VALUELABS LLP,HYDERABAD vs. DCIT., CENTRAL CIRCLE 8(1), HYDERABAD

ITA 1609/HYD/2025Status: DisposedITAT Hyderabad06 March 2026AY 2020-2111 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the definition of 'carbon credit' in Section 115BBG is precise and restrictive, requiring validation under the UNFCC mechanism for reduction of carbon dioxide emissions. RECs, issued under the Electricity Act, do not meet this definition. Therefore, income from RECs is not eligible for the concessional tax rate under Section 115BBG.

What were the facts?

The assessee firm earned income from the sale of Renewable Energy Certificates (RECs) and offered it to tax under Section 115BBG at a concessional rate of 10%. The Assessing Officer (AO) disallowed this, stating that Section 115BBG applies only to 'carbon credits' and not RECs. The CIT(A) upheld the AO's order.

What were the issues?

Whether income from the sale of Renewable Energy Certificates (RECs) is eligible for the concessional tax rate under Section 115BBG of the Income Tax Act, and if not, whether it qualifies for deduction under Section 801A.

Which sections of the Income-tax Act were involved?

Section 115BBG,Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad

Before: Shri Manjunatha G. & Shri Ravish Sood

For Appellant: Shri P. Murali Mohan, CA
For Respondent: Ms. U. Mini Chandran
Hearing: 29/01/2026

PER. RAVISH SOOD, J.M: The present appeal filed by the assessee firm is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 13/08/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under section 143(3) r.w.s 144B of the Income Tax Act, 1961 (for short, "the Act"), dated 27/09/2022 for the Assessment Year (AY) 23/11/2021.

The assessee firm has assailed the impugned order of the CIT(A) on the following grounds of appeal: The order of the Ld. CIT (A)

The order continues below.

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