TaxTMI 
TaxTMI 
2018 (7) TMI 2369
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....nt to the terms and conditions of the environment clearance granted by Ministry of Environment and Forest? 3. The facts of the case are that the assessee company e-filed its return of income for A.Y. 2012-13 declaring total income of Rs. NIL which was further revised on 23.7.2013 declaring total income of Rs. 73,21,160/-. The case was selected for scrutiny under CASS and accordingly, notice u/s 143(2) was issued on 23.9.2013, fixing the case for hearing on 27.9.2013. Further notice u/s 142(1) alongwith questionnaire was issued on 22.9.2014 in compliance to which Sh. Nitesh Gangwal, Company Secretary Authorized representative of the assessee company appeared from time to time, furnished relevant details and the case was discussed with him. 4. Regarding issue no.1, counsel for the appellant has relied upon the following decisions:- 4.1 In Pr. Commissioner of Income Tax vs. M/s. Road Infrastructure Corporation of Raj. Ltd., DBITA No. 144/2017 decided on 18.7.2017, it has been held as under:- 3. While considering the matter, tribunal has observed as under:- "4. We have heard the rival contentions and perused the material available on record. The issue under consid....
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....ely apply to the facts of the assessee. In the instant case, undisputedly, the funds have been borrowed for the specific purpose of execution of the mega road projects and as per the loan agreement executed between the consortium of bankers and the assessee dated 23.11.2005, all the disbursements shall be deposited in the trust and retention account which shall be subject to strict control and verification by the Senior lenders and all disbursements shall be utilized solely for the purposes of implementation of the project and no other purpose. The funds are thus inextricably linked to the setting up of the mega road projects and interest earned on such borrowed funds infused in the business could not be classified as income from other sources. We also note a distinguishing feature in the instant case that the assessee is not all liberty to use the interest so earned as per its will and discretion unlike the case in Tuticorin Alkali Chemicals & Fertilizers (supra) and the interest has to be used solely for the purposes of implementation of the specified projects only. The impugned interest receipt of Rs. 35,39,479/- on such borrowed funds relates to the mega road projects/stre....
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.... under:- 5. We will take the first three heads under which the assessee has received certain amounts. These are, the rent charged by the assessee to its contractors for housing workers and staff employed by the contractor for the construction work of the assessee including certain amenities granted to the staff by the assessee. Secondly, hire charges for plant and machinery which was given to the contractors by the assessee for the purpose of facilitating the work of construction. The activities of the assessee in connection with all these three receipts are directly connected with or are incidental to the work of construction of its plant undertaken by the assessee. Broadly speaking, these pertain to the arrangements made by the assessee with its contractors pertaining to the work of construction. To facilitate the work of the contractor, the assessee permitted the contractor to use the premises of the assessee for housing its staff and workers engaged in the construction activity of the assessee's plant. This was clearly to facilitate the work of construction. Had this facility not been provided by the assessee, the contractors would have had to make their own arrangements ....
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....so generated will be his income. This income can be utilized by the assessee whichever way he likes. Merely because he utilized it to re-pay the interest on the loan taken, will not make the interest income as a capital receipt. The department relied upon the observations made in that judgment (at page 179) to the effect that it the company, even before it commences business, invests surplus funds in its hands for purchase of land or house property and later sells it at profit, the gain made by the company will be assessable under the head "capital gains". Similarly, if a company purchases rented house and gets rent, such rent will be assessable to tax under Section 22 as income from house property. Likewise, the company may have income from other sources. 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 Income-tax Act. This Court also emphasised the fact that the company was not bound to utilize 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....
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....e Revenue. The Revenue is in appeal by special leave. It is now in dispute that the appeal must succeed, having regard to the judgment of this court in Tuticorin Alkali Chemicals and Fertilizers ltd. vs. CIT [1997] 227 ITR 172. The civil appeal is accordingly allowed. The judgment and order under challenge is set aside. The question is answered in the negative and in favour of the revenue. In other words, the interest income is assessable to tax in the hands of the assessee." 4.4 In Indian Oil Panipat Power Consortium Ltd. vs. Income Tax Officer (2009) 181 Taxman 249 (Delhi), it has been held as under:- 3.3 The assessee earned interest in the sum of Rs 1,65,75,906/- in assessment year 2001-02 and Rs 1,54,62,098/- in the assessment year 2002-03. As mentioned hereinabove the Assessing Officer applied the ratio of the judgment of the Supreme Court in Tuticorin Alkali Chemicals (supra) and the judgment of the Supreme Court in the case of CIT vs Autokast Ltd; (2001) 248 ITR 110 and held that the interest which accrued to the assessee was assessable under the head "income from other sources" and could not be set off against pre- operative expenses as claimed by the assessee. 3.4 A....
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....diency. As long as the payment which is made is for the purposes of the business, and the payment made is not by way of penalty for infraction of any Law, the same would be allowable as a deduction. The contribution which was made by the assessee could under no circumstances be regarded as illegal payments or payments which were opposed to public policy. This was not a case where the assessee was paying any bribe to any person nor is this a case where money was being contributed to any private fund or for the benefit of any individual which could be regarded as a form of illegal gratification. By a voluntary scheme, with which the District Collector was associated, the District Welfare Fund has been established for the benefit of the general public. The payment to such a fund which was openly made by all the millers and which fund was being used for public benefit could not be regarded as being opposed to public policy. Requiring payment to be made, made for a just cause which would entitle a businessman to obtain a licence or permit cannot he regarded as being against the public policy. Any contribution made by an assessee to a public welfare fund which is directly, connected rela....
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....e decision of the Supreme Court in Cement Company's case and the rule in the English tax cases in the case of Atherton v. British Insulated and Helsby Cables Ltd., [1925] 10 TC 155 (HL). 11. The last case cited is one from the Bombay High Court in the case of Commissioner of Income-tax v. Associated Cement Companies Ltd., [1974] 96 ITR 650 (Bom) Assessee in this case was a cement factory situated outside the municipal limits of a town. Government decided to include the factory area within the municipal limits. Assessee agreed to provide certain amenities to the town including provision of water supply and Government on its part undertook not to include the properties of the factory within the municipal limit for fifteen years so that the assessee would not have to pay municipal taxes during that period. Assessee spent more than Rs. 2 lakhs in installing pipe lines, etc., which became the property of the municipality. Assessee claimed the sums spent by it as revenue expenses. Assessee's claim was upheld. 12. The principle indicated in these tests certainly support the assessee. As found here by the Tribunal, the primary health centre was the property of the Governme....
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....Mi, decided on 30.05.2017 wherein while considering the issues, this court in Paragraph 4 to 7, observed as under:- "4. Counsel for the department has contended that the tribunal has committed error in passing the judgment and the issue is required to be answered in favour of the Department. 5. Counsel for the respondent-assessee has relied upon the following decision of this court:- 5.1. In CIT vs. Rajasthan Mines & Minerals Ltd. D.B. ITA No. 107/2004 decided on 17.1.2017 wherein it has been observed as under:- "It is not in dispute that the issue is raised in this appeal is squarely covered by the Division Bench judgment of this Court in D.B. Income Tax Reference No. 1/2000 (CIT, Jaipur vs. Rajasthan State Mines & Minerals Ltd.) decided on 15.9.2016 wherein it has been held as under:- "Taking into consideration the fact initially the Corporation has not accepted the liability, therefore, the observations which are made by the Tribunal for the year 1991-92 were in the peculiar facts where the liability was not accepted but subsequently for the year 1992- 93, the Corporation has accepted the liability which was shown in the books of account and in view of the ma....