|QUERY:||A chemical company by installing sophisticated equipment for pollution control generates carbon credit. Carbon credit which is sold for Rs. 20/- crores. The Income tax Department is of the view that the proceeds are liable to tax under business income. The auditor is of the view that the income is taxable under capital gains.|
|ANSWER:||Click here to read the full answer of the expert|
|EXPERT:||CA. H. N. Motiwalla|
|CATCH WORDS:||capital gains, Capital receipts, Carbon Credit|
In My Home Power Ltd. v. DCIT [IT Appeal No. 1114 (Hyd.) of 2009 dt. Nov. 02, 2012] the Hyderabad Tribunal has held as under:
“Carbon credit is in the nature of an entitlement received to improve world atmosphere reducing carbon, heat and gas emissions.