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TMI Blog2015 (6) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... but it is generated due to environmental concerns.' We agree with this factual analysis as the assessee is carrying on the business of power generation. The carbon credit is not even directly linked with power generation. On the sale of excess carbon credits the income was received and hence as correctly held by the Tribunal it is capital receipt and it cannot be business receipt or income. - Decided against the revenue. - I.T.A. No. 1190/Hyd/2014 - - - Dated:- 7-11-2014 - SHRI B. RAMAKOTAIAH AND SMT. ASHA VIJAYARAGHAVAN, JJ. For the Appellant : Sri Rajat Mitra For the Respondent : Sri P. Vinod ORDER Smt. Asha Vijayaraghavan (Judicial Member).- This appeal by the Revenue is directed against the order of the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try of crediting the account of Sree Rayalaseema Green Steloy Ltd., it was submitted that the same was done as per the understanding between the assessee and the said company, as the assessee is using the steam supplied by Sree Rayalaseema Green Steloy in lieu of which the assessee had agreed to pass on portion of their entitlement by way of crediting to their account, as they are not otherwise entitled to. As a matter of fact the credit to the extent of ₹ 5,60,00,000 was offered as income by Sree Rayalaseema Green Steloy Ltd. for the same year. Alternately it was submitted that since generation of such income has direct nexus with power generation using biomass is derived from such business which is allowable as deduction under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not derived from sale of power, it was proposed to exclude this amount from the deduction claimed. In response, the company in its reply dated February 8, 2013 had submitted a clarification on this, but has not given any objection to this exclusion. Hence, the Assessing Officer excluded the same from the deduction claimed. 6. Aggrieved by this assessment, the assessee had preferred an appeal before the Commissioner of Income-tax (Appeals) on the following lines : 1. The order of the Assessing Officer is perverse, illegal and is against the facts and unsustainable in law. 2. The Assessing Officer erred in bringing to tax the proceeds of carbon credits of ₹ 5,60,00,000 which is capital in nature by disregarding b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with UNFCCC, the international body for accreditation for carbon credits and was not even entitled for such registration as it was not in the business of power generation. The transfer of the sale receipts for carbon credits to SRGS by the assessee was, therefore, without any basis and not on business considerations. The Assessing Officer is therefore, correct in his conclusions that the receipt of ₹ 5,60,00,000 on sale of carbon credits were receipts of the assessee. Accordingly, the Commissioner of Income-tax (Appeals) dismissed the ground on this issue. 9. The Commissioner of Income-tax (Appeals) further observed that the second and third grounds of appeal relate to the taxation of the sum of ₹ 5,60,00,000 from sale of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of carbon credit is a capital receipt. Accordingly, he partly allowed the second and third grounds of appeal. Aggrieved, the Revenue is in appeal before us with the following grounds of appeal : (a) The learned Commissioner of Income-tax (Appeals) erred in law allowing the assessee's appeal. (b) The hon'ble Commissioner of Income-tax (Appeals) ought not to have treated the sale of carbon credits as capital receipt. (c) The hon'ble Commissioner of Income-tax (Appeals) out to have appreciated the fact that the issue involved in the appeal is not the taxability of carbon credits, but its eligibility for deduction under section 80-IB. 11. We have heard both parties and perused the material o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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