Appeal details
Counselvise Citation
164821714 RSA 2015
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 month(s) 30 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-10-2015
Appeal Filed By
Department
Bench Allotted
B
Next Hearing Date
12-10-2015
Assessment Year
2010-2011
Appeal Filed On
17-07-2015
Judgement Text
, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL ME MBER I.T.A.NO. 1648 /MDS/201 5 ASSESSMENT YEAR :201 0 - 1 1 & C.O. NO. 101 /MDS/2015 [IN I.T.A. NO. 1648 /MDS/201 5 ] THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE I (2) , CHENNAI 600 034. VS. M/S. COASTAL ENERGEN P. LTD., NO. 4, MOORES ROAD, BUHARIA TO WERS, CHENNAI 600 006. [PAN: AA DCC0886G ] ( APPELLANT ) ( R ESPONDENT /CROSS OBJECTOR ) DEPARTMENT BY : SHRI RAJIB KUMAR HOTA, CIT ASSESSEE BY : SHRI N. C. PRABHAKAR , ADVOCATE / DATE OF HEARING : 12 . 1 0 .201 5 / DATE OF P RONOUNCEMENT : 16. 10 .201 5 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : TH I S APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) I, C HENNAI , DATED 26 . 03 .201 5 RELEVANT TO THE ASSESSMENT YEAR 20 1 0 - 1 1 . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ESTABLISHING THERMAL POWER PROJECTS F OR DISTRIBUTION AND SALE OF I.T.A. NO . 1648 /M/ 1 5 & C.O. NO. 101 /M/15 2 ELECTRICITY TO VARIOUS ELECTRICITY BOARDS THROUGHOUT THE COUNTRY. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS RECEIVED INTEREST INCOME OF .84,49,163/ - . THE ASSESSING OFFICER, BY FOLLOWING THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZER S VS. CIT 93 TAXMAN 502, HAS BROUGHT TO TAX THE INTEREST INCOME OF .84,49,163/ - UNDER THE HEAD INCOME FROM OTHER SOURCES . THE ASSESSING OFFICER HAS ALSO RELIED ON THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SESHASAYEE PAPER & BOARDS LTD. 156 ITR 542. FURTHER, THE ASSESSING OFFICER HAS ALSO OBSERVED THAT AS PER THE AMENDED PROVISIONS OF SECTION 36(1)(III), ALL THE INTEREST EXPENDITURE PRIOR TO COMMENCEMENT OF BUSINESS SHOULD BE CAPITALIZED AND NO NETTING OF THE INTEREST IS PERMISSIBLE AND ACCORDINGLY TAXED. 3. ON APPEAL BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF NTPC SAIL POWER COMPANY LTD. V. CIT 25 TAXMANN.COM 401. THE LD. CIT(A) BY FOLLOWING THE ABOVE DECISION OF THE HON BLE DELHI HIGH COURT AND ALSO THE ORDER PASSED BY HIS PR EDECESSOR IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10, ALLOWED THE GROUND RAISED BY THE ASSESSEE. 4. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. THE LD. DR HAS SUBMITTED THAT THE INTEREST INCOME EARNED BY THE ASSESSEE BY KEEPING I.T.A. NO . 1648 /M/ 1 5 & C.O. NO. 101 /M/15 3 T HE MONEY IN SHORT TERM FIXED DEPOSIT IS INCOME FROM OTHER SOURCES AND THE SAME CANNOT BE ALLOWED TO NETTING ALSO. HE RELIED ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS VS. CIT (SUPRA). 5. ON THE O THER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF NTPC SAIL POWER COMPANY LTD. V. CIT (SUPRA). 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AU THORITIES BELOW. THE ONLY ISSUE RAISED IN THE APPEAL OF THE REVENUE IS WHETHER THE INTEREST INCOME RECEIVED BY THE ASSESSEE BY KEEPING THE FUND IN A FIXED DEPOSIT IS INCOME FROM OTHER SOURCES OR INCOME FROM BUSINESS? THE ASSESSEE HAS BORROWED CERTAIN FUND AND KEPT IN THE BANKS IN FIXED DEPOSITS DURING THE PERIOD OF PRE - OPERATIVE STAGE FOR A TEMPORARY PERIOD AND EARNED THE INTEREST INCOME. THE INTEREST INCOME EARNED BY THE ASSESSEE IS FROM THE FIXED DEPOSITS, WHICH ARE MADE IN THE BANK. THE LD. CIT(A) DECIDE D THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE ORDER PASSED BY HIS PREDECESSOR IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10, WHEREIN THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF NTPC SAIL POWER COMPANY LTD. IN ITA NO. 1238/ 2011 DATED 17.07.2012 HAS BEEN FOLLOWED AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. T HE HON BLE SUPREME COURT HAS CONSIDERED SIMILAR ISSUE IN THE I.T.A. NO . 1648 /M/ 1 5 & C.O. NO. 101 /M/15 4 CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS VS. CIT (SUPRA) AND HELD THAT THE INTEREST EARNED BY ASS ESSEE BEFORE COMMENCEMENT OF BUSINESS ON SHORT TERM DEPOSITS WITH BANKS OUT OF TERM LOANS SECURED FROM FINANCIAL INSTITUTIONS IS INCOME CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND WOULD NOT GO TO REDUCE THE INTEREST PAYABLE BY THE ASSESSEE WH ICH WOULD BE CAPITALIZED AFTER THE COMMENCEMENT OF COMMERCIAL PRODUCTION. THEREFORE, KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO BY FOLLOWING THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS AND FE RTILIZERS LTD. V. CIT (SUPRA), WE ARE OF THE OPINION THAT THE INTEREST INCOME EARNED BY THE ASSESSEE IS AN INCOME CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES . 7. THE ASSESSEE HAS RELIED ON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF NTPC SAIL POWER COMPANY LTD. V. CIT (SUPRA) BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS OBSERVED THAT THE HON BLE HIGH COURT HAS MADE A DISTINCTION, ON INTRODUCTION OF THE PROVISO TO SECTION 36(1)(III) WITH RESPECT TO THE EXPENDITURE ON INT EREST TO BE CAPITALIZED AND HELD THAT A SIMILAR COROLLARY SHOULD BE DRAWN FOR THE RECEIPT OF INTEREST INCOME. HOWEVER, IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS, VS. CIT, THE HON BLE SUPREME COURT HAS HELD THAT NO ADJUSTMENT COULD BE ALLOWED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. I.T.A. NO . 1648 /M/ 1 5 & C.O. NO. 101 /M/15 5 7.1 SIMILAR VIEW WAS TAKEN BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. ARASAN ALUMINIUM INDUSTRIES PVT. LTD. 220 ITR 476. 8. I N VIEW OF THE ABOVE DECISION OF THE HON BLE SUPREME COURT AND ALSO THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT , WE REVERSE THE FINDINGS OF THE LD. CIT(A) AND ALLOW THE GROUND RAISED BY THE REVENUE. THUS, THE APPEAL FILED BY THE REVENUE IS ALLOWED. 9. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ONLY IN SUPPORT OF THE ORDER PASSED BY THE LD. CIT(A) AND SINCE WE HAVE ALLOWED THE APPEAL FILED BY THE REVENUE, THE CROSS OBJECTION FILED BY THE ASSESSEE BECOME INFRUCTUOUS AND ACCORDINGLY THE SAME IS DISMISSED. 10 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 16 TH O F OCTOBER , 2015 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( V. DURGA RAO ) JU DICIAL MEMBER CHENNAI, DATED, THE 16 . 1 0 .201 5 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.
