TMI Blog2014 (10) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal is allowed. - I.T.A. No. 352/Mds/2014 - - - Dated:- 9-10-2014 - Dr. O.K. NARAYANAN, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER For the Appellant : Shri N.Vijay Kumar, CA., For the Respondent : Shri C.V.Pavana Kumar, JCIT ORDER PER VIKAS AWASTHY, J.M: The appeal has been filed by the assessee impugning the order of Commissioner of Income Tax (Appeals)-II, Coimbatore, dated 28-11-2013 relevant to the assessment year 2009-10. In appeal, the assessee has assailed the findings of CIT(Appeals) rejecting the claim of the assessee to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng decisions:- (i) CIT v. M/s My Home Power Ltd. 2014 (6) TMI 82 AP High Court; (ii) M/s My Home Power Ltd. v. DCIT 21 ITR (Trib) 186 (Hyd); (iii) Sri Velayudhaswamy Spinning Mills (P) Ltd. v. DCIT in I.T.A. No. 582/Mds/2013 decided on 12.06.2013; and (iv) M/s Sri Ambika Cotton Mills Ltd. v. DCIT in I.T.A.No.1836/Mds/2012 decided on 16.04.2013 4. On the other hand, Shri C.V.Pavana Kumar, representing the Department supported the order of CIT(Appeals). The ld.DR in support of his contentions relied on the decision of Cochin Bench of the tribunal in the case of Apollo Tyres Ltd., v. ACIT reported as 31 ITR (Trib) 477, wherein, the Tribunal has held income from sale of carbon credit as revenue receipts and not eligible for ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of saving of energy consumption and not because of its business. Further, in our opinion, carbon credits cannot be considered as a bi-product. It is a credit given to the assessee under the Kyoto Protocol and because of international understanding. Thus, the assessees who have surplus carbon credits can sell them to other assessees to have capped emission commitment under the Kyoto Protocol. Transferable carbon credit is not a result or incidence of one's business and it is a credit for reducing emissions. The persons having carbon credits get benefit by selling the same to a person who needs carbon credits to overcome one's negative point carbon credit. The amount received is not received for producing and/or selling any product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit for reducing carbon emission or greenhouse effect can be transferred to another party in need of reduction of carbon emission. It does not increase profit in any manner and does not need any expenses. It is a nature of entitlement to reduce carbon emission, however, there is no cost of acquisition or cost of production to get this entitlement. Carbon credit is not in the nature of profit or in the nature of income. Similar view has been taken by the co-ordinate Bench of the Tribunal in the case of Sri Velayudhaswamy Spinning Mills (P) Ltd. v. DCIT (supra), M/s Sri Ambika Cotton Mills Ltd. v. DCIT (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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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