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TMI Blog2015 (12) TMI 1323X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (2010 (9) TMI 7 - SUPREME COURT OF INDIA) wherein held that the assessee is not liable to deduct TDS when nonresident provided service outside India. It was held that when the services are provided outside India, the commission payments made to non-resident cannot be treated as income deemed to accrue or arise in India, therefore the provisions of section 195 has no application. It is clear that in order to invoke the provisions of Section 195 of the Income tax Act, the income should be chargeable to tax in India. Here, the commission payments to non-resident in the case of the appellant are not chargeable to tax in India and therefore the provisions of Section 195 are not applicable. In the case of appellant, the facts are similar and the decision of the Hon'ble Supreme Court and also the jurisdictional Tribunal decision referred to above is squarely applicable. Hence, the Assessing Officer is correctly directed to delete the addition made u/s 40(a)(ia} for non-deduction of TDS in respect of commission payments to non-resident.- Decided in favour of assessee. Entitlement for deduction under section 80IA on windmills - Held that:- All the business undertakings are wind mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to be taxed. We make it clear that there is no issue between the parties qua realization of the amount in question or its source and the dispute is regarding nature of receipt i.e. whether capital or revenue. In this backdrop, we find that the very issue stands adjudicated by the Coordinate Bench of ITAT, Hyderabad (supra) wherein it has been held as under: 24. We have heard both the parties and perused the material on record. Carbon credit is in the nature of an entitlement 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 a 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 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 man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the course of business but it is generated due to environmental concerns. Credit for reducing carbon emission or greenhouse effect can be transferred to another party in need of reduction of carbon emission. It does not increase profit in any manner and does not need any expenses. It is a nature of entitlement to reduce carbon emission, 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 in the nature of income. 25. Further, as per guidance note on accounting for Self generated Certified Emission Reductions (CERs) issued by the Institute of Chartered Accountants of India (ICAI) in June, 2009 states that CERs should be recognised in books when those are create d by UNFCCC and/or unconditionally available to the generating entity. CERs are inventories of the generating entities as they are generated and held for the purpose of sale in ordinary course. Even though CERs are intangible assets those should be accounted as per AS-2 (Valuation of inventories) at a cost or market price, whichever is lower. Since CERs are recognised as inventories, the generating assessee should apply AS-9 to recogn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ITO Vs. Faizan Shoes (supra). 11. Heard both sides. Perused orders of lower authorities and the decisions relied on. This issue has been considered by the Commissioner of Income Tax (Appeals) with reference to the contentions of the assessee as well as the Assessing Officer and by following the jurisdictional High Court decision in the case of ITO Vs. Faizan Shoes (supra) deleted the disallowance observing as under:- 6. Ground No.3: This ground of appeal is against the action of the Assessing Officer in making addition u/s 40(a)(ia) for nondeduction of TDS in respect of commission paid to foreign agent. The appellant made detailed submissions in the ground of appeal. The foreign commission agent procured export orders and they are also acting as agent for other spinning mills in India as well as spinning mills in Pakistan, Indonesia, Korea and other countries. They are engaged in the business of commission agent for sale of yarn. The export sales are made based on price and creditworthiness of the buyer. Sales are against irrevocable letter of credit. The issue of disallowance u/s 40(a)(ia) is contrary to the decision of the Hon'ble Supreme Court in the case of GE I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. On going through the above order , we do not find any infirmity in the findings of the Commissioner of Income Tax (Appeals) in deleting the disallowance made by the Assessing Officer in respect of sales commission paid to foreign agents. Thus, we sustain the order of the Commissioner of Income Tax (Appeals) on this issue and reject the grounds raised by the Revenue. 13. The last 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 on windmills. The assessee in the return of income claimed deduction under section 80IA of the Act in respect of installation of windmill by following the decision of jurisdictional High Court in the case of Sri Velayudhasamy Spinning Mills Pvt.Ltd. (231 CTR 368). However, the Assessing Officer disallowed the claim of the assessee for the reason that the decision of the jurisdictional High Court has not become final and the Department has preferred SLP before the Hon'ble Supreme Court and is pending for decision. The Commissioner of Income Tax (Appeals) allowed the claim of the assessee against which Revenue is in appeal before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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