TaxTMI 
TaxTMI 
TaxTMI 
2015 (2) TMI 1419
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....company, which is engaged in the business of power generation using agro-waste. The return of income for the year under consideration was filed by it on 26.9.2009, declaring total income of Rs. 'Nil" under the normal provisions of the Act and book profit of Rs. 2,40,11,593 under S.115JB of the Act. In the process of its activity of power generation by using agro waste, the assessee company had received carbon credits. The said carbon credits were sold by the assessee to a foreign company, viz. M/s. EDF Trading Ltd, London, England for Rs. 4,28,78,7817. The said amount of sale proceeds of carbon credits was included by the assessee for the purpose of computing the profits eligible for deduction under S.80IA. The said deduction under S.80IA a....
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....CIT (ITA No. 1114/Hyd/2009 dated 2.11.2012), and the same therefore, was not liable to be included at all in the total income of the assessee. The learned CIT(A) admitted the additional grounds raised by the assessee and decided the issue raised therein in favour of the assessee by holding that although the assessee was not entitled for deduction under S.80IA in respect of sale of carbon credits as held by the Assessing Officer, receipts from sale of carbon credits being in the nature of capital receipts as held by the Tribunal in the case of My Home Power Ltd. Hyderabad (supra), the same was not liable to be included in the total income of the assessee at all. He therefore, deleted the disallowance made by the Assessing Officer under S.80I....
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....t 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 that the assessee gets a privilege in the nature of transfer of carbon credits. Thus, the amount received for carbon credits has no element of profit or gain and it cannot be subjected to tax in any manner under any head of income. It is not liable for tax for the assessment year under considera....
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.... 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 considered as business income and it is a capital receipt. Accordingly, we are of the opinion that the consideration received on account of carbon credits cannot be considered as income as taxable in the assessment year under consideration. Carbon credit is not an offshoot of business but an o....
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....le Andhra Pradesh High Court, vide its judgment reported in 365 ITR 82, holding that the proceeds on sale of excess carbon credits is a capital receipt. The issue involved in this appeal of the Revenue thus is squarely covered in favour of the assessee on merits by the decision of the jurisdictional High Court in the case of My Home Power Ltd (supra) and respectfully following the same, we hold that the amount of sale proceeds from carbon credits received by the assessee cannot be included in its income, being in the nature of a capital receipt. Consequently, there would be no positive income from the business of generation of power in the hands of the assessee for the year under consideration and therefore, the question of claiming any ded....