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2021 (4) TMI 587 - AT - Income TaxReceipt on sale of carbon credit - Capital Receipt OR revenue receipt - HELD THAT:- CIT(A) has allowed claim of the assessee for exclusion of receipt from sale of CERs (carbon credit) as capital receipt by following the decision in the case of M/s. My Home Power Ltd. [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] held that carbon credit not being an offshoot of business, but an offshoot of environmental concern, amount received on transfer had no element of profit or gain. The Hon'ble Jurisdictional High Court of Madras in the case of Ambika Cotton Mills Vs ACIT [2014 (3) TMI 428 - ITAT CHENNAI] had considered an identical issue and held that sale of carbon credit is to be considered as capital receipt. The Hon'ble High Court of Madras in the case of M/s. S.P. Spinning Mills Pvt.Ltd. [2021 (1) TMI 1081 - MADRAS HIGH COURT] had once again reiterated its earlier findings in the case of Ambika Cotton Mills Vs ACIT [2014 (3) TMI 428 - ITAT CHENNAI] and held that receipt by way of sale of carbon credit will not fall within the definition of total income and the same cannot be included u/s. 80IA of the Act. The sum and substance of ratios of the Hon’ble High Courts are that receipt by way of sale of carbon credit is a capital receipt and cannot be included in taxable income. The learned CIT(A) after considering relevant facts and also by following certain judicial precedents has rightly directed the Assessing Officer to treat sale of carbon credit as capital receipt and not liable for tax. Appeal filed by the revenue is dismissed.
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