M/s. Jaypee Powergrid Ltd., New Delhi V. ITO, New Delhi

ITA 1101/DEL/2016

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 6403 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 02-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI PRAKASH DUBEY
• Assessee Lawyers: VINOD GARG SHRI PARVEEN KUMAR
• Keywords: Capital receipt; Set aside
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES C : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA.NO.1101/DEL./2016 ASSESSMENT YEAR 2011-2012 M/S. JAYPEE POWERGRID LIMITED, 63, JA HOUSE, BASANT LOK, VASANT VIHAR, NEW DELHI 110 057. PAN AABCJ8054F [ VS. THE INCOME TAX OFFICER, WARD 4 (1), NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI VINOD GARG, ADVOCATE SHRI PARVEEN KUMAR, ADVOCATE FOR REVENUE : MR. SHRI PRAKASH DUBEY , SR.DR DATE OF HEARING : 18.01.2021 DATE OF PRONOUNCEMENT : 01.02.2021 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-5, DELHI, DATED 14.12.2015, FOR THE A.Y. 2011-2012, CHALLENGING THE ORDERS OF THE AUTHORITIES BELOW IN ASSESSING A SUM OF RS.1,53,70,579/- BEING INTEREST INCOME FROM FDRS DURING PRE-OPERATIVE PERIOD AS INCOME FROM OTHER SOURCES. 2 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES THROUGH VIDEO CONFERENCING AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT RETURN DECLARING NIL INCOME WAS FILED ON 30.09.2011. THE ASSESSEE COMPANY WAS INCORPORATED ON 05.10.2006. THE SOURCE OF THE FUNDS IN THE HANDS OF ASSESSEE AS PER BALANCE-SHEET AS ON 31.03.2011 ARE SHARE CAPITAL OF RS.250 CRORES AND SECURED LOANS OF RS.576.94 CRORES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS EXPLAINED THAT COMPANY HAS BEEN GRANTED LICENCE FOR CONSTRUCTION OF MAINTENANCE OF CERTAIN TRANSMISSION LINES AND EVACUATION OF POWER FROM KARCHAM-WANGTOO HEP LOCATED IN THE STATE OF HIMACHAL PRADESH TO ABDULLAPUR SUB-STATION LOCATED IN THE STATE OF HARYANA. IT WAS EXPLAINED THAT THE PROJECT IS UNDER IMPLEMENTATION AND PROFIT AND LOSS ACCOUNT HAS BEEN DRAWN FOR THE YEAR UNDER CONSIDERATION. ALL THE EXPENSES INCURRED DURING THE YEAR HAVE BEEN SHOWN IN THE BALANCE-SHEET AS INCIDENTAL EXPENSES DURING CONSTRUCTION [IEDC]. EXAMINATION OF THE IEDC STATEMENT REVEALED THAT THE ASSESSEE COMPANY HAD EARNED AN AMOUNT OF RS.1,53,70,579/- AS INTEREST ON SHORT TERM DEPOSITS WITH BANKS. THE SAID AMOUNT WAS DEDUCTED FROM THE 3 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. EXPENDITURE MENTIONED IN THE SAID STATEMENT. THUS, THE INTEREST RECEIVED ON THE FDRS HAS BEEN REDUCED FROM THE PRE-OPERATIVE EXPENDITURE WHICH ARE PENDING ALLOCATION. AFTER REDUCTION OF THIS AMOUNT, IEDC EXPENDITURE WAS SHOWN AT RS.239,45,85,724/-. THUS, THE INTEREST INCOME EARNED DURING THE YEAR, INSTEAD OF BEING SHOWN SEPARATELY, HAS BEEN USED TOWARDS ABATEMENT OF CAPITAL COST. THE A.O. ISSUED SHOW CAUSE NOTICE AS TO WHY THE IMPUGNED AMOUNT EARNED BY DEPLOYING OF SURPLUS FUNDS MAY NOT BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. THE EXPLANATION OF ASSESSEE IS REPRODUCED IN THE ASSESSMENT ORDER. THE A.O, HOWEVER, DID NOT ACCEPT THE CONTENTION OF ASSESSEE AND CONSIDERED THE IMPUGNED INTEREST INCOME FROM FDRS AS INCOME FROM OTHER SOURCES. THE A.O. ALSO MADE REFERENCE TO THE ORDER OF THE LD. CIT(A) FOR THE A.Y. 2009-2010 IN WHICH SIMILAR ADDITION HAVE BEEN MADE. THE LD. CIT(A) DISMISSED THE APPEAL OF ASSESSEE. 4. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN A.Y. 2009-2010 ON IDENTICAL FACTS THE APPEAL OF ASSESSEE HAS BEEN ALLOWED BY ITAT, DELHI-D BENCH, NEW DELHI IN ITA.NO.5489/DEL./2013 FOR THE A.Y. 2009-2010 VIDE ORDER DATED 24.07.2018. THE ORDER IS REPRODUCED AS UNDER : 4 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 5 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 6 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 7 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 8 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 9 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 10 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 11 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 12 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 13 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 14 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 15 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 16 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 17 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 18 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 19 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. 5. ON THE OTHER HAND, LD. D.R. MERELY RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. CONSIDERING THE ABOVE FACTS IN THE LIGHT OF THE ORDER OF THE TRIBUNAL DATED 24.07.2018 (SUPRA) IN THE CASE OF THE SAME ASSESSEE, WE FIND THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID DECISION OF THE TRIBUNAL. WE, ACCORDINGLY, FOLLOWING THE SAME REASONS FOR DECISION, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THAT IMPUGNED INTEREST INCOME IS CAPITAL RECEIPT NOT CHARGEABLE TO TAX DURING ASSESSMENT YEAR UNDER APPEAL. ACCORDINGLY, APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE ALLOWED. 20 ITA.NO.1101/DEL./2016 M/S. JAYPEE POWERGRID LIMITED, NEW DELHI. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (B.R.R. KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 01 ST FEBRUARY, 2021 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT C BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.