New Delhi: The Supreme Court on Saturday takes interesting questions related to global warming – is the money obtained from carbon credit trading by Green Industries? – And say this will have a deep impact on the industry.
This problem can have a bearing on the promise of ‘net-zero in 2070 India at Glasgow Climate Summit.
Sanjiv Khanna and Bela M Trivedi captured the importance of the issue submitted by additional lawyers General N Venkataratan and Advisor About Kaul challenges the decision of the High Court that the money obtained from carbon credit trading is treated as ‘capital assets’ is not responsible for income tax.
Justice Khanna said this would have a deep impact on future industrial scenarios considering the increasing cry of global warming.
Venkataran said, “The problem can – both trading in carbon credit trading is part of an industry business activity? Today may be capital assets but can be an income asset because carbon trade income can be classified as revenue from other sources.” He said, “If you say classifying carbon credit trade as income from other sources, there might be a problem.
If this will be treated as business assets, then the problem will appear in some cases.
“The bench does not describe more because it issues notifications to Lanco Tanjore Power Corporation Ltd, which is given release from Tax liability for the income obtained by selling carbon credits to foreign companies.
With this new regulation apply, pressure on businesses to find ways to reduce their carbon footprint to grow.
Most of the temporary solutions currently involve the use of carbon markets.
What the carbon market does is to change CO2 emissions into commodities by providing prices.
When a company buys carbon credits, usually from the government, they get permission to produce a ton of CO2 emissions.
With carbon credit, carbon income flows vertically from the company to the regulator, even though the company ends with excessive credit can sell it to other companies.
In this case, Lanco Tanjore Thermal Power Company Ltd.
was burdened with the tax effect of RS 567 lakh for its income from carbon credit trade for assessment of 2010-11.
After this case tortuous through the Tax Court, Madras HC in February sucked profit capital assets and decided it was not responsible for taxes.
This center raises this question before SC, “HC is justified in holding that sales of carbon emissions reduction, also known as carbon credits, must be considered as acceptance of capital and irresponsible for taxation, without respecting carbon loans is income in nature as clearly from the section 115bg included in income tax laws? “