TaxTMI 
TaxTMI 
2016 (9) TMI 394
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....Tax Act, 1961 (herein after referred to as 'the Act'). 2. The Revenue has raised the following grounds of appeal:- ''2. The learned CIT(A) has erred to consider that the Clean Development Mechanism (CDM) receipts are not Subsidies, but a trading receipt. The assessee's power generation from the windmill compared to the Conventional power generation has no emission of C02. This attribute was given an economic value by the issuance of Certified Emission Reduction (CER) by the United Nations Framework Convention on Climate Change (UNFCCC). These CERs are traded in the various climate exchanges or through private quotes to the Annex I countries or the organizations in the Annex I countries. 3. The learned CIT(A) has erred to consid....
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....ider that the CDM receipts are neither subsidies nor capital receipts but incomes from selling of intangible goods called CERs in the market and are taxable as business income under the provisions of Section 28(iv). 7. The learned Commissioner of Income tax(Appeals), Coimbatore has erred in holding that the assessee is entitled for deduction u/s-80IA. 8. The learned Commissioner of Income tax-I, Coimbatore has erred to consider that the department has filed a Special Leave Petition (SLP) before the Hon'ble Supreme Court of India which is pending for decision. 9. The learned Commissioner of Income tax-I, Coimbatore, should have observed that as per the provisions of section- 80IA(2) an assessee can opt for deduction of any ten c....
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....ed an alternative prayer that only in view of deduction claim u/s 80IA, the said carbon credit receipts had been offered as 'revenue' receipts. He sought to cancel his action of offering the carbon credit receipts as income as well as deduction claim u/s 80IA in view of the decision of the Chennai 'tribunal' in Ambika Cotton Mills Ltd(supra). We find that the CIT(A) has rejected the same as under: " 7.0 Carbon Credit - The Assessing Officer disallowed an amount of Rs. 45,83,739/- being carbon credit. However, a perusal of the assessment order and the submissions of the assessee would indicate that the assessee has admitted an amount of Rs. 1,18,78,061/- as revenue receipts in their return of income as under: "Receipts in....
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....rbon credits are directly proportionate to the reduction in the amount of carbon-dioxide and other green house gases by using nonconventional means but are not revenue derived from generation of electricity from WTGs. 7.4 It has been held in the case of CIT V Sterling Foods 237 ITR 579 (SC) that the word derived restricts the qualifying profits to the profits arising directly from the particular activity. 7.5 Hence considering the facts of the case and the decision of the honorable Supreme Court in sterling foods, revenue from sale of carbon credits cannot be treated as eligible for deduction under section 80IA. However, considering the facts and circumstances it indicate that the receipts from sale of carbon credit cannot....