INCOME TAX ACT, 1961

Section 4 Section 80B & 80-IA

Income - Capital or revenue receipt - Receipts from sale of carbon credit -

Revenue by way of appeal filed before High Court questioned order of Tribunal as to whether Tribunal was legally correct in holding that sale of carbon emission reduction (CER) also known as carbon credits was to be considered as capital receipt, not liable to tax. Held: Assessee was carrying on the business of power generation. The Carbon Credit was not even directly linked with power generation. On sale of excess Carbon Credits, income was received and hence, as correctly held by Tribunal, it was capital receipt and it could not be treated as business receipt or income and as receipt from the sale of carbon credit was a capital receipt, it would go out of the purview of the gross total income' as defined under section 80B(5), which expression was found in section 80-IA.

Followed:CIT v. My Home Power Ltd. (2014) 365 ITR 82 (AP-HC) : 2014 TaxPub(DT) 2672 (AP-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

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