TaxTMI 
TaxTMI 
TaxTMI 
2014 (3) TMI 428
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....the array of grounds raised in the appeal, it emerges that the assessee has assailed the order of the CIT(A) confirming additions made in the assessment order dated 29.12.2011 of an amount of Rs. 3,39,64,303/- claimed as capital receipt re Clean Development Mechanism (CDM) by realizing carbon credit, Rs. 660/- for delayed payment of TDS, Rs. 89,690/- on account of interest on TDS and that of TNEB interest for security deposit amounting to Rs. 15,51,913/-. 3. In the course of hearing, the assessee vehemently argue that the CIT(A) has erred in confirming the aforesaid additions [except that of Rs. 660/-, which is not pressed before us] and prays for deleting the same. To buttress its submissions, it places reliance on case law reported [2012....
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....rtaining to carbon credits that the receipt in question was Revenue in nature since it had risen from emission reduction in market which is liable to be considered in the nature of goods having all attributes thereof. Similarly, the Assessing Officer also turned down assessee's submissions claiming interest of Rs. 89,660/- on TDS by holding that the parties at whose behest the amount had been paid did not agree and the amount had been written off as sundry expenses. In the same tune, the Assessing Officer noticed through AIR information, a receipt in assessee's hands of Rs. 15,59,913/- from TNEB. He sought assessee's accounts copy and TDS certificates. On verification thereof, the Assessing Officer found that though the receipt of Rs. 19,....
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....ITAT, Hyderabad (supra) wherein it has been held 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 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 ....
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.... 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 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 con....
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....ating assessee should apply AS-9 to recognise revenue in respect of sale of CERs. 26. Thus, sale of carbon credits is to be considered as capital receipt. This ground is allowed." Taking cue from the same, we also hold that the CIT(A) has erred in confirming addition made by the Assessing Officer holding herein that the realization of carbon credit in question by the assessee gives rise to a revenue receipt. Therefore, the addition stands deleted. 10. Coming to the issue of addition pertaining to Rs. 89,690/-. The sole reason given by the authorities below is that before making the addition, the party at whose instance the assessee had stated to have paid the amount did not support its plea and the amount had been written off as sundry ....