TaxTMI 
TaxTMI 
2015 (4) TMI 1181
X X X X Extracts X X X X
X X X X Extracts X X X X
....l is justified in concluding that the amount of Rs. 12,50,000/= received towards cost of tender documents was correctly assessed by the respondent under the head "other sources" on the facts and circumstances of the case? ii) Whether the Tribunal is correct in confirming the assessment of the said receipt under the head "income from other sources" by the respondent in the light of the decision of the Supreme Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd., even though the subsequent decision rendered by the Supreme Court distinguishing the above case was followed by the first appellate authority in deleting the said addition?" 2. The case of the appellant/assessee is that while it intended to produce power, fl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t by filing the present appeal. 4. Heard Mr.Sridhar, learned counsel appearing for the appellant/assessee and Mr.T.R.Senthilkumar, learned standing counsel appearing for the respondent/Department and perused the materials placed in the typed set of documents as also the judgments relied on by the learned counsel on either side which have been referred by the authorities below in coming to their respective findings. 5. The short issue that arise for consideration in this appeal is "Whether on the admitted facts, the receipt of amount on the sale of tender documents should be treated as income from other sources or as capital receipt?". 6. For better appreciation of the case on hand, the reasoning of the Tribunal, as found in para-3 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome out of the surplus funds, it invested the amounts for the purpose of earning interest and, therefore, held that it is revenue in nature and has to be taxed accordingly. The relevant portion is extracted hereinbelow for better clarity:- "In the case before us, the company had surplus funds in its hands. In order to earn income out of the surplus funds, it invested the amount for the purpose of earning interest. The interest thus earned is clearly of revenue nature and will have to be taxed accordingly. The accountants may have taken some other view but accountancy practice is not necessarily good law. In B. S. C. Footwears case (1972 (83) ITR 269), the House of Lords had no hesitation in holding that the accounting practice fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the construction of its steel plant. The receipts had been adjusted against the charges payable to the contractors and had gone to reduce the cost of construction. While considering this issue, the Supreme Court had occasion to take into consideration the judgment of the Delhi High Court in the case of ACIT - Vs - Indian Drugs & Pharmaceuticals (1983 (141) ITR 134 (Del.)) and endorsed the view of the Delhi High Court and, finally it was held that the receipts were capital receipts and not income of the assessee from any independent source. The relevant portion of the decision of the Supreme Court is extracted hereinbelow for better appreciation :- "In the case of Addl. CIT v. Indian Drugs and Pharmaceuticals Ltd. (1983 (141) ITR 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... endorsed by the Supreme Court that the receipts which are inextricably linked to the process of setting up of business could not be construed in any other manner other than in the nature of capital receipt. 11. The Tribunal fell in error in merely stating that the decision in Bokaro Steel case (supra) is distinguishable from Tuticorin Alkali Chemicals & Fertilizers case (supra), without even understanding the scope of the decision in Bokaro Steel case (supra). The admitted fact in this case is that the amount received by the appellant/assessee in sale of tender documents at the pre-commencement stage is in relation to the establishment of the unit and, therefore, it could be clearly stated that it is intrinsically connected with the pur....