Posco India Private Limited, Bhubaneswar V. ITO, Ward-1(2), Bhubaneswar

CO 26/CTK/2018

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3987 (ITAT-CUTTACK)
• Duration Of Justice: 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 12-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MOHAPATRA
• Keywords: Business income; Transfer pricing; Opportunity of being heard; Capital receipt; Revised return; Revenue expenditure
• Section: 142(1); 14A; 56

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PA V AN KUMAR GADALE, JM ./ ITA NO. 64 / CTK /201 7 ( [ [ / ASSESSMENT YEAR S : 201 4 - 2015 ) ITO, WARD - 1(2), BHUB ANESWAR . VS. POSCO - INDIA PRIVATE LIMITED, GROUND FLOOR, FORTUNE TOWERS, CHANDRASEKHARPUR, BHUBANESWAR - 751023 ./ ./ PAN/GIR NO. : A ADCP 6735 B ( / APPELLANT ) .. ( / RESPONDENT ) AND CROSS OBJECTION NO . 26 /CTK/201 8 (A RISING OUT OF ITA NO. 64 /CTK/2018) ( [ [ / ASSESSMENT YEARS : 201 4 - 201 5 ) POSCO - INDIA PRIVATE LIMITED, GROUND FLOOR, FORTUNE TOWERS, CHANDRASEKHARPUR, BHUBANESWAR - 751023 VS. ACIT, CORPORATE CIRCLE - 1(2), BHUBANESWAR ./ ./ PAN/GI R NO. : A ADCP 6735 B ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI A.K.MOHAPATRA, CITDR [ /AS SESSEE BY : NONE (WRITTEN SUBMISSION) / DATE OF HEARING : 31 / 0 7 /201 8 / DATE OF PRONOUNCEMENT 31 /0 7 /201 8 / O R D E R PER PAVAN KUMAR GADALE, JM : THE REVENUE HAS FILED APPEAL AGAINST THE ORDER PASSED BY THE CIT(A) - 1 , BHUBANESWAR , FOR THE ASSESSMENT YEAR 2014 - 2015 . THE ASSESSEE HAS ALSO FILED CROSS OBJECT ION. 2. AT THE TIME OF HEARING, N ONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE MATTER WAS CALLED FOR HEARING. HOWEVER, LD. AR OF THE ITA NO. 64 /CTK/201 8 AND CO NO. 26 /CTK/2018 POSCO INDIA LIMITED 2 ASSESSEE SHRI B.K.MAHAPATRA HAS FILED WRITTEN SUBMISSION DATED 30.07.2018 STATING THEREIN THAT THE ISSUES RAISED IN REVE NUES APPEAL AND THE CROSS OBJECTIN FILED BY THE ASSESSEE ARE COVERED BY THE COMBINED ORDER OF THE TRIBUNAL IN ITA NO.155&122/CTK/2017 AND CO NO.07&08/CTK/2017 FOR THE ASSESSMENT YEAR 2010 - 2011 AND 2012 - 2013, COPY OF WHICH IS ENCLOSED ALONG WITH THE WRITTE N SUBMISSION. ACCORDINGLY, THE BENCH PROCEEDED TO DISPOSE OFF THE APPEAL AFTER CONSIDERING THE FACTS AND MATERIAL AVAILABLE ON RECORD , WRITTEN SUBMISSION OF ASSESSEE AND THE SUBMISSIONS OF LD. DR. 3 . THE SOLE ISSUE RAISED BY THE REVENUE IN ITS APPEA L IS TH AT THE CIT(A) ERRED IN DELETING ADDITION OF INTEREST INCOME OF RS. 30,86,63,374/ - FOR THE ASSESSMENT YEAR 201 4 - 2015 . 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014 - 2015 ELECTRONICALLY ON 28.11.2014 D ISCLOSING TOTAL INCOME AT RS.NIL. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICES U/S.143(2) & 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WERE ISSUED TO THE ASSESSEE. IN COMPLIANCE, LD. AR OF THE ASSESSEE APPEARED AND FURNISHED BOOKS OF ACCOUNTS ALONG WITH EVIDENTIAL VOUCHERS AND THE C A SE WAS HEARD . THEREAFTER THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT AFTER MAKING ADDITION ON ACCOUNT OF INTEREST INCOME AND ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.30,86,63,370/ - AN D PASSED ORDER DATED 08.12.2016. ITA NO. 64 /CTK/201 8 AND CO NO. 26 /CTK/2018 POSCO INDIA LIMITED 3 5 . ON APPEAL, THE CIT(A) FOLLOWING THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 - 09 IN ITA NO.462/CTK/2011 HAS HELD THAT THE INTEREST INCOME ON FDS CANNOT BE TAXED BEING CAPITAL RECEIPTS . THE CIT(A) ALSO OBSERVED THAT IN THE ASSESSMENT YEAR 2009 - 2010, THE CIT(A) - II HAS ALSO DELETED THE ADDITION ON ACCOUNT OF INTEREST ON FDS FOLLOWING THE ORDER OF THE TRIBUNAL. THEREFORE, HE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR UNDER APPEAL AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 6 . AGAINST THE AFORESAID ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7 . BEFORE US, LD D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 8 . WE HAVE CONSIDERED THE WRITTEN SUBMISSION OF LD. AR OF THE ASSESSEE AND THE SUBMISSIONS OF LD. DR AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. AT THE OUTSET WE FOUND THAT THE THIS DISPUTED ISSUE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2011 - 12 & 2013 - 14 IN ITA NOS.155&122/CTK/2017, ORDER DATED 15.02.2018 , WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER : - 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ONLY DISPUTE AGITATED BY THE REVENUE IN THESE APPEALS IS WITH RESPECT TO INTEREST ON FIXED DEPOSITS ON MONEY RECEIVED IN RESPECT OF SHARE CAPITAL. THE CONTENTION OF LD D.R. IS THAT THE INTEREST INCOME IS A PART OF THE SHARE CAP ITAL AND IT IS IN THE NATURE OF TRADE OPERATIVE BUSINESS ACTIVITY AND, THEREFORE, THE INCOME HAS TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. HOWEVER, LD D.R. ON THIS DISPUTED ISSUE CONCEDED THAT THE ISSUE IS COVERED BY THE DECISION OF THE TRIB UNAL IN ASSESSEES OWN CASE FOR THE ITA NO. 64 /CTK/201 8 AND CO NO. 26 /CTK/2018 POSCO INDIA LIMITED 4 ASSESSMENT YEARS 2006 - 07 TO 2008 - 09 (SUPRA). WE FIND THAT THE CO - ORDINATE OF THIS TRIBUNAL WHILE CONSIDERING THIS ISSUE HAS HELD AS UNDER: WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. O N OUR CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF CASE AS BROUGHT ON RECORD BY THE AUTHORITIES BELOW, WE ARE INCLINED TO FIND THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE APPROPRIATE TO THE EXTENT THAT IT WAS NEVER A CHANGE OF STANCE O N THE FACTS REMAINING THE S AME BEGINNING FROM ASSESSMENT YEAR 2006 - 07. IT WAS A MISCONSTRUCTION OF THE FACTS FOR THE PURPOSE OF FINDING APPLICABILITY OF THE PROVISIONS OF LAW ENUNCIATED BY THE HON'BLE APEX COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD V. CIT (SUPRA). THE LAW ENUNCIATED IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD V. CIT(SUPRA) CANNOT ALONE BE CONSIDERED AS FAVORING REVENUE INSOFAR AS IT ALSO TALKS ABOUT CAPITALIZATION OF THE INTEREST AND THE CIRCUMSTA NCES, WHICH CIRCUMSTANCES HAVE BEEN DEALT WITH BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF INDIA N OIL PANIPAT POWER CONSORTIUM LTD V. ITO (SUPRA) AND FURTHER MORE IN THE CASE OF NTPC SAIL POWER COMPANY PVT. LTD., V.CIT DECIDED ON17.07.2012 IN ITA NO.1238/2011 (COPY PLACED ON RECORD) WHICH HAS ALSO BEEN RELIED ON BY THE LEARNED COUNSEL OF THE ASSESSEE. THE LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED THE FINANCIAL STATEMENTS DULY AUDITED UNDER THE PROVISIONS OF THE I.T ACT AS WELL AS UND ER THE COMPANIES ACT WHICH HAVE BEEN VERIFIED BY THE ASSESSING OFFICER REQUIRING NO REFERENCE TO BE MADE TO THE TRANSFER PRICING OFFICER UNDER THE PROVISIONS OF SECTION 92CA. IN OTHER WORDS, NO BUSINESS INCOME HAS BEEN GENERATED BY THE ASSESSEE. THE EXPEN DITURE CLAIMED THEREFORE WAS ONLY FOR THE PURPOSE OF SETTING UP THE PROJECT ENVISAGED AND THERE IS NO METHOD FOR BALANCING INTEREST, IF ANY, PASSED ON TO THE SHARE HOLDERS ON ACCOUNT OF DIVIDEND OR BUSINESS INCOME BY THE ASSESSEE. THE TEST, THEREFORE, TO O UR MIND IS WHETHER THE ACTIVITY WHICH IS TAKEN UP FOR SETTING UP OF THE BUSINESS AND THE FUNDS WHICH ARE GARNERED ARE INEXTRICABLY CONNECTED TO THE SETTING UP OF THE PLANT. THE CLUE IS PERHAPS AVAIL - ABLE IN SECTION 3 OF THE ACT WHICH STATES THAT FOR NEWLY SET UP BUSINESS THE PREVIOUS YEAR SHALL BE THE PERIOD BEGINNING WITH THE DATE OF SETTING UP OF THE BUSINESS. THEREFORE, AS PER THE PROVISION OF SECTION 4 OF THE ACT WHICH IS THE CHARGING SECTION INCOME WHICH ARISES TO AN ASSESSEE FROM THE DATE OF SETTING O F THE BUSINESS BUT PRIOR TO COMMENCEMENT IS CHARGEABLE TO TAX DEPENDING ON WHETHER IT IS OF A REVENUE NATURE OR CAPITAL RECEIPT. THE INCOME OF A NEWLY SET UP BUSINESS, POST THE DATE OF ITS SETTING UP CAN BE TAXED IF IT IS OF A REVENUE NATURE UNDER ANY OF T HE HEADS PROVIDED UNDER SECTION 14 IN CHAPTER IV OF THE ACT. FOR AN INCOME TO BE CLASSIFIED AS INCOME UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' IT WOULD HAVE TO BE AN ACTIVITY WHICH IS IN SOME MANNER OR FORM CONNECTED WITH BUSINESS. THE WORD 'BUSINESS' IS OF WIDE IMPORT WHICH WOULD ALSO INCLUDE ALL SUCH ACTIVITIES WHICH COALESCE INTO SETTING UP OF THE BUSINESS. ONCE IT IS HELD THAT THE ASSESSEE'S INCOME IS AN INCOME CONNECTED WITH BUSINESS, WHICH WOULD BE SO IN THE ITA NO. 64 /CTK/201 8 AND CO NO. 26 /CTK/2018 POSCO INDIA LIMITED 5 PRESENT CASE, IN VIEW O F THE FINDING OF FACT BY THE COMMISSIONER OF INCOME - TAX (APPEALS) THAT THE MONIES WHICH WERE INDUCTED INTO THE JOINT VENTURE BY THE KOREANS WERE PRIMARILY INFUSED TOPURCHASE LAND AND TO DEVELOP INFRASTRUCTURE THEN IT CANNOT BE HELD THAT THE INCOME DERIVED BY PARKING THE FUNDS TEMPORARILY WITH BANK, WILL RESULT IN THE CHARACTER OF THE FUNDS BEING CHANGED, INASMUCH AS, THE INTEREST EARNED FROM THE BANK WOULD HAVE A HUGE DIFFERENT THAN THAT OF BUSINESS AND BE BROUGHT TO TAX UNDER THE HEAD ' INCOME FROM OTHER S OURCES'. IT IS WELL - SETTLED THAT AN INCOME RECEIVED BY THE ASSESSEE CAN BE TAXED UNDER THE HEAD 'INCOME FROM OTHER SOURCES' ONLY IF IT DOES NOT FALL UNDER ANY OTHER HEAD OF INCOME AS PROVIDED IN SECTION 14 OF THE ACT. THE HEAD 'INCOME FROM OTHER SOURCES' I S A RESIDUARY HEAD OF INCOME. IN THE INSTANT CASE, IT WAS CLEAR UPON A PERUSAL OF THE FACTS AS FOUND BY THE AUTHORITIES BELOW THAT THE FUNDS IN THE FORM OF SHARE CAPITAL WERE INFUSED FOR A SPECIFIC PURPOSE OF ACQUIRING LAND AND THE DEVELOPMENT OF INFRASTRU CTURE. THEREFORE, THE INTEREST EARNED ON FUNDS PRIMARILY BROUGHT FOR INFUSION IN THE BUSINESS COULD NOT HAVE BEEN CLASSIFIED AS 'INCOME FROM OTHER SOURCES SINCE THE INCOME WAS EARNED IN A PERIOD PRIOR TO COMMENCEMENT OF BUSINESS, IT WAS IN THE NATURE OF CA PITAL RECEIPT AND, HENCE, WAS REQUIRED TO HE SET OFF AGAINST PRE - OPERATIVE EXPENSES. WE ARE INCLINED TO FIND A MEANING TO THE INSERTION OF THE PROVISO TO SECTION 36(L)(III) THAT INTEREST PAID, IN RESPECT OF CAPITAL BORROWED FOR ACQUISITION OF AN ASSET FOR EXTENSION OF EXISTING BUSINESS OR PROFESSION WAS BEING ALLOWED AS DEDUCTION U/.S.36(L)(III) OF THE ACT AS REVENUE EXPENDITURE WAS AMENDED W.E.F. 1.4.2004 WHEN THE AMOUNT OF INTEREST PAID IN RESPECT OF CAPITAL BORROWED FOR ACQUISITION OF AN ASSET FOR EXTENS ION OF EXISTING BUSINESS OR PROFESSION WHETHER CAPITALIZED IN THE BOOKS OF ACCOUNT OR NOT FOR ANY PERIOD BEGINNING FROM THE DATE ON WHICH THE CAPITAL WAS BORROWED FOR ACQUISITION OF THE ASSET TILL THE DATE ON WHICH SUCH ASSET WAS FIRST PUT TO USE, SHALL NO T BE ALLOWED AS DEDUCTION, HOLDS TRUE FOR THE INCOME INSOFAR AS ONCE HAVING IDENTIFIED THAT THE INCOME FROM INTEREST IS FROM THE BANKS WHERE THE SHARE CAPITAL WAS PARKED WAS TO NOT EARN INTEREST TO BE BALANCED INTEREST ON CAPITAL BORROWED WHEN THE ASSESSE E'S OWN FUNDS WERE BEING UTILISED FOR THE PURPOSE OF INCURRING THE PROJECT COST WHICH TOOK UNDUE DELAY DUE TO GOVERNMENT AND OTHER INTERFERENCE. IN THE CASE OF TUTICORIN ALKALI CHEMICALS& FERTILIZERS LTD V. CIT (SUPRA), HON'BLE APEX COURT HAS HELD - 'IF T HE COMPANY, EVEN BEFORE IT COMMENCES BUSINESS, INVESTS THE 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 COMP ANY PURCHASES A RENTED HOUSE AND GETS RENT, SUCH RENT WILL BE ASSESSABLE TO TAX UNDER SECTION 22 AS INCOME FROM HOUSE PROPERTY. LIKEWISE,A COMPANY MAY HAVE INCOME FROM OTHER SOURCES ................. THE COMPANY MAY ALSO, AS IN THAT CASE, KEEP THE SURPLUS FU NDS IN SHORT - TERM DEPOSITS IN ORDER TO EARN INTEREST. SUCH INTEREST WILL BE CHARGEABLE UNDER SECTION 56 OF THE INCOME - TAX ACT'. SUBSEQUENTLY HON'BLE APEX COURT IN THE CASE OF CIT V. BOKARO STEEL LTD (SUPRA) HELD - 'HOWEVER, WHILE INTEREST EARNED BY INVESTI NG BORROWED CAPITAL IN SHORT - TERM DEPOSITS IS AN ITA NO. 64 /CTK/201 8 AND CO NO. 26 /CTK/2018 POSCO INDIA LIMITED 6 INDEPENDENT SOURCE OF INCOME NOT CONNECTED WITH THE CONSTRUCTION ACTIVITIES OR BUSINESS ACTIVITIES OF THE ASSESSEE, THE SAME CANNOT BE SAID IN THE PRESENT CASE WHERE THE UTILISATION OF VARIOUS ASSETS OF THE COMPANY AND THE PAYMENTS RECEIVED FOR SUCH UTILISATION ARE DIRECTLY LINKED WITH THE ACTIVITY OF SETTING UP THE STEEL PLANT OF THE ASSESSEE. THESE RECEIPTS ARE INEXTRICABLY LINKED WITH THE SETTING UP OF THE CAPITAL STRUCTURE OF THE ASSESSEE COMPANY. THEY MU ST, THEREFORE, BE VIEWED AS CAPITAL RECEIPTS GOING TO REDUCE THE COST OF CONSTRUCTION.' MERITS FOR CONSIDERATION AS BROUGHT ON RECORD FOR THE AYS IN APPEAL BEFORE US ARE AS UNDER : RS. IN LAKHS PARTICULARS. AS ON 31.3.2006 AS ON 31.3.2007 AS ON 31.3.2008 1. SHARE CAPITAL 22500.00 22500.00 22500.00 2.LAND(CWIP) 307.00 664.74 1440.85 3. BANK DEPOSIT. 19190.00 1289.00 - 4. INTEREST FROM BANK 637.44 1,04.17 432.67 5.PRE - OPERATIVE EXPENSES. 629.76 3736.28 5280.69 THE RETURNS FILED BY THE ASSESSEE FOR THE AYS 2006 - 07 AND 2007 - 08 CLEARLY INDICATE THAT THE ASSESSEE AT NO POINT OF TIME WAS HAVING INCOME FROM OTHER SOURCES IRRESPECTIVE OF THE ACCOUNTING OF THE INCOME HAVING BEEN CAPITALIZED WHEN THE CLAIM OF EXPENDITURE OF 10% WAS PURELY ON ESTIMATION WHEN APPA RENTLY IT WAS NOT THE BUSINESS OF THE ASSESSEE TO EARN INCOME BUT PARKING OF ITS FUNDS WHEN THE INTEREST INCOME SOUGHT TO BE CONSIDERED EXEMPT FOR COMPUTING EXPENDITURE UNDER THE PROVISIONS OF SECTION 14A FOR THE PURPOSE OF I.T.ACT. THE LEARNED COUNSEL OF THE ASSESSEE, THEREFORE, HAS CLARIFIED THAT THE ASSESSEE CANNOT BE SUBJECTED TO TAXATION IN THE IMPUGNED ASSESSMENT YEAR ON THE INTEREST INCOME CAPITALIZED AND AT THE SAME TIME ALLOW AMORTIZATION THEREOF IN THE HOPE THAT PROJECT WILL SEE THE LIGHT OF THE D AY IN THE YEARS TO COME WHEN THE I.T. DEPARTMENT WILL ALLOW LESS DEDUCTION THAN OTHERWISE CLAIMED WILL BE MULTIPLICATION OF ASSESSMENTS FOR NO FAULT OF THE ASSESSEE APPELLANT. WE ARE THEREFORE INCLINED TO HOLD THAT THE LEARNED COUNSEL OF THE ASSESSEE HAS S UBMITTED A BULK PAPER BOOK WHICH INTER ALIA CORRELATES TO EARNING OF INTEREST ON THE AMOUNTS DEPOSITED IN THE BANKS TO BE UTILISED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AS PER THE PROJECT ENVISAGED AND AS PER THE PROJECT APPROVED BY THE GOVERNMENT OF ORISSA BUT TAKEN TIME DUE TO REASON BEYOND THE ASSESSEE'S CONTROL INSOFAR AS SANCTION AND AUTHORIZATION HAVE TAKEN ITS TOLL WHEN THE FACT FINDING IS WHETHER CAPITALIZATION BY REDUCING THE EXPENSES COULD BE ISOLATED FOR THE PURPOSE OF TAXATION AS INCOME FROM OTHER SOURCES FOLLOWING THE CASE LAWS ANNUNCIATED BY HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD V. CIT (SUPRA) WHEN AGAIN HON'BLE APEX COURT HAVE CLARIFIED THE STAND IN THE CASE OF CIT V. BOKARO STEEL LTD (SUPRA) WAS WHETHER THE BUSINESS OF THE ASSESSEE WAS TO CLAIM THE EXPENDITURE INCURRED FOR EARNING OF SUCH INTEREST HAVING BEEN ADJUSTED AGAINST THE OTHER EXPENSES INCURRED RATHER LEANS IN FAVOUR OF ITA NO. 64 /CTK/201 8 AND CO NO. 26 /CTK/2018 POSCO INDIA LIMITED 7 THE ASSESSEE TO THE EXTENT THAT THE INTEREST WAS INEXTRICABLY LI NKED TO THE EXPENDITURES INCURRED WHICH PROJECT COST DID NOT REQUIRE FURTHER APPROVAL BUT WAS TAKING TIME WHICH TIME EARNED INTEREST TO THE ASSESSEE WHEN RECORDING EXPENDITURE HAVE BEEN CLAIMED FROM THE INTEREST EARNED FOR CONSIDERATION OF 10% THEREOF WAS NOT TO BE DISTURBED AT ALL. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT FOR THE ASSESSMENT YEAR 2008 - 09 THE INTEREST CANNOT BE TAXED AS INCOME FROM OTHER SOURCES IN THE HANDS OF THE ASSESSEE AND THEREFORE, THE SUBSEQUENT DISALLOWANCE OF EXPENSES CLAIMED AT 10% TO EARN THAT INCOME HAS BEEN INFUSED IN THE TOTAL PROJECT COST CANNOT BE DISALLOWED INSOFAR AS THE WHOLE OF THE INCOME HAS BEEN CAPITALIZED WAS RIGHTLY CONSIDERED FOR REVISION BY THE ASSESSEE BEFORE THE ASSESSING OFFICER FILING NIL RETURN. THE APPEAL FOR THE ASSESSMENT YEAR 2008 - 09, THEREFORE, IS ALLOWED ON THE BASIS OF FACTS AND FIGURES BROUGHT ON RECORD BY THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) AND AS MENTIONED ABOVE. HOWEVER IN VIEW OF THE PRINCIPLES LAID OUT ABOVE, WE ARE INCLINED TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR THE ASSESSMENT2006 - 07 AND 2007 - 08 TO CONSIDER THE CASE OF THE ASSESSEE DE NOVO ON ESTABLISHING THE FACT THAT THE INTEREST HAS BEEN EARNED ON THE PARKING OF SHARE GENERATED AS WA S CONSIDERED BY THE HON'BLE APEX COURT INSOFAR AS THE EARNING OF INTEREST HAS BEEN CAPITALIZED BY REDUCING THE PROJECT COST TO BE AMORTIZED HAS TO BE CONSIDERED AS A NULLITY AFTER VERIFICATION. NEEDLESS TO SAY, AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BE GRANTED TO ESTABLISH THE FACT AS HAVE BEEN NARRATED BEFORE US IN THE LIGHT OF ASSESSMENT YEAR 2008 - 09 WHEN IT IS NOT A CHANGE OF STANCE AS CONTESTED BY THE LEARNED DR BUT ON THE SAME SET OF FACTS THE INTEREST PORTION CANNOT BE ISOLATED FOR THE PURPOSE OF TAXATION. 6. IN THE RESULT, THE APPEAL FOR THE ASSESSMENT YEAR 2008 - 09 IS ALLOWED AND THE LEARNED ASSESSING OFFICER IS DIRECTED TO ACCEPT THE NIL REVISED RETURN AND THE APPEALS FOR THE AYS 2006 - 07 AND 2007 - 08 ARE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION AFRESH IN THE LIGHT OF OUR DECISION FOR THE ASSESSMENT YEAR 2008 - 09 ABOVE. THE SAME ARE CONSIDERED TO BE ALLOWED FOR STATISTICAL PURPOSES. 8. WE, CONSIDERING THE APPARENT FACTS ON RECORD AND FOLLOWING THE JUDICIAL PRECEDENT AR E OF THE OPINION THAT THE INTEREST ON FIXED DEPOSITS ARE NOT TAXABLE UNDER INCOME FROM OTHER SOURCES AND, ACCORDINGLY, WE UPHOLD THE FINDINGS OF THE CIT(A) AND DISMISS THE GROUND OF APPEAL TAKEN BY THE REVENUE FOR BOTH THE ASSESSMENT YEARS. RECENTLY, THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2011 - 2012 & 2013 - 2014 IN ITA NO. 403&344/CTK/2017, VIDE ORDER DATED 27.07.2018 HAS DECIDED THE ISSUE AGAINST THE REVENUE. RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENCE WE UPHOLD THE FINDINGS OF CIT(A ) AND ITA NO. 64 /CTK/201 8 AND CO NO. 26 /CTK/2018 POSCO INDIA LIMITED 8 DISMISS TH E GROUNDS RAISED BY THE REVENUE. ACCORDINGLY, APPEAL OF THE REVENUE IS DISMISSED. 9 . IN THE CROSS OBJECTION, THE ASSESSEE IS AGGRIEVED BY THE SUSTENANCE OF REDUCTION OF EXPENSES OF RS.7,12,500/ - U/S.14A OF THE ACT. 10 . NONE APPEARED ON BEHA LF OF THE ASSESSEE, HOWEVER, THE LD. AR OF THE ASSESSEE HAS FILED A WRITTEN SUBMISSION WHEREIN IT IS SUBMITTED THAT THIS ISSUE IS ALSO COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2011 - 12 & 2013 - 14 IN ITA NOS.155 &122/CTK/2017, ORDER DATED 15.02.2018 11 . ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 12 . WE HAVE CONSIDERED THE WRITTEN SUBMISSION OF LD. AR OF THE ASSESSEE AND THE SUBMISSIONS OF LD. DR AND PERUSED THE ORDER OF THE TRIBUNAL AND FOUND THAT THE THIS DISPUTED ISSUE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2011 - 12 & 2013 - 14 IN ITA NOS.155&122/CTK/2017, ORDER DATED 15.02.2018, WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER : - 12. WE HAVE HE ARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. WE FIND THAT RULE 8D OF THE INCOME TAX RULES, 1962 IS APPLICABLE ONLY PROSPECTIVELY I.E. FROM A.Y.2008 - 09 AND THE ASSESSMENT YEARS INVOLVED IN THE PRESENT CASE ARE 2010 - 11 AND 2012 - 13 BUT THE ISSUE IS IN RESPECT OF NON - CLAIM OF EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT. LD A.R. DEMONSTRATED BEFORE US BY REFERRING TO THE AUDITED ACCOUNTS AND INCOME TAX RETURNS AT PAGE 6 OF THE PAPER BOOK EXPLAINING THAT THE ASSESSEE HAS CAPITALISED THE EXPENDITURE UNDER PRE - OPERATIVE EXPENSES. THEREFORE, THERE IS NO CLAIM AND THE ASSESSING OFFICER BY APPLYING THE PROVISIONS ITA NO. 64 /CTK/201 8 AND CO NO. 26 /CTK/2018 POSCO INDIA LIMITED 9 OF SECTION 14A R.W.RULE 8D HAS MADE THE ADDITION . LOOKING TO THE FACTS OF THE CASE IN ITS ENTIRETY, WE ARE OF THE OPINION THAT WHEN THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE IN ITS RETURN OF INCOME EITHER UNDER THE HEAD 'BUSINESS INCOME' OR 'OTHER SOURCES', THE REDUCTION OF EXPENSES HAS NO BASE OR LE GAL SCRUTINY. THEREFORE, WE ARE OF THE SUBSTANTIVE VIEW THAT THE PROVISIONS OF SECTION 14A ARE NOT APPLICABLE IN THIS CASE AND, ACCORDINGLY, WE ALLOW THE CROSS OBJECTIONS OF THE ASSESSEE AND DELETE THE ADDITION IN BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. RESPECTFULLY FOLLOWING THE ABOVE JUDICIAL PRECEDENCE, WE ALLOW THE CROSS OBJECTION OF THE ASSESSEE AND DELETE THE ADDITION MADE U/S.14A OF THE ACT . 13 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 /07/2018. SD/ - (N. S. SAINI) SD/ - ( PAVAN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 31 /07/2018 . . /PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. [ / GUARD FILE. //TRUE COPY//