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2020 (8) TMI 176 - AT - Income TaxSale of carbon credits - capital receipt OR revenue receipt - assessee is a company engaged in the business of generation of hydro and wind power. The assessee was entitled to claim deduction u/s. 80IA of the Income-tax Act, 1961 [the Act] in respect of business of generation of power - HELD THAT:- As decided in M/S. SHREE CEMENT LTD. [2015 (3) TMI 759 - ITAT JAIPUR] entitlement earned for carbon credits is 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 manner under any head of income." In CIT Vs. Subhash Kabini Power Corporation Ltd. [2016 (5) TMI 793 - KARNATAKA HIGH COURT] upheld the view taken by the Tribunal that receipts on account of carbon credit are capital receipts not chargeable to tax. Disallowance u/s. 14A r.w. Rule 8D - Assessee submitted that since the issue of disallowance u/s. 14A of the Act has not been examined either by the AO or the CIT(A) on the basis of availability of own funds of the assessee which have been utilized for making investments which are likely to yield tax free income and other relevant considerations, the issue should be remanded to the AO - HELD THAT:- Prayer for remanding the issue to the AO as put forth by the ld. counsel for the assessee has to be accepted as neither the AO or the CIT(Appeals) has examined this issue. In this regard, the ld. counsel for the assessee submitted that a perusal of balance sheet would show availability of own funds. We are of the view that this aspect can be looked into by the AO in the set aside proceedings. We hold and direct accordingly.
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