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TMI Blog2015 (5) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 of the Income Tax Act. 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 - ITA No.1958/Mds/2014 & C.O.No.142/Mds/2014, ITA No.2165/Mds/2014 - - - Dated:- 20-5-2015 - SHRI A.MOHAN ALANKAMONY AND SHRI CHALLA NAGENDRA PRASAD, JJ. For The Assessee : Mr. R.Kumar, Advocate For The Revenue : Mr.N.Rengaraj, CIT ORDER Per Challa Nagendra Prasad, JM: These two appeals are filed by the assessee and Revenue respectively against the order of the Commissioner of Income Tax(Appeals)-II, Coimbatore dated 29.05.2014 for the assessment year 2011-12. The cross objection is filed by the Revenue with delay of 119 days. ITA No.1958/Mds/2014: 2. The first issue in the appeal of the assessee is that Commissioner of Income Tax (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue fails to point out any distinction on facts. Thus, we accept the assessee s ground. The Assessing Officer is directed to frame necessary computation. 6. Respectfully following the said decision, we hold that income from carbon credit is capital receipt not exigible to tax and such income is not eligible for deduction under section 80IA of the Act. 7. As far as TUF interest subsidy is concerned, counsel for the assessee submits that similar issue is decided by the co-ordinate Bench of this Tribunal in the case of C.N.V Textiles Pvt. Ltd., Vs. DCIT., in ITA No.746/Mds/2014 dated 21.11.2014, wherein the Tribunal following the decision of Kolkata Bench of this Tribunal in the case of M/s. Gloster jute Mills Ltd. Vs. Addl. CIT in ITA No.687/Kol/2010 dated 2.7.2014 and the decision of Hon ble Punjab Haryana High Court in the case of CIT Vs. Shamlal Bansal [(2011) 11 Taxman.com 369] held that TUF receipt is only capital receipt not liable to be treated as income. 8. Departmental Representative supports the order of lower authorities. 9. After hearing both the parties and on going through the decisions relied on by the assessee, we find that the issue is squarely covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann.com 75(Delhi) Magnum Power Generation Ltd. vs DCIT holds that such a receipt arising from compensation is entitled for section 80IA deduction. The Revenue does not cite any judicial precedence in its favour. Thus, we adopt the same view and allow the assessee s corresponding ground. The Assessing Officer is directed to pass a consequential computation order. 14. Similar view has been expressed by the Delhi Bench of this Tribunal in the case of Magnum Power Generation Ltd. Vs. DCIT (16 Taxmann.com 75). Respectfully following the said decisions, we hold that generation loss compensation is eligible for deduction under section 80IA of the Act. ITA No.2165/Mds/2014:- 15. The only issue in the appeal of the Revenue is that Commissioner of Income Tax (Appeals) erred in holding that assessee is entitled for deduction under section 80IA of the Act. The Commissioner of Income Tax (Appeals) ought to have appreciated that as per provisions of section 80IA(5) eligible undertaking should be treated as only source of income for computing quantum of deduction allowable under section 80IA. 16. The Assessing Officer while completing the assessment restricted the deduction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of CIT Vs. Velayudhaswamy Spinning Mills P. Ltd. (231 CTR 368) allowed the claim of the assessee. 17. Departmental Representative places reliance on the order of Assessing Officer in restricting the claim under section 80IA(5) of the Act. 18. Counsel for the assessee supports the order of the Commissioner of Income Tax (Appeals). 19. Heard both sides. Perused orders of lower authorities and the decision of the jurisdictional High Court in the case of CIT Vs. Sri Velayudhaswamy Spinning Mills P.Ltd. (supra).The Hon ble High Court in the case of Sri Velayudhaswamy Spinning Mills Pvt.Ltd. Vs. ACIT (supra) held that for the purpose of computing deduction under section 80IA, initial assessment year means the year in which the assessee begins to claim deduction under section 80IA of the Act. While holding so, the Hon ble High Court observed as under:- From reading of sub-s. (1) of s. 80-IA, it is clear that it provides that where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-s. (4) i.e. referred to as the eligible business, there shall, in accordance with and subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally. Fiction created in sub-s. (5) does not contemplates to bring set off amount notionally. Fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created. 20. The Commissioner of Income Tax (Appeals) allowed the claim of the assessee following the jurisdictional High Court decision in the case of Velayudhaswamy Spinning Mills Ltd. Vs. ACIT(supra). Respectfully following the said decision, we sustain the order of the Commissioner of Income Tax (Appeals) on this issue and reject the grounds of appeal raised by the Revenue. 21. Coming to cross objection filed by the Revenue opposing the contentions of the assessee that receipts from sale of carbon credits is to be treated as capital receipt in case if it is not held as revenue receipt for the purpose of relief under section 80IA of the Act, we find that cross objection was filed with a delay of 119 days and no condonation petition was filed though defect memo was issued. Revenue also did not place any argument on the condonation of ..... 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