Taxpublishers.in - InterestingDecision/Flash_048.htm - Tax Publishers Your Tax Solution Hub

Share via Whatsapp 174 Views


Tax Publishers Dy. CIT v. Bhoruka Power Corporation Ltd. [ITA No. 1734/Bang/2016, dt. 7-8-2020] : 2020 TaxPub(DT) 3122 (Bang.-Trib.) Taxability of Sale of carbon credits Certified Emission Reduction (CER) receipt *Facts:* Assessee was in receipt of consideration by way of sale of carbon credits/CER. It was the plea of the assessee that the said amounts were capital receipt thus outside the scope of income tax which was held in favour of the assessee by the Commissioner (Appeals). Revenue went in appeal against this to the ITAT - Held by the ITAT dismissing revenue's appeal that Carbon credits/CER are capital receipts and are outside the scope of income tax. *Applied:* My Home Power Ltd. (2014) 365 ITR 82 (AP) : 2014 TaxPub(DT) 2672 (AP-HC) Ambuthirtha Power Pvt. Ltd in ITA No. 465(Bng)/2013 Ambika Cotton Mills Ltd. v. Deputy Commissioner of Income Tax (2013) 27 ITR(Trib) 44 (Chen) : 2013 TaxPub(DT) 2716 (Chen-Trib) Shree Cement Ltd. v. ACIT (2014) 31 ITR(Trib) 513 (Jp) : 2014 TaxPub(DT) 1594 (Jp-Trib) CIT v. Subhash Kabini Power Corporation Ltd. (2016) 385 ITR 592 (Karn.) : 2016 TaxPub(DT) 2164 (Karn-HC) DCIT v. M/s. Sree Rayalaseema Green Energy Ltd., Hyderabad [ITA No.1612/Hyd/2013] India Dyeing Mills Pvt. Ltd. v. ACIT, [I.T.A. No. 498/Mds/2014] : 2014 TaxPub(DT) 4316 (Chen-Trib) Sri Velayudhaswamy Spinning Mills (P) Ltd. v. DCIT [I.T.A. No. 582/Mds/2013] : 2013 TaxPub(DT) 2704 (Chen-Trib) SLP has been admitted by the Supreme Court against the high court decision of My Home Power vide SLP (C) No. 20134 of 2014 : 2018 TaxPub(DT) 3256 (SC) Contrary decision holding that Carbon credits are taxable as income also exist as in -- DCIT v. Kalpataru Power Transmission Ltd. [I.T.A. No. 538/Ahd/2013/Assessment Year 2009-10] : 2016 TaxPub(DT) 1422 (Ahd-Trib) *Editorial Note:* Finance Act, 2017 with effect from 1-4-2018 (Assessment Year 2018-19) has ushered in section 115BBG which taxes Carbon credits/CER at a presumptive rate of 10% with no expenditure being allowed on the same. One can at least safely say that Carbon credits were not taxable until assessment year 2018-19 until this amendment. 115BBG. Tax on income from transfer of carbon credits.--(1) Where the total income of an assessee includes any income by way of transfer of carbon credits, the income-tax payable shall be the aggregate of -- (a) the amount of income-tax calculated on the income by way of transfer of carbon credits, at the rate of ten per cent; and (b) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (a). (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) of sub-section (1). Explanation.--For the purposes of this section, "carbon credit" in respect of one unit shall mean reduction of one tonne of carbon dioxide emissions or emissions of its equivalent gases which is validated by the United Nations Framework on Climate Change and which can be traded in market at its prevailing market price.

Tax Publishers

Dy. CIT v. Bhoruka Power Corporation Ltd. [ITA No. 1734/Bang/2016, dt. 7-8-2020] : 2020 TaxPub(DT) 3122 (Bang.-Trib.)

Taxability of Sale of carbon credits Certified Emission Reduction (CER) receipt

Facts:

Assessee was in receipt of consideration by way of sale of carbon credits/CER. It was the plea of the assessee that the said amounts were capital receipt thus outside the scope of income tax which was held in favour of the assessee by the Commissioner (Appeals). Revenue went in appeal against this to the ITAT -

Held by the ITAT dismissing revenue's appeal that Carbon credits/CER are capital receipts and are outside the scope of income tax.

Applied:

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

Ambuthirtha Power Pvt. Ltd in ITA No. 465(Bng)/2013

Ambika Cotton Mills Ltd. v. Deputy Commissioner of Income Tax (2013) 27 ITR(Trib) 44 (Chen) : 2013 TaxPub(DT) 2716 (Chen-Trib)

Shree Cement Ltd. v. ACIT (2014) 31 ITR(Trib) 513 (Jp) : 2014 TaxPub(DT) 1594 (Jp-Trib)

CIT v. Subhash Kabini Power Corporation Ltd. (2016) 385 ITR 592 (Karn.) : 2016 TaxPub(DT) 2164 (Karn-HC)

DCIT v. M/s. Sree Rayalaseema Green Energy Ltd., Hyderabad [ITA No.1612/Hyd/2013]

India Dyeing Mills Pvt. Ltd. v. ACIT, [I.T.A. No. 498/Mds/2014] : 2014 TaxPub(DT) 4316 (Chen-Trib)

Sri Velayudhaswamy Spinning Mills (P) Ltd. v. DCIT [I.T.A. No. 582/Mds/2013] : 2013 TaxPub(DT) 2704 (Chen-Trib)

SLP has been admitted by the Supreme Court against the high court decision of My Home Power vide SLP (C) No. 20134 of 2014 : 2018 TaxPub(DT) 3256 (SC)

Contrary decision holding that Carbon credits are taxable as income also exist as in --

DCIT v. Kalpataru Power Transmission Ltd. [I.T.A. No. 538/Ahd/2013/Assessment Year 2009-10] : 2016 TaxPub(DT) 1422 (Ahd-Trib)

Editorial Note: Finance Act, 2017 with effect from 1-4-2018 (Assessment Year 2018-19) has ushered in section 115BBG which taxes Carbon credits/CER at a presumptive rate of 10% with no expenditure being allowed on the same. One can at least safely say that Carbon credits were not taxable until assessment year 2018-19 until this amendment.

115BBG. Tax on income from transfer of carbon credits.--(1) Where the total income of an assessee includes any income by way of transfer of carbon credits, the income-tax payable shall be the aggregate of --

(a) the amount of income-tax calculated on the income by way of transfer of carbon credits, at the rate of ten per cent; and

(b) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (a).

(2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) of sub-section (1).

Explanation.--For the purposes of this section, "carbon credit" in respect of one unit shall mean reduction of one tonne of carbon dioxide emissions or emissions of its equivalent gases which is validated by the United Nations Framework on Climate Change and which can be traded in market at its prevailing market price.