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TMI Blog2014 (10) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... treat Clean Development Mechanism [CDM] receipts as capital receipts. 2. The assessee is engaged in the business of manufacturing of yarn and is also generating power through windmills. The assessee filed its return of income for the AY.2009-10 on 28-09-2009 declaring NIL income. The case of the assessee was selected for scrutiny and notice u/s. 143(2) of the Income Tax Act, 1961 (herein after referred to as 'the Act') was issued to the assessee on 05-09-2008. In its return of income, the assessee had disclosed income from Wind mill division as Rs. 5,19,94,710/- and total gross income after deducting loss from Spinning division as Rs. 2,48,67,705/-. The assessee claimed deduction of Rs. 3,10,42,900/- u/s.80IA on the income from wind mill d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported as 31 ITR (Trib) 477, wherein, the Tribunal has held income from sale of carbon credit as revenue receipts and not eligible for deduction u/s.80IA. 5. Both sides heard. We have perused the orders of the authorities below and examined the decisions on which both sides have placed reliance. The issue in appeal has come up before Tribunal in several cases. The Hyderabad Bench of the Tribunal in the case of M/s My Home Power Ltd. v. DCIT (supra) has held carbon credit as capital receipts. The relevant extract of the findings of the co-ordinate Bench are as under:- "24. 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 environme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redits to overcome one's negative point carbon credit. The amount received is not received for producing and/or selling any product, bi-product or for rendering any service for carrying on the business. In our opinion, carbon credit is entitlement or accretion of capital and hence income earned on sale of these credits is capital receipt. For this proposition, we place reliance on the judgement of the Supreme Court in the case of CIT vs. Maheshwari Devi Jute Mills Ltd. (57 ITR 36) wherein held that transfer of surplus loom hours to other mill out of those allotted to 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 considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) and many other similar cases. 6. The Hon'ble Andhra Pradesh High Court in the appeal of Revenue in I.T.T.A. No.60 of 2014 decided on 19-02-2014 has upheld the view taken by the Hyderabad Bench in the case of M/s My Home Power Ltd (supra). The Hon'ble High Court observed: "We have considered the aforesaid submission and we are unable to accept the same, as the learned Tribunal has factually found that "Carbon Credit is not an offshoot of business but an offshoot of environmental concerns. No asset is generated in the course of business but it is generated due to environmental concerns". We agree with this factual analysis as the assessee is carrying on the business of power generation. The Carbon Credit is not even directly lin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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