9911796707
TMI Blog2015 (10) TMI 1867X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Briefly stated, assessee is a company in which public are not substantially interested and is engaged in the production of seeds and wind power. In the impugned assessment years, assessee has shown incomes from sale of carbon credits or Certified Emission Reductions (CER) in the company's power division totaling to Rs. 6,47,02,202/- as income in AY. 2008-09 and Rs. 8,85,56,891/- in AY. 2009-10. The above amounts were claimed as deduction u/s. 80IA of the Income Tax Act [Act]. Ld. Assessing Officer (Ld. AO) did not allow the deduction on the reason that the income from sale of carbon credits has no direct nexus to the business of power generation and was never in the form of incentives like duty draw back/import entitlements. Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: "We have heard both the parties and perused the material on record. 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 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 cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee under an agreement for control of production was capital receipt and not income. Being so, the consideration received by the assessee is similar 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered as capital receipt". 4.5. In view of the above, I hold that the appellant is not entitled for deduction u/s. 80IA but the said amount is to be treated as a capital receipt. Therefore, the addition of Rs. 6,47,02,202/- is deleted". 3. After considering the contentions of the Ld. DR and Ld. AR, we see no reason to interfere with the orders of the Ld. CIT(A). The co-ordinate bench decision relied upon by the Ld. CIT(A) was upheld by the Hon'ble High Court of Judicature at Hyderabad for the State of Telangana and State of Andhra Pradesh in their judgment of CIT Vs. My Home Power Ltd., [365 ITR 82 (AP)]. Since the decision of the CIT(A) is in line with the decision of the co-ordinate bench as approved by the Hon'ble juri ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
