2015 (11) TMI 1055

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....h regard to treatment of carbon credit receipts. 3. In this case, the assessee admitted receipts from trading of carbon credits as revenue nature and included the same for computation of deduction under section 80-IA of the Income-tax Act, 1961. The Assessing Officer observed that it is not derived from industrial undertaking and not considered the same for computation of deduction under section 80-IA of the Act. Accordingly, he included that portion of income from the business income of the assessee so as to compute deduction under section 80-IA of the Act. Before the Commissioner of Income-tax (Appeals), the assessee pleaded that if it is not trading receipt, it is to be considered as capital receipt and excluded from the total income ....

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....s who have surplus carbon credits can sell them to other assessees under the Kyoto carbon credits 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, by-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. The same view is supported by....