2014 (10) TMI 820

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....of Rs. 49,21,087 received by the assessee on account of clean development mechanism (CDM) is capital or revenue receipt ? 2. The assessee is engaged in the business of manufacture and export of garments and generation of electricity through windmills. The assessee received Rs. 49,21,087 towards CDM receipts. The assessee in its return of income claimed CDM receipts as capital receipts. The Assessing Officer in scrutiny assessment held CDM receipts to be revenue in nature. The Assessing Officer further held that CDM receipts are attributable to windmill power generation and not derived from generation of power from windmill, therefore, deduction under section 80-IA will not be available on such CDM receipts and made addition, accordingly.....

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....ioner of Income-tax (Appeals). The learned Departmental representative in support of his contentions relied on the decision of Cochin Bench of the Tribunal in the case of Apollo Tyres Ltd. v. Asst. CIT [2014] 31 ITR (Trib) 477 (Cochin). Wherein, the Tribunal has held income from sale of carbon credit as revenue receipts and not eligible for deduction under section 80-IA. 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 the Tribunal in several cases. The Hyderabad Bench of the Tribunal in the case of My Home Power Ltd. v. Deputy CIT [2013] 21 ITR (Trib) 186 (Hyd) has held carbon credit as capital receipts. Th....

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...., 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, 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 th....