revenue's argument, stating that pending special leave petitions cannot justify adopting a different view. Consequently, the Revenue's appeal was dismissed. In conclusion, the Tribunal allowed the assessee's appeal and dismissed the Revenue's appeal, emphasizing the correct treatment of receipts as capital rather than revenue and upholding the eligibility for deduction under section 80IA based on legal interpretations and precedents.
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