TMI Blog2013 (6) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... ads as follows :- . 1. The learned CIT(A) has erred in treating the tradable Carbon credit receipts as capital receipt, against the provisions of section 2(14) which defines a capital asset being property of any kind . but, does not include any stock-in-trade, consumable stores or raw materials held for the purpose of business of profession. 2. The learned CIT(A) is not justified in treating the Carbon credits as capital receipts when they have all the attributes such as ready market, purchase and sale and holding period like in stock-in-trade. 3. The learned CIT(A) has erred in coming to the conclusion against the provisions of section 28(iv) which includes the value of any benefit or perquisite, whether convertible into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs and vehemently submits that the CIT(Appeals) has erred in treating the receipts realized by the assessee from carbon credits as capital in nature instead of a revenue receipt. In view thereof, it presses for acceptance of the appeal. 4. In reply, the assessee supports the CIT(Appeals) s order under challenge as well as findings contained therein. To buttress the same, it also places reliance on the order of Chennai ITAT C Bench dated 16.4.2013 passed in ITA No.1836/Mds/2012 in the case of M/s. Ambika Cotton Mills Limited v. DCIT and prayed for upholding CIT(Appeals) s order. 5. We have heard both learned representatives at length and perused the relevant findings in the case file as well as case law cited herein above. 6. Und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessee s claim only to the extent of ₹ 90,75,726/-. 8. Aggrieved, the assessee preferred appeal. It is to be seen from the CIT(Appeals) s order under challenge that on the one hand he has affirmed the AO s action of restricting deduction under sec.80-IA (supra); on the other hand, he has held that; inter alia, the assessee s receipts from carbon credits is capital in nature on the basis of decision reported as (2012) 27 Taxmann.com - My Home Power Limited, Hyderabad ITAT holding it to be not taxable in terms of Sec.2(24),28,45 and 56 of the Act. On this analogy, he has directed the Assessing Officer to treat the receipt in question realized by the assessee from the sale of carbon credit as capital receipt and partly accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment 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 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 ..... ation 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 of business but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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