INCOME TAX ACT, 1961

Section 4

Income - Capital or revenue receipt - Carbon credit receipts -

The issue in dispute was taxability of carbon credit receipts, on facts the CIT(A) had deleted addition made by the AO.Held: Assessee's own case for assessment year 2009-10 in ITA No. 538/Ahd/2013 Order, dt. 18-3-2016. One also take note of the insertion of section 115BBG inserted with effect from assessment year 2018-19 whereby the legislature had sought to tax income by way of transfer of carbon credits at a specified percentage. Clearly, the charge of tax of transfer of carbon credit was prospective with effect from assessment year 2018-19 onwards. As a corollary, the income arising on account of carbon credit receipts was not taxable in the assessment years 2010-11 and 2011-12 in question. This aspect had been taken note of by the co-ordinate Bench in Gujarat Fluorochemicals v. Dy. CIT in ITA No. 805/Ahd/2017 and co-ordinate Bench after taking judicial notice of various decisions operating in this regard and also prospective amendment in the law from assessment year 2018-19 had rendered a view that receipt on account of carbon credits are to be treated as capital receipt, and not susceptible to taxation.

Followed:Assessee's own case for assessment year 2009-10 in ITA No. 538/Ahd/2013 Order, dt. 18-3-2016, Tax Appeal No. 73 of 2017, judgment, dt. 2-3-2017 and Gujarat Fluorochemicals v. Dy. CIT ITA No. 805/Ahd/2017 and Ors. Order dt. 13-8-2018.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11 & 2011-12

INCOME TAX ACT, 1961

Section 14A Rule 8D

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