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TMI Blog2016 (1) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... not granting deduction u/s.80IA of the Act. 3. After hearing both the parties, we are of the opinion that this issue was considered by this Tribunal in the case of Arun Textiles Pvt. Ltd. v. DCIT in ITA No.2174/Mds/2014 dated 19.6.2015, wherein it was held as under : "4. We have heard both the parties and perused the material on record. In our opinion, 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 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness. In our opinion, carbon credit is entitlement or accretion of capital and hence income earned on sale of these credits is capital receipt. The same view is supported by the following judicial precedents, which are relied on by the ld. AR: 1. CIT v. My Home Power Ltd. (2014)[365 ITR 82](AP) 2. My Home Power Ltd. v. DCIT (2013)[21 ITR(Trib) 186] (Hyd) 3. Ambika Cotton Mills Ltd. v. DCIT (2013) [27 ITR (Trib) 44] (Chennai) 4. DCIT v. Salona Cotspin Ltd. in ITA No.426/Mds/2013 for AY 2009-10 5. Sri Velayudhaswamy Spinning Mills (P) Ltd. v. DCIT in ITA No.582/Mds/2013 for AY 2009-10 6. Sri Matha Spinning Mills Pvt. Ltd. v. DCIT in ITA No.617/Mds/2013 for AY 2009-10 7. Sudhan Spinning Mills Pvt. Ltd. v. JCIT in ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputation. During the course of hearing before the lower authorities, the assessee has stated that there is no profit element included in the total profit as insurance claim received was in lieu of higher expenditure incurred on the same items in the Profit & Loss Account. A perusal of the assessee's submissions indicated that the assessee has spent an amount of Rs. 8,84,520/- as purchase price and the claim of insurance receipt of damages was only Rs. 5,34,448/-. In other words the assessee claims that receipt is in nature of reimbursement of the expenditure debited to the Profit and Loss Account. The submission is that duty drawback/DEPB benefit received had to be credited against the cost of manufacture of goods/purchases debited to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industrial' activity of the assessee. He further observed that the same analogy is applicable to the facts of the present case also. The origin of the compensation is out of a contractual obligation of the insurer with the assessee. Since the immediate origin of the receipt is from the policy with the insurance company, the compensation received is one step removed from industrial activity. Therefore, the CIT(Appeals) relying on the judgment of the Supreme Court in Liberty India (supra), held that the assessee is not eligible for deduction u/s.80IA of the Act. Aggrieved, the assessee is in appeal before us. 8. We have heard both the parties and perused the material on record. We find that the material brought on record does not show th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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