TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 425
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.... and are being disposed of by a single consolidated order for the sake of convenience. 2. The grounds raised by the Revenue in these appeals, which are identical except the amount in dispute, read as under:- "(1) On the facts and circumstances of the case and in law, ld. CIT(A) has erred in allowing set off of the interest income of Rs. 1,57,93,739/- (for A.Y. 2010-11) and Rs. 1,05,16,357/- (for A.Y. 2011-12) from the project cost as development expenditure account. (2) On the facts and circumstances of the case and in law, ld. CIT(A) has erred in deleting the interest income which is taxable, under income from other source as held "The amount of interest received by the company flows from its investments and is its income and is clea....
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....e as deduction under section 57(iii) of the Act and, therefore, there was no question of making addition on account of such interest income under the head "income from other sources". This contention of the asessee was not found acceptable by the Assessing Officer and he proceeded to bring to tax the interest income earned by the assessee in both the years under consideration in the hands of the assessee under the head "income from other sources". 4. The addition made by the Assessing Officer on account of interest income under the head "income from other sources" in both the years under consideration was challenged by the assessee and after considering the submissions made by the assessee, the facts of the case and the case laws relied up....
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....i Chemicals & Fertilizers Ltd.. vs. CIT in 141 CTR 387(SC) which was relied upon by the A.O The Hon'ble Supreme Court has observed in para-7 of the said judgement that "The company may also, as in that case, keep the surplus funds in short term deposits in order to earn interest. Such interest will be chargeable under section 56 of the Act. This court also emphasized the fact that the company was not bound to utilise the interest so earned to adjust it against the interest paid on borrowed capital. The company was free to use this income in any manner it liked. However, while interest earned t)y investing borrowed capita! in short term deposits is an independent source of income not concerned with the construction activities or business....
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..../- after adjusting interest income of Rs.l,05,16,357/-, the balance of Rs. 5,40,34,747/- was debited to project development expenditure account, which was Included in total work-in-progress in the Balance Sheet. The AO has brought to tax entire interest income of Rs. 1,05,16,357/- as income from other Sources by applying ratio of judgment in case of Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. CIT in 141 CTR 387(SC). The appellant has relied upon the ratio of the two Judgements of Hen'ble Supreme Court in the case CIT vs. Bokaro Steer Ltd. 236 TTR 315(SC) and CTT vs.-Kamal Co-operative Suqar Mills Ltd. 243 ITR 2(SC). While deciding the issue on taxability of interest: income on short term bank deposits in the case of Bokaro Stee....
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....ound to be covered by issue of the decision of the of Hon'ble Apex Court in the case of CIT v Karnal Cooperative Sugar Mills Ltd 243 ITR 2(SC) and the decision of the Hon'ble Supreme court in CIT v. Bokaro Steel Ld.( 1999) 236 ITR 31S(SC). Therefore, the interest income amounting to Rs. Rs. 1,05,16,357/- on bank and other deposits during the pre-operative period are held to be in the nature of capital receipts. The addition made by the A.O. to the appellant's returned income is directed to be deleted. Grounds No. 2 to 3 are treated as allowed". 5. Aggrieved by the orders of the ld. CIT(Appeals), the Revenue has preferred these appeals before the Tribunal. 6. We have heard the arguments of both the sides and also perused the r....