Carbon Credit Income Exempted from Normal Income Tax Provisions and Book Profit: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) comprising Shri Challa Nagendra Prasad, Judicial Member and Shri Pradip Kumar Kedia, Accountant Member has held that the receipt from the sale of Carbon Credit is exempted under the normal provisions of the Income Tax Act, 1961 and shall not be included while computing book profit under section 115JB of the Income Tax Act, 1961.

The Assessing Officer, while passing an order against held that Carbon Credit income as revenue receipt and taxable under normal provisions of the Act and taxable under Section 115JB of the Income Tax Act, 1961.

The division bench has held that the decision relied on by the assessee in the case of its Holding company M/s. Malana Power Company Limited and found that the income from sale of Carbon Credits is capital in nature.

Holding in favour of the assessee, the Tribunal held that “It was further held that since the income/profits from the sale of Carbon Credits is essentially in the nature of capital receipts and it cannot be brought to tax under the provisions of minimum alternate tax under Section 115JB of the Act. While holding so the Tribunal followed the decision of the Jaipur Bench of the Tribunal in the case of Shree Cements Ltd. reported in 49 taxmann.com 274. We observe that the ld. CIT (Appeals) following the order of the co-ordinate bench of the Tribunal in the case of M/s. Malana Power Company Limited, which is the Holding company of the assessee decided the grounds in favour of the assessee holding that sale of Carbon Credits is capital receipt not exigible to tax under normal provisions of the Act and also while computing the book profits under Section 115JB of the Act, we see no infirmity in the order passed by the ld. CIT (Appeals).”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.