India Metal One Steel Plate Processing Private Ltd., CHENNAI V. DCIT, CHENNAI

ITA 3497/CHNY/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9591 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 30-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Business income; Depreciation; Source of fund; Capital receipt
• Section: 56; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , , $ BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 3497/CHNY/2016 / ASSESSMENT YEAR : 2012-13 M/S. INDIA METAL ONE STEEL PLATE PROCESSING PVT. LTD., PRESTIGE PALLADIUM BAYAN, 6 TH FLOOR, DOOR NO. 129 TO 140 GREAMS ROAD, CHENNAI 600 006. [PAN: AACCI 5959F] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(2), 121, MAHATMA GANDHI ROAD, NUNGAMBAKKAM, CHENNAI 600 034. ( / APPELLANT) ( %&' /RESPONDENT ) ASSESSEE BY : SHRI. R. VIJAYARAGHAVAN, ADVOCATE REVENUE BY : SHRI. AR. V. SREENIVASAN, JCIT 0 /DATE OF HEARING : 27.11.2018 0 /DATE OF PRONOUNCEMENT : 27.11.2018 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI IN ITA NO. 185/CIT(A)-6/15-16 DATED 18.10.2016 FOR ASSESSMENT YEAR 2012-13. :-2-: ITA NO. 3497/CHNY/2016 2. M/S. INDIA METAL ONE STEEL PLATE PROCESSING PVT. LTD., THE ASSESSEE, A COMPANY INCORPORATED ON 20.04.2011, I S IN THE PROCESS OF ESTABLISHING FACILITY FOR MANUFACTURE OF STEEL P LATE PROCESSING AND FABRICATION OF HEAVY MACHINERY PARTS AND COMPONENTS . WHILE MAKING THE ASSESSMENT , THE AO HAS NOTED THAT DURING THE F .Y 2011-12, THE ASSESSEE WAS IN THE PROCESS OF PROCUREMENT OF PLANT & MACHINERY AS WELL AS SETTING UP VARIOUS SYSTEMS AND STRUCTURES F OR THE COMMENCEMENT OF BUSINESS. THE COMMERCIAL PRODUCTION BEGAN FROM 1 ST AUGUST 2012. THE AO FURTHER NOTED THAT THE ASSESSEE HAD EARNED RS. 3,20,36,214/- AS AN INTEREST INCOME PRIOR TO TH E SETUP OF BUSINESS. REJECTING THE ASSESSEES SUBMISSION THAT THE INTEREST INCOME EARNED FROM SHORT TERM DEPOSITS IN BANK ARE CAPITAL IN NATURE, THE AO HAS ASSESSED THE INTEREST INCOME UNDER THE H EAD INCOME FROM OTHER SOURCE. IN DOING SO, THE AO HAS PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TU TICORIN AIKALI CHEMICALS & FERTILIZERS LTD. VS CIT REPORTED IN [19 97] 227 ITR 172 SC. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE TH E LD. CIT(A). THE LD. CIT(A) DISMISSED THE APPEAL. 3. AGGRIEVED AGAINST THAT ORDER, THE ASSESSEE FILE D THIS APPEAL WITH THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) [CIT (A)] IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES O F THE CASE. 2. INTEREST INCOME TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES :-3-: ITA NO. 3497/CHNY/2016 2.1 THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDE R OF THE ASSESSING OFFICER (AO) IN TREATING THE INTEREST RECEIPTS OF R S. 3,20,36,214 EARNED PRIOR TO SETUP OF BUSINESS AS INCOME TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. 2.2 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH AT THE INTEREST EARNED OUT OF SHORT TERM DEPLOYMENT OF EQUITY FUNDS INFUSED FOR THE PURPOSE OF SETTING UP OF BUSINESS IS A CAPITAL RECE IPT, NOT SUBJECT TO TAX. 2.3 WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A) OUGH T TO HAVE SET-OFF THE EXPENDITURE OF RS. 2,55,75,842 DEBITED IN THE P ROFIT & LOSS ACCOUNT AGAINST THE AFORESAID INTEREST INCOME. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, SUBSTITUTE, RESCIND, MODIFY & AND/OR WITHDRAW IN ANY MANNER WHA TSOEVER ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. 4. THE LD. AR PRESENTED THE CASE ON THE LINES OF GR OUNDS OF APPEAL AND RELIED ON THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT VS VGR FOUNDATIONS 298 ITR 132. PER CONTRA, THE LD. DR SUPPORTED ELABORATELY THE ORDER OF THE LD. CIT(A). 5. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. THE ASSESSEES FINANCIALS DISCLOSE THAT OUT OF SHARE CAPITAL OF RS. 1,227,000,000/- AS ON 31.03.2012, THE ASSESS EE KEPT RS. 230,500,000/- IN DEPOSIT ACCOUNTS. ON WHICH, IT EAR NED INTEREST INCOME ON FIXED DEPOSITS WITH BANKS AT RS. 32,035,5 09/-. IN THE P&L ACCOUNT FOR THE PERIOD FROM 20.04.2011 TO 31.03.201 2, WITH THE ABOVE INTEREST IT ADDED OTHER INCOME OF RS705/- AND SHOWN THE TOTAL :-4-: ITA NO. 3497/CHNY/2016 OF RS. 32,036,214/-, AS AN INCOME UNDER THE HEAD O THER INCOME. AS AGAINST THIS, THE ASSESSEE HAS SHOWN EXPENSES RS. 5,47,429/- TOWARDS EMPLOYEE BENEFITS EXPENSES, RS. 1,340,133/- TOWARDS DEPRECIATION AND AMORTISATION EXPENSES AND RS. 23,6 88,280/- TOWARDS OTHER EXPENSES AND THUS ARRIVED THE PROFIT BEFORE TAX AT RS. 6,460,372/-. THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT(A) IS EXTRACTED AS UNDER: 6. THE MATTER IS CONSIDERED. IN THE CASE OF M/S. I NDIAN OIL PANIPAT POWER CONSORTIUM LTD (SUPRA), PRIMARILY RELIED UPON BY THE APPEIL.MT THE FACTS WERE THAT DUE TO LEGAL ENTANGLE MENT WITH RESPECT TO THE TITLE OF LAND SOUGHT TO BE ACQUIRED BY THE GOVERNMENT FOR THE ASSESSEE, THE SHARE CAPITAL CONTRIBUTION WA S PUT IN FIXED DEPOSIT WITH BANK. THE HONBLE DELHI HIGH COURT DIS TINGUISHED THIS, CASE FROM THE RATIO OF HONBLE SUPREME COURTS DECI SION IN M/S. TUTICORIN CHEMICALS (SUPRA) THAT IN THE MATTER BEFO RE THE HONBLE APEX COURT, THE ASSESSEE HAD SURPLUS FUNDS. WHEREA S, IN THE CASE OF M/S. INDIAN OIL PANIPAT POWER CONSORTIUM LTD (SU PRA), THE ASSESSEE WAS FORCED TO PARK THE FUNDS IN THE SHORT TERM DEPOSIT CLUE TO THE LEGAL ENTANGLEMENT. HENCE IT IS TO BE NOTED THAT THE DISTINCTION FROM TUTICORIN CHEMICALS (SUPRA) HAS BE EN MADE BY THE HONBLE DELHI HIGH COURT ON THE BASIS FACTS. 7. IN APPELLANTS COMPANYS CASE, THERE WERE NO SUC H IMPEDIMENTS OR LEGAL ENTANGLEMENTS THAT FORCED IT TO PARK THE F UNDS IN SHORT TERM DEPOSITS. THE APPELLANT COMPANY HAD UNTRAMMELLED FR EEDOM TO UTILIZE THE FUNDS THE WAY IT WANTED. THE FACT THAT IT CHOSE TO PARK ITS SURPLUS FUNDS DURING THE COMMENCEMENT PERIOD IN SHO RT TERM DEPOSITS TO EARN INTEREST INCOME WAS A VOLUNTARY DE CISION, AND NOT A FORCED ONE. HENCE, IN MY CONSIDERED VIEW, THE RATIO OF HONBLE APEX CURT IN THE CASE OF ALKALI CHEMICALS & FERTILIZERS LTD (SUPRA) IS SQUARELY APPLICABLE ON THE APPELLANTS CASE. IN THI S CASE, THE HONBLE APEX COURT HAS HELD THAT INTEREST EARNED BY THE ASS ESSEE PRIOR TO :-5-: ITA NO. 3497/CHNY/2016 COMMENCEMENT OF BUSINESS IN SHORT TERM DEPOSITS WIT H BANKS OUT OF TERM LOAN SECURED FROM FINANCIAL INSTITUTIONS IS IN COME CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND WOUL D NOT GO TO REDUCE, THE INTEREST PAYABLE BY THE ASSESSEE WHICH WOULD BE CAPITALIZED AFTER THE COMMENCEMENT OF COMMERCIAL PR ODUCTION. THE RELEVANT EXCERPT FROM THE DECISION OF HONBLE SUPRE ME COURT IN TUTICORIN CHEMICALS (SUPRA) IS REPRODUCED AS UNDER: THE BASIC PROPOSITION THAT HAS TO BE BORNE IN MIND IN THIS CASE IS THAT IT IS POSSIBLE FOR A COMPANY TO HAVE S IX DIFFERENT SOURCES OF INCOME, EACH ONE OF WHICH WILL BE CHARGE ABLE TO INCOME-TAX. PROFITS AND GAINS OF BUSINESS OR PROFES SION IS ONLY ONE OF THE HEADS UNDER WHICH THE COMPANYS INC OME IS LIABLE TO BE ASSESSED TO TAX. IF A COMPANY HAS NOT COMMENCED BUSINESS, THERE CANNOT BE ANY QUESTION OF ASSESSMENT OF ITS PROFITS AND GAINS OF BUSINESS. TH AT DOES NOT MEAN THAT UNTIL AND UNLESS THE COMPANY COMMENCE S ITS BUSINESS, ITS INCOME FROM ANY OTHER SOURCE WILL NOT BE TAXED. IF THE 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 MAD E BY THE COMPANY WILL BE ASSESSABLE UNDER THE HEAD CAPITAL GAINS. SIMILARLY, IF A COMPANY PURCHASES A RENTED HOUSE AN D GETS RENT, SUCH RENT WILL BE ASSESSABLE TO TAX UNDER SEC TION 22 AS INCOME FROM HOUSE PROPERTY. LIKEWISE, A COMPANY MAY HAVE INCOME FROM OTHER SOURCES. IT MAY BUY SHARES AND GE T DIVIDENDS. SUCH DIVIDENDS WILL BE TAXABLE UNDER SEC TION 56 OF THE ACT. THE COMPANY MAY ALSO, AS IN THIS CASE, KEE P THE SURPLUS FUNDS IN SHORT-TERM DEPOSITS IN ORDER TO EA RN INTEREST. SUCH INTEREST WILL BE CHARGEABLE UNDER SE CTION 56 OF THE ACT. THE COMPANY HAS CHOSEN NOT TO KEEP ITS SUR PLUS CAPITAL IDLE, BUT HAS DECIDED TO INVEST IT FRUITFUL LY. THE FRUITS OF SUCH INVESTMENT WILL CLEARLY BE OF REVENUE NATUR E. IN OTHER WORDS, IF THE CAPITAL OF A COMPANY IS FRUITFU LLY UTILISED INSTEAD OF KEEPING IT IDLE, THE INCOME THUS GENERAT ED WILL BE :-6-: ITA NO. 3497/CHNY/2016 OF REVENUE NATURE AND NOT AN ACCRETION TO CAPITAL. WHETHER THE COMPANY RAISED THE CAPITAL BY ISSUE OF SHARES O R DEBENTURES OR BY BORROWING, WILL NOT MAKE ANY DIFFE RENCE TO THIS PRINCIPLE. IF BORROWED CAPITAL IS USED FOR THE PURPOSE OF EARNING INCOME, THAT INCOME WILL HAVE TO BE TAXED I N ACCORDANCE WITH LAW. INCOME IS SOMETHING WHICH FLOW S FROM THE PROPERTY. SOMETHING RECEIVED IN PLACE OF THE PR OPERTY WILL BE CAPITAL RECEIPT. THE AMOUNT OF INTEREST REC EIVED BY THE COMPANY FLOWS FROM ITS INVESTMENTS AND IS ITS I NCOME AND IS CLEARLY TAXABLE EVEN THOUGH THE INTEREST AMO UNT IS EARNED BY UTILISING BORROWED CAPITAL. IT IS TRUE TH AT THE COMPANY WILL HAVE TO PAY INTEREST ON THE MONEY BORR OWED BY IT. BUT THAT CANNOT BE A GROUND FOR EXEMPTION OF INTEREST EARNED BY THE COMPANY BY UTILIZING THE BORROWED FUN DS AS ITS INCOME. IT WAS RIGHTLY POINTED OUT IN THE CASE OF KEDARNARAIN SINGH V. CIT [1938] 6 ITR 157 (ALL) THAT ANYTHING WHICH CAN PROPERLY BE DESCRIBED AS INCOME IS TAXABLE UNDER THE ACT UNLESS EXPRESSLY EXEMPTED. T HE INTEREST EARNED BY THE ASSESSEE IS CLEARLY ITS INCO ME AND UNLESS IT CAN BE SHOWN THAT ANY PROVISION LIKE SECT ION 10 HAS EXEMPTED IT FROM TAX, IT WILL BE TAXABLE. ON QUESTION OF ADJUSTMENT OF INTEREST PAYABLE THE H ONBLE SUPREME COURT HELD AS UNDER: THE QUESTION OF ADJUSTMENT OF INTEREST PAYABLE BY THE COMPANY AGAINST THE INTEREST EARNED BY IT WILL DEPE ND UPON THE PROVISIONS OF THE ACT. THE EXPENDITURE WOULD HA VE BEEN DEDUCTIBLE AS INCURRED FOR THE PURPOSE OF BUSINESS IF THE ASSESSEES BUSINESS HAD COMMENCED. BUT THAT IS NOT THE CASE HERE. THE ASSESSEE MAY BE ENTITLED TO CAPITALI SE THE INTEREST PAYABLE BY IT. BUT WHAT THE ASSESSEE CANNO T CLAIM IS ADJUSTMENT OF THIS EXPENDITURE AGAINST INTEREST ASS ESSABLE UNDER SECTION 56. SECTION 57 OF THE ACT SETS OUT IN ITS CLAUSES (I) TO (III) THE EXPENDITURES WHICH ARE ALLOWABLE A S DEDUCTION FROM INCOME ASSESSABLE UNDER SECTION 56. IT IS NOT THE CASE :-7-: ITA NO. 3497/CHNY/2016 OF THE ASSESSEE THAT THE INTEREST PAYABLE BY IT ON TERM LOANS IS ALLOWABLE AS DEDUCTION UNDER SECTION 57 OF THE A CT. IF THAT BE SO, UNDER WHICH OTHER PROVISION OF LAW C AN THE ASSESSEE CLAIM DEDUCTION OR SET-OFF OF HIS INCOME F ROM OTHER SOURCES AGAINST INTEREST PAYABLE ON THE BORROWED FU NDS ? THERE ARE SPECIFIC PROVISIONS IN THE INCOME-TAX ACT FOR SETTING OFF LOSS FROM ONE SOURCE AGAINST INCOME FRO M ANOTHER SOURCE UNDER THE SAME HEAD OF INCOME (SECTI ON 70), AS WELL AS SETTING OFF LOSS FROM ONE HEAD AGAINST I NCOME FROM ANOTHER (SECTION 71). IN THE FACTS OF THIS CAS E THE COMPANY CANNOT CLAIM ANY RELIEF UNDER EITHER OF THE SE TWO SECTIONS, SINCE ITS BUSINESS HAD NOT STARTED AND TH ERE COULD NOT BE ANY COMPUTATION OF BUSINESS INCOME OR LOSS I NCURRED BY THE ASSESSEE IN THE RELEVANT ACCOUNTING YEAR. IN SUCH A SITUATION, THE EXPENDITURE INCURRED BY THE ASSESSEE FOR THE PURPOSE OF SETTING UP ITS BUSINESS CANNOT BE ALLOWE D AS DEDUCTION, NOR CAN IT BE ADJUSTED AGAINST ANY OTHER INCOME UNDER ANY OTHER HEAD. SIMILARLY, ANY INCOME FROM A NON- BUSINESS SOURCE CANNOT BE SET OFF AGAINST THE LIABI LITY TO PAY INTEREST ON FUNDS BORROWED FOR THE PURPOSE OF PURCH ASE OF PLANT AND MACHINERY EVEN BEFORE COMMENCEMENT OF THE BUSINESS OF THE ASSESSEE. IT HAS BEEN ARGUED THAT THE SOURCE FROM WHICH THE C OMPANY HAS EARNED INTEREST IS BORROWED CAPITAL. THE COMPAN Y HAS TO PAY INTEREST TO ITS CREDITORS ON THE SAME BORROWED CAPITAL. HAVING REGARD TO THE IDENTITY OF THE FUND ON WHICH INTEREST IS EARNED AND INTEREST IS PAYABLE, THE COMPANY SHOULD BE ALLOWED TO SET OFF ITS INCOME AGAINST INTEREST PAYA BLE BY IT ON THE SAME FUND. WE ARE OF THE VIEW THAT NO ADJUSTMEN T CAN BE ALLOWED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME-TAX ACT. HOWEVER DESIRABLE IT MAY BE FROM TH E POINT OF VIEW OF EQUITY, THIS ADJUSTMENT CANNOT BE MADE U NLESS THE LAW SPECIFICALLY PERMITS SUCH ADJUSTMENT. :-8-: ITA NO. 3497/CHNY/2016 8. IN THE LIGHT OF THE DECISION OF HONBLE SUPREME COURT AS ABOVE, I FIND INFIRMITY IN THE ACTION OF THE ASSESSING OFFIC ER IN TREATING THE INTEREST INCOME FROM SHORT TERM DEPOSITS IN HANK AS INCOME FROM OTHER SOURCES. THE DEDUCTIBILITY OF EXPENSES IN GO VERNED BY THE PROVISIONS OF SECTION 57 OF THE ACT. THE APPELLANT COMPANY HAS DISCLOSED THE FOLLOWING EXPENDITURE PRIOR TO SET UP : 1. DEPOSIT & AMORTIZATION EXPENSES RS. 13,40,133 2. OTHER EXPENSES RS. 2,42.33,701 THESE EXPENSES ARE RELATING TO THE SETTING UP OF BU SINESS AND MANUFACTURING OPERATION OF THE APPELLANT IN THE PRE COMMENCEMENT PHASE HENCE, THESE EXPENSES ARE CLEARLY NOT DEDUCTI BLE FROM THE INTEREST INCOME CHARGEABLE UNDER THE HEAD OTHER SO URCES. THEREFORE, THE ADDITION MADE BY THE AG ST3NDS CONFI RMED, AND THE GROUNDS OF APPEAL FAIL. 6. THUS, AFTER EXAMINING THE FACTS, THE LD. CIT(A) APPLYING THE APEX COURT DECISION IN TUTICORIN CHEMICALS (SUPRA), HAS HELD , INTER ALIA, THAT THE ASSESSEE HAD UNTRAMMELLED FREEDOM TO UTILIZE THE FUNDS THE WAY IT WANTED. THE FACT THAT IT CHOSE TO PARK I TS SURPLUS FUNDS DURING THE COMMENCEMENT PERIOD IN SHORT TERM DEPOSI TS TO EARN INTEREST INCOME WAS A VOLUNTARY DECISION, AND NOT A FORCED ONE. IF A COMPANY HAS NOT COMMENCED BUSINESS, THERE CANNOT BE ANY QUESTION OF ASSESSMENT OF ITS PROFITS AND GAINS OF BUSINESS. THAT DOES NOT MEAN THAT UNTIL AND UNLESS THE COMPANY COMMENCES IT S BUSINESS, ITS INCOME FROM ANY OTHER SOURCE WILL NOT BE TAXED. IF THE COMPANY, EVEN BEFORE IT COMMENCES BUSINESS, KEEPS THE SURPLU S FUNDS IN SHORT- TERM DEPOSITS IN ORDER TO EARN INTEREST, AS IN THIS CASE, SUCH INTEREST WILL BE CHARGEABLE UNDER SECTION 56 OF THE ACT. SEC TION 57 OF THE ACT :-9-: ITA NO. 3497/CHNY/2016 SETS OUT IN ITS CLAUSES (I) TO (III) THE EXPENDITUR ES WHICH ARE ALLOWABLE AS DEDUCTION FROM INCOME ASSESSABLE UNDER SECTION 5 6. THUS, THE ASSESSEE CANNOT CLAIM ADJUSTMENT OF THE IMPUGNED E XPENDITURES AGAINST INTEREST ASSESSABLE UNDER SECTION 56. THERE ARE SPECIFIC PROVISIONS IN THE INCOME-TAX ACT FOR SETTING OFF LO SS FROM ONE SOURCE AGAINST INCOME FROM ANOTHER SOURCE UNDER THE SAME H EAD OF INCOME (SECTION 70), AS WELL AS SETTING OFF LOSS FROM ONE HEAD AGAINST INCOME FROM ANOTHER (SECTION 71). IN THE FACTS OF THIS CAS E, THE COMPANY CANNOT CLAIM ANY RELIEF UNDER EITHER OF THESE TWO S ECTIONS, SINCE ITS BUSINESS HAD NOT STARTED AND THERE COULD NOT BE ANY COMPUTATION OF BUSINESS INCOME OR LOSS INCURRED BY THE ASSESSEE IN THE RELEVANT ACCOUNTING YEAR. IN SUCH A SITUATION, THE EXPENDITU RE INCURRED BY THE ASSESSEE FOR THE PURPOSE OF SETTING UP ITS BUSINESS CANNOT BE ALLOWED AS DEDUCTION, NOR CAN IT BE ADJUSTED AGAINST ANY OT HER INCOME UNDER ANY OTHER HEAD ETC. THE ASSESSEE COULD NOT CHAL LENGE ANY OF THESE FINDINGS AND THE CORRESPONDING APPLICATION OF LAW. THEREFORE, THE ASSESSEES APPEAL IS DISMISSED. 7. THERE IS ONE MORE ASPECT. IT APPEARS THAT THE ASSES SEE HAS NOT UNDERSTOOD THE SCOPE OF THE DECISION OF THE APEX CO URT IN THE CASE OF TUTICORIN ALKALI CHEMICALS VS CIT, 227 ITR 172 . TH E RELEVANT PORTION OF THE ORDER FROM SUPREME COURT DECISION IS EXTRACT ED AS UNDER (PAGE 177 OF 227 ITR) : :-10-: ITA NO. 3497/CHNY/2016 THE VIEW TAKEN BY THE MADRAS HIGH COURT IN THE CAS E OF CIT V. SESHASAYEE PAPER AND BOARDS LTD. [1985] 156 ITR 542 WAS THAT THE INTEREST EARNED BY THE ASSESSEE ON INVESTMENT OF SH ARE CAPITAL IN CALL DEPOSITS EVEN BEFORE PRODUCTION COMMENCED COULD BE ASSESSED SEPARATELY UNDER THE HEAD OTHER SOURCES. THE ANDH RA PRADESH HIGH COURT TOOK A CONTRARY VIEW IN THE CASE OF CIT V. NA GARJUNA STEELS LTD. [1988] 171 ITR 663 WHERE IT WAS HELD THAT INTEREST RECEIVED ON SHORT- TERM DEPOSITS BY A COMPANY PRIOR TO THE COMMENCEMEN T OF PRODUCTION COULD NOT BE TREATED AS REVENUE RECEIPT. IN VIEW OF THE AFORESAID CONFLICT OF DECISIONS BETWEEN THE MADRAS AND ANDHRA PRADESH HIGH COURTS, THE TRIBUNAL HAS REFERRED THE FOLLOWING QUE STION OF LAW TO THIS COURT FOR DECISION: 7.1 AFTER LAYING VARIOUS PRINCIPLES IN THE ABOVE DE CISION, THE SUPREME COURT CONCLUDED AS UNDER (PAGE 186 OF 227 I TR) : IN THE PREMISES, WE ARE OF THE VIEW THAT THE MADRA S HIGH COURT CAME TO THE CORRECT DECISION IN THE CASE OF CIT V. SESHASAYEE PAPER AND BOARDS LTD. [1985] 156 ITR 542 . THE CONTRARY VIEWS EXPRESSED IN THE CASES OF CIT V. NAGARJUNA STEELS LTD. [1988] 171 ITR 663 (AP); CIT V. ELECTROCHEM ORISSA LTD. [1995] 211 ITR 552 (ORISSA) AND CIT V. MAHARASHTRA ELECTROSMELT LTD. [1995] 214 ITR 489 (BOM) ARE ERRONEOUS. THUS, THE APEX COURT VERY CLEARLY CONFIRMED THAT T HE INTEREST EARNED BY AN ASSESSEE ON THE INVESTMENT OF SHARE CAPITAL I N CALL DEPOSITS BEFORE THE COMMENCEMENT OF ITS PRODUCTION COULD BE ASSESSED SEPARATELY UNDER THE HEAD OTHER SOURCES. FURTHER, THE RELEVANT PORTION OF THE ORDER OF THE SUPREME COURT IN THE CA SE OF CIT VS BOKARO STEEL LTD IN 236 ITR 315 EXTRACTED AS UNDER : ( PAGE 321 OF 236 ITR): :-11-: ITA NO. 3497/CHNY/2016 DURING THESE ASSESSMENT YEARS, THE RESPONDENT-ASSE SSEE HAD INVESTED THE AMOUNTS BORROWED BY IT FOR THE CONSTRU CTION WORK WHICH WERE NOT IMMEDIATELY REQUIRED, IN SHORT-TERM DEPOSI TS AND EARNED INTEREST. IT HAS BEEN HELD IN THESE PROCEEDINGS THA T THE RECEIPT OF INTEREST AMOUNTS TO INCOME OF THE ASSESSEE FROM OTH ER SOURCES. THE ASSESSEE HAS NOT FILED ANY APPEAL FROM THIS FINDING WHICH IS GIVEN AGAINST IT. IN ANY CASE, THIS QUESTION IS NOW CONCL UDED BY A DECISION OF THIS COURT IN TUTICORIN ALKALI CHEMICALS AND FER TILIZERS LTD. V. CIT [1997] 227 ITR 172 . HENCE, WE ARE NOT CALLED UPON TO EXAMINE THAT ISSUE. 8. THUS, THE APEX COURT IN ITS SUBSEQUENT DECISION ALSO REAFFIRMED THE PRINCIPLES LAID IN THE CASE OF TUTICORIN ALKALI CHEMICALS VS CIT, SUPRA. THEREFORE, WE DONOT FIND ANY REASON TO INTER FERE WITH THE ORDER OF THE LD. CIT(A). THUS, THE ASSESSEES APPEAL IS D ISMISSED. 9. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2018 AT CHENNAI. SD/- ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ! /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 27 TH NOVEMBER, 2018 JPV 0%7898 /COPY TO: 1. '/ APPELLANT 2. %&' /RESPONDENT 3. ; ) (/CIT(A) 4. ; /CIT 5. 8% /DR 6. /GF