TMI Blog2021 (4) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... ka 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitlement to Certified Emission Reduction is akin to import entitlements whose sale proceeds are taxable as revenue receipts and they are also tradable in Stock Exchange. 2.3 It is submitted that the decision of the Honble High Court of Andhra Pradesh relied on by the CIT(A) in the case of MIs. My Home Power Limited (365 ITR 82) is not accepted by the Department and SLP filed in this case and other group cases are pending before the Hon ble Supreme Court. 3. For these and other grounds that may be adduced at the time of bearing, it is prayed that the order of the learned CIT (A) may be set aside and that of the Assessing Officer restored. 3. We find that appeal filed by the Revenue is barred by limitation of 7 days for whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority. Before the learned CIT(A), the assessee has also filed additional ground of appeal challenging exclusion of CERs (carbon credit) from taxation on the ground that sale of CERs is capital receipt and not liable for taxation. The learned CIT(A), for the detailed reasons recorded in his appellate order, allowed additional ground filed by the assessee and directed the Assessing Officer to treat sale of carbon credit as capital receipt and not liable to tax. The relevant findings of the learned CIT(A) are as under:- 10. Additional ground: Treatment of sale of CERs carbon credit) as pita1 receipt and not liable for taxation, 10.1 Appellant s submissions before the CIT(A): During appeal proceeding, the appellant has made the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of Goetze India Ltd.( 2006) 284 ITR 323 (SC) and of Hon ble High Court of Madras in the case of Ramco Cements (2015) 373 ITR 146 (Mad), wherein it is held that the Appellate Authority can entertain a fresh claim, which was not made in the original return of income, the appellant s additional ground is taken up for adjudication. 10.2.1 The appellant has claimed that the sale of CERs (carbon credit) is a capital receipt and is not liable for taxation by relying on the decisions as mentioned above under para 10.1. In the cases relied on by the appellant as mentioned above, it is clearly held that the sale proceed of carbon credit is a capital receipt and is not liable for taxation. The relevant portion of the above case la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned CIT(A) has erred in allowing the claim of the assessee regarding treatment of sale of carbon credit as capital receipt, without appreciating the fact that it is a compensation for incurring extra cost in using alternate fuel and further, it is a benefit given to the industry for carrying out business by using alternate fuel. The DR further submitted that entitlement to certify emission reduction is akin to import entitlements, whose sale proceeds are taxable as revenue receipts and they are also tradable in stock exchange. Therefore, the learned CIT(A) has grossly erred in directing the Assessing Officer to treat sale of carbon credit as capital receipt by following the decision of the Hon ble High Court of Andhra Pradesh in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adras in the case of M/s. S.P. Spinning Mills Pvt.Ltd. Vs. ACIT (supra) had once again reiterated its earlier findings in the case of Ambika Cotton Mills Vs ACIT (supra) 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. Hence, we are inclined to u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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