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TMI Blog2014 (8) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of clean development mechanism (CDM) is capital or revenue receipt. 2. The assessee is in the business of manufacture of yarn and electricity generation through wind electrical generators. The assessee in its return of income for the assessment year 2009-10 claimed CDM receipts as capital receipts. The Assessing Officer in scrutiny assessment held CDM receipts to be revenue receipts under the head "income from business and profession". The assessee, carried the issue in appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals), vide impugned order, upheld the findings of the Assessing Officer on the issue. Aggrieved by the order of the first appellate authority, the assessee has come in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bon, 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 manner under any head of income. It is not liable for tax for the assessment year under consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar to consideration received by transferring of loom hours. The Supreme Court considered this fact and observed that taxability of payment received for sale of loom hours by the assessee is on account of exploitation of capital asset and it is capital receipt and not an income. Similarly, in the present case the assessee transferred the carbon credits like loom hours to some other concerns for certain consideration. Therefore, the receipt of such consideration cannot be considered as business income and it is a capital receipt. Accordingly, we are of the opinion that the consideration received on account of carbon credits cannot be considered as income as taxable in the assessment year under consideration. Carbon credit is not an offshoot o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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