Itta/60/2014 Of Commissioner Of Income Tax-Iv v. M/S My Home Power Ltd

IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR INCOME TAX APPELLATE TRIBUNAL APPEAL NO.60 OF 2014 DATED:19.2.2014 Between: The Commissioner of Income Tax – IVHyderabad … Appellant And M/s. My Home Power Ltd.,5[th] Floor, My Home Jupally Ameerpet, Hyderabad … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA ANDTHE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. NO.60 OF 2014 JUDGMENT:(per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be preferred and admitted against thejudgment and order of the learned Tribunal, dt.2.11.2012, on thefollowing substantial questions of law: 1.“Whether, in the facts and circumstances of the case andin law, ITAT is correct in holding that sale of CarbonCredits is to be considered as Capital Receipt and notliable for tax under any head of income under IncomeTax Act, 1961?in law, ITAT is correct in holding that sale of CarbonCredits is to be considered as Capital Receipt and notliable for tax under any head of income under IncomeTax Act, 1961? 2.Whether, in the facts and circumstances of the case andin law, ITAT is correct in holding that there is no cost ofacquisition or cost of production to get entitlement for theCarbon Credits, without appreciating that generation ofCarbon Credits is intricately linked to the machinery andprocesses employed in the production process by theassessee?”in law, ITAT is correct in holding that there is no cost ofacquisition or cost of production to get entitlement for theCarbon Credits, without appreciating that generation ofCarbon Credits is intricately linked to the machinery andprocesses employed in the production process by theassessee?” Sri J.V. Prasad, learned Counsel appearing for the appellant –Revenue submits that the consideration received on account of sale ofCarbon Credits should be treated to be business income as the salehas been made in connection with the business. We have considered the aforesaid submission and we areunable to accept the same, as the learned Tribunal has factually foundthat “Carbon Credit is not an offshoot of business but an offshoot ofenvironmental concerns. No asset is generated in the course ofbusiness but it is generated due to environmental concerns.” We agree with this factual analysis as the assessee is carrying on thebusiness of power generation. The Carbon Credit is not even directlylinked with power generation. On the sale of excess Carbon Creditsthe income was received and hence as correctly held by the Tribunal itis capital receipt and it cannot be business receipt or income. In thecircumstances, we do not find any element of law in this appeal. The appeal is accordingly dismissed. There will be no order asto costs. ________________________ K.J. SENGUPTA, CJ _______________________ SANJAY KUMAR, J 19.2.2014bnr