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TMI Blog2015 (4) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Bench, we hold that the CDM receipts are capital receipts. - Impugned order set aside - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... entative submitted that the case of the assessee is squarely covered by the earlier orders of the Tribunal, wherein the Tribunal has held that the receipt of such consideration cannot be considered as business income and it is a capital receipt. 4. On the other hand, Dr. S. Moharana, representing the Revenue vehemently opposed the submission of the authorised representative. The learned Departmental representative submitted that the case of the assessee is not covered by the order in the case of My Home Power Ltd. v. Deputy CIT reported as [2013] 21 ITR (Trib) 186 (Hyd). The learned Departmental representative supporting the order of the Commissioner of Income-tax (Appeals) made the following submissions : (i) the different clauses in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l representative further submitted that the CERs are akin to import entitlement, the incentives in the form of carbon credit are given by the Government to avoid use of fossil fuel in the industry. If saving in CERs is made, the industry can make money by selling them. They have almost similar features as in an "important entitlement". Based on the quantum of exports, the exporters are given import entitlements. The exporter can either import the raw material/goods covered by the important entitlements or without importing the goods they can sell the important entitlements ; (viii) CERs should be taxable as revenue receipt under section 28(iv) ; and (ix) the CERs are received from the Government (out of the quota allotted to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. 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 consideration in terms of sections 2(24) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 car bon 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 offshoot of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the present case, therefore, they do not support the case of the Revenue.
6. The co-ordinate Bench of the Tribunal in the case of Ambika Cotton Mills Ltd. v. Deputy CIT [2013] 27 ITR (Trib) 44 (Chennai) while dealing with an identical issue followed the decision of the Hyderabad Bench of the Tribunal in the case of My Home Power Ltd. v. Deputy CIT reported as [2013] 21 ITR (Trib) 186 (Hyd). Respectfully following the decision of the co-ordinate Bench, we hold that the CDM receipts are capital receipts. Accordingly, the order of the Commissioner of Income-tax (Appeals) is set aside and the appeal of the assessee is allowed.
The order pronounced on Wednesday, the 12th June, 2013 at Chennai. X X X X Extracts X X X X X X X X Extracts X X X X
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