Tamilnadu Newsprint & Papers Limited, CHENNAI V. ACIT, CHENNAI

CO 42/CHNY/2015

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1397 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 07-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 17-04-2015
• Court: TRIBUNAL
• Department Lawyers: R VIJAYARAGHAVAN
• Assessee Lawyers: JOE SEBASTIAN
• Keywords: Business income; Depreciation; Capital receipt; Unabsorbed depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . ! '# , $ %& BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ./ ITA NO. 259/MDS/2015 AND C.O.NO.42/MDS/2015 (IN ITA NO.259/MDS/2015) / ASSESSMENT YEAR : 2010-11 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CORPORATE CIRCLE-3(1), CHENNAI 34. APPELLANT) V. M/S. TAMIL NADU NEWSPRINT & PAPERS LTD., NO.67, TNPL BUILDING, MOUNT ROAD, GUINDY, CHENNAI 600 032. PAN AAACT2935J RESPONDENT/CROSS -OBJECTOR) / APPELLANT BY : SHRI JOE SEBASTIAN, CIT / RESPONDENT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE ! / DATE OF HEARING : 07.10.2015 '# ! / DATE OF PRONOUNCEMENT: 16.10.2015 ' / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THE APPEAL IS FILED BY THE REVENUE AND THE CROSS OBJECTION IS FILED BY THE ASSESSEE. THE APPEAL AND THE CROSS - - ITA 259 & CO 42/15 2 OBJECTION ARE DIRECTED AGAINST THE ORDER OF THE COM MISSIONER OF INCOME-TAX(APPEALS) DATED 26.09.2014. 2. THE FIRST GROUND IN THE REVENUES APPEAL IS THAT THE CIT(APPEALS) ERRED IN HOLDING THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S.80IA FROM THE TWO POWER GENERATING UN ITS SITUATED IN THE MAIN MANUFACTURING PLANTS PRODUCING NEWS PRI NT AND WRITING PAPER, SET UP FOR CAPTIVE CONSUMPTION AS TH EY DID NOT QUALIFY TO BE CONSIDERED AS SEPARATE INDUSTRIAL UND ERTAKINGS WITHIN THE MEANING OF CLAUSE (IV) OF SUB-SECTION (4 ) OF SEC .80IA OF THE ACT. 3. THE LD. DR SUBMITTED THAT THE ASSESSEE WAS NOT E NTITLED TO DEDUCTION U/S.80IA OF THE ACT IN RESPECT OF THE PROFITS RELATING TO CAPTIVE GENERATION OF POWER WHICH COULD NOT BE C ONSIDERED AS PROFITS DERIVED FROM AN IDENTIFICATION INDUSTRIAL UNDERTAKING. HE FURTHER SUBMITTED THAT THE TWO POWER GENERATING UNI TS IN THE ASSESSEES MANUFACTURING FACILITY PRODUCING NEWSPRI NT AND WRITING PAPER WAS NOT A SEPARATE INDUSTRIAL UNDERTA KING. THE EXPRESSION UNDERTAKING MEANS A SEPARATE AND DISTI NCT BUSINESS OR INDUSTRIAL ACTIVITY AND DOES NOT COMPREHEND A SM ALL PART OF THE MANUFACTURING PROCESS. ACCORDING TO THE LD. DR, TH E - - ITA 259 & CO 42/15 3 CIT(APPEALS) FAILED TO OBSERVE THAT THESE TWO POWER UNITS FORMED PART OF THE MAIN MANUFACTURING UNDERTAKING AND HAD BEEN TREATED AS SUCH FOR CENTRAL EXCISE PURPOSES AND THE REFORE THE ASSESSEE CANNOT CLAIM DEDUCTION U/S.80IA ON THE SA ID UNITS. HE ALSO SUBMITTED THAT THE CIT(APPEALS) FAILED TO T AKE NOTE IN THE ASSESSEES CASE THAT THERE MAY BE AN INCREASE IN PR OFITS BY WAY OF COST REDUCTION AND SUCH INCREASE IN PROFITS COUL D NOT BE CONSIDERED AS PROFITS DERIVED FROM AN ELIGIBLE IN DUSTRIAL UNDERTAKING U/S.80-IA OF THE ACT. FURTHER, THE LD. DR SUBMITTED THAT THE SLP IS PENDING BEFORE THE SUPREME COURT AG AINST THE HIGH COURTS ORDER IN ITCA NOS.537 TO 540 OF 2011 D ATED 01.02.2012 ON THIS ISSUE IN ASSESSEES OWN CASE. 4. THE LD. AR RELIED ON THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 328 TO 331/MDS/2011 DATED 13.5.2011. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS SUBMITTED BY THE LD. AR, SIMILAR ISS UE WAS CONSIDERED AND DECIDED IN FAVOUR OF THE ASSESSEE BY THIS TRIBUNAL IN ASSESSEES OWN CASE CITED SUPRA, WHEREI N IT WAS OBSERVED AS UNDER : - - ITA 259 & CO 42/15 4 8. THE ISSUE HERE THEREFORE BOILS DOWN TO WHETHER POWER PRODUCED FROM TG-3 BOILER 4 AND TG-4 BOILER 5 UNITS WERE ALSO ELIGIBLE FOR DEDUCTION UNDER SECTIO N 80- IA OF THE ACT, ON PAR WITH THE WIND FARMS. CONTENTI ON OF THE REVENUE IS THAT THESE TWO UNITS WEREAN INTEGRAL PART OF THE MAIN INDUSTRIAL UNDERTAKING OF THE ASSE SSEE PRODUCING PAPER. A.O. HIMSELF AT SL.NO.10 OF THE FA CING SHEET OF THE ASSESSMENT ORDER HAS MENTIONED THE NATURE OF BUSINESS OF THE ASSESSEE AS MANUFACTURE AND SALE OF NEWSPRINT, PAPER AND GENERATION OF ELECTRICITY. THERE IS NO DISPUTE THAT TG-3 BOILER 4 AND TG-4 BOILER 5 WERE TURBO GENERATORS. THERE IS ALSO NO DISPUTE THAT SUCH TURBO UNITS WERE PLACED WITHIN TH E MAIN PREMISES OF THE ASSESSEE FROM WHERE ITS MAIN MANUFACTURING ACTIVITY OF PRODUCTION OF PAPER WAS BEING CARRIED ON. NOW THE QUESTION IS WHETHER JUST BECAUSE THE TURBO GENERATORS WERE PLACED INSIDE THE MAIN INDUSTRIAL UNDERTAKING MANUFACTURING PAPER, ASSESSEE COULD HAVE BEEN DENIED DEDUCTION UNDER SECTION 80-IA OF THE ACT, IN RESPECT OF POWER PRODU CED BY SUCH TURBO GENERATORS, USED CAPTIVELY FOR CONSUMPTION. IN THIS REGARD, ONE PERTINENT POINT WE NOTICE IS THAT THE POWER GENERATED THROUGH SUCH TUR BO GENERATORS, THOUGH MAINLY USED FOR CATERING TO THE REQUIREMENT OF POWER FOR PAPER MANUFACTURING ACTIVI TY, THE SURPLUS, AS PER THE ASSESSEE, WAS SOLD TO TAMIL NADU ELECTRICITY BOARD. THIS POSITION HAS BEEN NOTE D BY LD. CIT(APPEALS) IN HIS ORDER AND IS NOT DISPUTE D. IN OUR OPINION, THIS BY ITSELF WOULD GO TO SHOW THAT S UCH TURBO GENERATORS PRODUCING POWER THOUGH NOT DISPARATELY PLACED, WERE UNDERTAKINGS PRODUCING POWER. CLAUSE (IV) OF SUBSECTION (4) OF SECTION 80- IA REQUIRES THAT AN UNDERTAKING HAS TO BE SET UP IN AN Y PART OF INDIA FOR GENERATION OR GENERATION AND DISTRIBUTION OF POWER, FOR BEING ELIGIBLE FOR DEDUC TION UNDER SECTION 80-IA OF THE ACT. NOW IF WE LOOK AT S UB- SECTION (1) OF SECTION 80-IA OF THE ACT, PROFITS AN D GAINS DERIVED BY AN UNDERTAKING OF AN ASSESSEE WOUL D BE ELIGIBLE FOR DEDUCTION SUBJECT TO OTHER SUB-SECT IONS THEREUNDER. THERE IS NO CASE FOR THE REVENUE THAT T HE - - ITA 259 & CO 42/15 5 TURBO GENERATOR UNITS WERE NOT SITUATED IN INDIA. DEFINITELY IT WAS SITUATED OR SET UP IN A PART OF I NDIAN TERRITORY AND JUST BECAUSE IT WAS PLACED WITHIN THE MAIN UNIT OF THE ASSESSEE PRODUCING PAPER, IN OUR OPINIO N, COULD NOT BE CITED AS A REASON FOR DENYING THE CLAI M TO THE ASSESSEE. WHETHER PLACED INSIDE THE PREMISES OR OUTSIDE, THE UNIT WAS PRODUCING ELECTRICITY AND TAK ING A DIFFERENT VIEW FOR PRODUCTION OF ELECTRICITY FROM I NSIDE OF THE PREMISES AND OUTSIDE OF THE PREMISES WOULD NOT HAVE ANY RATIONAL MEANING NOR WOULD IT BE AN INTELLIGIBLE DIFFERENTIATION. EVEN OTHERWISE, HON'B LE JURISDICTIONAL HIGH COURT IN THE CASE OF TANFAC INDUSTRIES LTD. (SUPRA) HAD HELD THAT POWER PRODUCE D USING STEAM WHICH WAS GENERATED IN THE COURSE OF TH E MAIN PRODUCTION ACTIVITY OF AN ASSESSEE WOULD STILL BE ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 80-IA OF THE ACT. IF WE HAVE A LOOK AT PARA 8 OF THE ORDER O F HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF THIAGARAJAR MILLS LTD. (SUPRA) REPRODUCED BY US AT PARA 7 ABOVE, THEIR LORDSHIP HAS HELD THAT AN ASSESSEE SHOULD HAVE SET UP AN UNDERTAKING OR AN ENTERPRISE AND FROM AND OUT OF WHICH ELECTRICITY SHOULD HAVE B EEN GENERATED WHETHER FOR CAPTIVE USE OR OTHERWISE FOR BEING ELIGIBLE FOR 80-IA DEDUCTION. NO DOUBT, HERE, IT IS NOT COMING OUT OF THE ORDERS OF THE AUTHORITIES BEL OW WHETHER THE TURBO GENERATORS WHERE POWERED BY DIESE L OR POWERED BY STEAM OR POWERED BY ANY OTHER BYE- PRODUCTS PRODUCED BY THE ASSESSEE IN THE COURSE OF ITS MAIN ACTIVITY OF PRODUCING PAPER. BUT, NEVERTHELESS THIS WOULD NOT BY ITSELF BE SUFFICIENT TO HOLD THAT THE TURBO GENERATORS WERE NOT AN UNDERTAKING BY ITSELF ELIGIB LE FOR CLAIMING DEDUCTION UNDER SECTION 80-IA OF THE ACT I N RESPECT OF POWER GENERATED THEREFROM USED FOR CAPTI VE CONSUMPTION. ESPECIALLY SO, SINCE STEAM BASED GENERATING UNITS, WHERE STEAM WAS ONLY AN INCIDENTA L OUTPUT OF MAIN MANUFACTURING ACTIVITY, WAS HELD BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF TA NFAC INDUSTRIES LTD. (SUPRA) TO BE ELIGIBLE FOR 80-IA DEDUCTION IN RESPECT OF POWER GENERATED AND CAPTIVE LY USED. WE ARE THEREFORE OF THE OPINION THAT THE - - ITA 259 & CO 42/15 6 ASSESSEE IS BOUND TO SUCCEED IN THESE APPEALS. ITS CLAIM FOR DEDUCTION UNDER SECTION 80-IA OF THE ACT HAS TO BE ALLOWED IN RESPECT OF ITS POWER GENERATED FRO M TG-3 BOILER 4 AND TG-4 BOILER 5 UNITS AS WELL. SINCE THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS THAT CONSIDERED BY THIS TRIBUNAL IN EARLIER OCCASION, FO LLOWING THE SAME, WE DISMISS THE GROUND RAISED BY THE REVENUE. 6. THE NEXT GROUND RAISED BY THE REVENUE IS THAT TH E CIT(APPEALS) ERRED IN HOLDING THAT INITIAL ASSESSME NT YEAR REFERRED TO IN SECTION 80IA(5) OF THE ACT. 7. THE LD. DR SUBMITTED THAT INITIAL ASSESSMENT YEA R REFERRED TO IN SEC.80IA(5) WOULD MEAN ONLY THE FIRST YEAR OF THE CLAIM OF DEDUCTION U/S.80IA BY THE ASSESSEE AND NOT THE COM MENCEMENT OF OPERATION OF THE ELIGIBLE UNDERTAKING. FURTHER, THE LD. DR SUBMITTED THAT THE COMMISSIONER OF INCOME-TAX(APPEA LS) ERRED IN HOLDING THAT INITIAL ASSESSMENT YEAR REFERRED TO IN SEC.80IA(5) WOULD MEAN ONLY THE FIRST YEAR OF THE CLAIM OF DEDU CTION U/S.80IA BY THE ASSESSEE AND NOT THE COMMENCEMENT OF OPERAT ION OF THE ELIGIBLE UNDERTAKING. THE LD. DR, FURTHER SUBMITTE D THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN HOLDIN G THAT THE UNABSORBED DEPRECIATION AND CARRIED FORWARD LOSSES OF THE EARLIER YEARS WHICH HAD ALREADY BEEN SET OFF AGAINS T THE OTHER - - ITA 259 & CO 42/15 7 INCOME COULD NOT BE NOTIONALLY CARRIED FORWARD AND TAKEN INTO CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF DED UCTION U/S.80IA STIPULATING THAT THE SAID UNDERTAKING SHOU LD BE CONSIDERED AS ONLY THE SOURCE OF INCOME OF THE ASSE SSEE FOR THE PURPOSE OF DETERMINING THE ELIGIBLE PROFITS AND HE SUBMITTED THAT SLP IS PENDING BEFORE THE SUPREME COURT AGAINST THE HIGH COURTS ORDER OF TCA NOS.39 & 40 OF 2012 DATED 13.0 3.2012 ON THIS ISSUE IN THE ASSESSEES OWN CASE. 8. THE LD. AR, RELIED ON THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. V. ACIT (340 ITR 477) AND THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.554/MDS/2011 DATED 30 TH JUNE, 2011 FOR THE ASSESSMENT YEAR 2006-07. 9. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. SIMILAR ISSUE WAS CONSIDERED IN FAVOUR OF THE ASSESSEE BY THIS TRIBUNAL IN ASSESSEES OWN CASE FO R ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 30.6.2011. SIMILARLY IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LT D. V. ACIT(SUPRA), THE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER: - - ITA 259 & CO 42/15 8 13. SEC.80-IA READS AS FOLLOWS: [(1) 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-SECTION (4) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVIS IONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT YEARS.] (2) THE DEDUCTION SPECIFIED IN SUB-SECTION (1) MAY, AT THE OPTION OF THE ASSESSEE, BE CLAIMED BY HIM FOR A NY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEA RS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRASTRUCTURE FACILITY OR STARTS PROVIDING TELECOMMUNICATION SERVICE OR DEVELOPS AN INDUSTRIAL PARK [OR DEVELOPS [***] A SPECIAL ECONOMIC ZONE REFERRED TO IN CLAUSE (III) OF SUB-SECTION (4)] OR GENERATES POWER OR COMMENCES TRANSMISSION OR DISTRIBUTION OF POWER [OR UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNISATION OF THE EXISTING TRANSMISSION OR DISTRIBUTION LINES ): (4) THIS SECTION APPLIES TO (I) ANY ENTERPRISE CARRYING ON THE BUSINESS [OF (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (II I) DEVELOPING, OPERATING AND MAINTAINING] ANY INFRASTRUCTURE FACILITY WHICH FULFILS ALL THE FOLLO WING CONDITIONS, NAMELY : (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMPANIES [OR BY AN AUTHORITY OR A BOARD OR A CORPORATION OR ANY OTHER BODY ESTABLISHE D OR CONSTITUTED UNDER ANY CENTRAL OR STATE ACT;] - - ITA 259 & CO 42/15 9 [(B) IT HAS ENTERED INTO AN AGREEMENT WITH THE CENT RAL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUTORY BODY FOR (I) DEVEL OPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPI NG, OPERATING AND MAINTAINING A NEW INFRASTRUCTURE FACI LITY;] (C) IT HAS STARTED OR STARTS OPERATING AND MAINTAIN ING THE INFRASTRUCTURE FACILITY ON OR AFTER THE 1ST DAY OF APRIL, 1995: 5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROVISIONS OF SUB-SECTION (1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUB-SECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE O NLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOU S YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO BE MADE. FROM READING OF SUB-S (1), IT IS CLEAR THAT IT PROV IDES THAT WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING FOR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-S(4) I.E. REFERRED TO AS THE ELI GIBLE BUSINESS, THERE SHALL, IN ACCORDANCE WITH AND SUBJE CT TO THE PROVISIONS OF THE SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO 100 PERCENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TE N CONSECUTIVE ASSESSMENT YEARS. DEDUCTION IS GIVEN TO ELIGIBLE BUSINESS AND THE SAME IS DEFINED IN SUB-S (4). SUBSS (2) PROVIDES OPTION TO THE ASSESSEE TO CHOOSE 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS. - - ITA 259 & CO 42/15 10 OPTION HAS TO BE EXERCISED. IF IT IS NOT EXERCISED, THE ASSESSEE WILL NOT BEGETTING THE BENEFIT. FIFTEEN YE ARS IS OUTER LIMIT AND THE SAME IS BEGINNING FROM THE Y EAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRASTRUCTURE ACTIVITY E TC. SUB-S(5) DEALS WITH QUANTUM OF DEDUCTION FOR AN ELIGIBLE BUSINESS. THE WORDS INITIAL ASSESSMENT YE AR ARE USED IN SUB-S(5) AND THE SAME IS NOT DEFINED UN DER THE PROVISIONS. IT IS TO NOTED THAT INITIAL ASSESS MENT YEAR EMPLOYED IN SUB-S(5) IS DIFFERENT FROM THE WO RDS BEGINNING FROM THE YEAR REFERRED TO IN SUB-S(2) IMPORTANT FACTORS ARE TO BE NOTED IN SUB-S(5) AND T HEY ARE AS UNDER:- (1) IT STARTS WITH NON OBSTANTE CLAUSE WHICH MEANS IT OVERRIDES ALL THE PROVISIONS OF THE ACT AND OTHER PROVISIONS ARE TO BE IGNORED. (2) IT IS FOR THE PURPOSE OF DETERMINING THE QUANTU M OF DEDUCTION; (3) FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR; (4) IT IS A DEEMING PROVISION; (5) FICTION CREATED THAT THE ELIGIBLE BUSINESS IS T HE ONLY SOURCE OF INCOME; AND (6) DURING THE PREVIOUS YEAR RELEVANT TO THE INITIA L ASSESSMENT YEAR AND EVERY SUBSEQUENT ASSESSMENT YEAR. FROM READING THE ABOVE, IT IS CLEAR THAT THE ELIGIB LE BUSINESS WERE THE ONLY SOURCE OF INCOME DURING THE PREVIOUS YEAR RELEVANT TO INITIAL ASSESSMENT YEAR A ND EVERY SUBSEQUENT ASSESSMENT YEARS. WHEN THE ASSESSEE EXERCISES THE OPTION, THE ONLY LOSSES OF T HE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEAR S - - ITA 259 & CO 42/15 11 WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF TH E ASSESSEE. LOOKING FORWARD TO A PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT IS CONTEMPLATED. IT DOE S NOT ALLOW THE REVENUE TO LOOK BACKWARD AND FIND OUT IF THERE IS ANY LOSS OF EARLIER YEARS AND BRING FORWAR D NOTIONALLY EVEN THOUGH THE SAME WERE SET OFF AGAINS T OTHER INCOME OF THE ASSESSEE AND THE SET OFF AGAINS T THE CURRENT INCOME OF THE ELIGIBLE BUSINESS, ONCE T HE SET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INCOME OF THE ASSESSEE, THE REVENUE CAN NOT REWORK THE SET OFF AMOUNT AND BRING IT NOTIONALLY. FICTION CREATED IN SUB-SECTION DOES NOT CONTEMPLATE TO BRIN G SET OFF AMOUNT NOTIONALLY. FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND THE SAME CAN NOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DI SMISSED. 10. THE NEXT GROUND RAISED BY THE REVENUE IS THAT T HE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN HOLDIN G THAT THE INCENTIVE ON CARBON CREDIT IS CAPITAL IN NATURE. 11. THE LD. DR SUBMITTED THAT THE COMMISSIONER OF I NCOME- TAX(APPEALS) FAILED TO OBSERVE THAT THE SUPREME COU RT DECISION IN THE CASE OF M/S. LIBERTY INDIA (371 ITR 218) HAS HELD ON A SIMILAR ISSUE THAT PROFITS FROM SALE OF DUTY DRAWBA CK ARE NOT ELIGIBLE FOR DEDUCTION U/S.80IA. BY USING THE EXPR ESSION DERIVED FROM, THE INTENT OF THE GOVERNMENT IS TO COVER SOU RCES NOT BEYOND THE FIRST DEGREE. - - ITA 259 & CO 42/15 12 12. ON THE OTHER HAND, THE LD. AR, RELIED ON THE JU DGMENT OF THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. MY HOME POWER LTD. (365 ITR 82). 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, SIMILAR ISSUE WAS DECID ED BY THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. MY HOME POWER LTD. (SUPRA), WHEREIN IT WAS HELD THAT INCOME RECEIVED FROM SALE OF CARBON CREDIT IS CONSIDERED AS CAPITAL RECEIPT AND NOT BUSINESS RECEIPT AND NOT LIABLE FOR TAX UNDER THE A CT. ACCORDINGLY, WE AGREE WITH THE FINDING OF THE COMMI SSIONER OF INCOME-TAX(APPEALS) ON THIS GROUND AND DISMISS THE GROUND OF APPEAL TAKEN BY THE REVENUE. 14. COMING TO THE CROSS-OBJECTION, WE FIND THAT THE RE IS A DELAY OF 27 DAYS. THE ASSESSEE HAS FILED AN AFFID AVIT STATING THE REASONS FOR DELAY. AFTER GOING THROUGH THE REASONS STATED IN THE AFFIDAVIT, WE ARE OF THE OPINION THAT THERE IS A RE ASONABLE CAUSE FOR THE DELAY OF 27 DAYS IN FILING THE CROSS-OBJECT ION. THEREFORE, THE SAME IS CONDONED AND THE CROSS-OBJECTION IS ADM ITTED FOR ADJUDICATION. - - ITA 259 & CO 42/15 13 15. AFTER HEARING BOTH THE SIDES, WE ARE OF THE OPI NION THAT THE ISSUE, REGARDING CARBON CREDIT RECEIPT RAISED BY TH E ASSESSEE IS DECIDED IN FAVOUR OF THE ASSESSEE VIDE PARAGRAPH 13 ABOVE WHILE DEALING WITH THE REVENUES APPEAL. BEING SO, THE C ROSS OBJECTION IS DISMISSED AS INFRUCTUOUS. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE CROSS OBJECTION IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED ON FRIDAY, THE 16 TH OF OCT., 2015 AT CHENNAI. SD/- SD/- ( . $ % ) ( & ' ( ) ) *+,-./01023 45067.082290.:3 ; $< /JUDICIAL MEMBER ! $<=>>2-6?06?@ABCA. &; /CHENNAI, D$ /DATED, THE 16 TH OCT., 2015. MPO* $E FGHG /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. I3 /CIT(A) 4. I /CIT 5. GJ% K /DR 6. %LM /GF.