2018 (9) TMI 1821

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....interest income received during construction period against the expense during construction period and assessing it as income from other sources" overlooking the fact that income earned on funds which are otherwise inextricably linked to the setting up of the plant is required to be capitalized and set off against the expense during construction. 2. The CIT(A) failed to note that the ratio of the Apex Court in the case of Turticorin Akali Chemicals & Fertilizers Ltd. (227 ITR 172) is not applicable to the case of the appellant. 3. Without prejudice to the above grounds, the CIT(A) erred in confirming the action of the Assessing Officer not setting off the business loss of Rs. 52,52,714/- returned by the appellant against t....

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....4,90,59,784/- and had shown the net balance of Rs. 15,24,97,274/- towards expenses incurred during construction. However, the Assessing Officer had not accepted the setting off the interest income against the expenditure incurred during the construction period and accordingly, completed the assessment by treating the interest earned of Rs. 14,88,64,388/- as taxable under the head income from other sources. 4. On appeal, the CIT(A) decided the issue against the assessee by holding that any income earned on surplus fund deposited with Banks cannot be incidental to the implementation of the assessee's project and therefore, it becomes 'income from other sources' and is to be taxed separately. 5. Against this, the assessee is in appeal be....

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.... the fund, has ever been made. Hence, the Ld. AR prayed for admission of the additional evidence. 8. The Ld. DR strongly opposed the admission of additional evidence and submitted that the CIT(A) had considered all the aspects and decided the issue on merit and there is no necessity to admit the additional evidence. 9. We have heard the rival submissions and perused the record. The additional evidence filed by the assessee in the form of a letter from Government of India, Ministry of Health & Family Welfare dated 14/06/2018 is very vital for deciding the disputed issue. For this proposition, we rely on the judgment of the Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (229 ITR 383) wherein it was held as under: ....