DCIT, Corporate Circle-1(2), Bhubaneswar V. M/s. Radhikapur (West) Coal Mining Pvt. Ltd., Bhubaneswar

ITA 397/CTK/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6684 (ITAT-CUTTACK)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 09-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S C BHADRA
• Keywords: Capital receipt
• Section: 56(2); 201; 192

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 396 &397 /CTK/201 8 ( / ASSESSMENT YEAR : 20 1 3 - 20 1 4 & 2014 - 2015 ) DCIT, CORPORATE CIRCLE - 1(2), BHUBANESWAR VS. M/S RADHIKAPUR (WEST) COAL MINING PRIVATE LIMITED, 52, SAHID NAGAR, BHUBANESWAR - 751007 ./ PANNO. : A A ECR 9135 Q ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI SUBHENDU DUTTA, DR /ASSESSEE BY : SHRI S.C.BHADRA, CA / DATE OF HEARING : 1 6 / 10 /2019 / DATE OF PRONOUNCEMENT : 21 / 10 /2019 / O R D E R PER L.P.SAHU , A M : TH ESE TWO APPEALS FILED BY THE REVENUE AGAIN ST THE ORDER OF CIT(A) - 1 , BHUBANESWAR , BOTH DATED 13.08.2018 FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. THE SOLE ISSUE AGITATED BY THE ASSESSEE IN BOTH THE APPEALS IS AGAINST THE DELETING THE ADDITION BY THE CIT(A) MADE U/S.56 OF THE ACT BY THE AO OF RS.2,16,0 6,733/ - FOR A.Y.2013 - 2014 AND RS.1,58,81,730/ - FOR THE A.Y.2014 - 2015. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY NAMELY RADHIKAPUR (WEST) COAL MINING PRIVATE LIMITED, IS A JOINT VENTURE (JV) ITA NO S . 396 &397 /CTK/201 8 2 COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 CONSISTING OF THREE CO - VENTURES NAMELY, (1) RUNGTA MINES LTD. (2) OCEAN ISPAT PRIVATE LIMITED AND (3) OCL INDIA LIMITED. THE MAIN OBJECTION OF THE JOINT VENTURE WAS TO DEVELOP RADHIKAPUR (WEST) COAL BLOCK UNDER THE CONDITION THAT THE MINING LEASE BE OBTAI NING IN THE NAME OF JV COMPANY AND THE JV WOULD GIVE A BANK GUARANTEE TO THE MINISTRY OF COAL, GOVERNMENT OF INDIA. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE FILED RETURN OF INCOME ON 29.09.2013 SHOWING NIL INCOME. THE CASE WAS SELECTED F OR SCRUTINY UNDER CASS AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE PRODUCED WHICH WERE DULY EXAMINED BY THE AO ON TEST CHECK BASIS. IT WAS NOTICED DURING THE ASS ESSMENT PROCEEDINGS THAT ASSESSEE HAD EARNED INTEREST ON FD INCOME OF RS.2,16,06,733/ - FOR A.Y.2013 - 2014 AND RS.1,58 ,81,730/ - FOR THE A.Y.2014 - 2015 ON THE FIXED DEPOSIT OF RS.17,51,98,378/ - IN A.Y.2013 - 2014 AND RS.9,16,89,953/ - IN A.Y.2014 - 2015, RESPECTIVE LY BOTH MAINTAINED WITH CANARA BANK. IN THIS REGARD A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE STATING THAT WHY THE SAID INCOME SHOULD BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR ABOVE YEARS UNDER CONSIDERATION. IN RESPONSE TO THE SAME, THE ASSESS EE REPLIED VIDE HIS LETTER DATED 03.03.2016 FOR THE A.Y.2013 - 2014 AS UNDER: - ITA NO S . 396 &397 /CTK/201 8 3 RADHIKAPUR (WEST) COAL MINING PRIVATE LIMITED IS A JOING VENTURE (JV) COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 CONSISTING OF THREE CO - VENTURERS NAMELY (1) RUNGTA MINES LTD (2) OCEAN ISPAT PRIVATE LIMITED AND (3) OCL INDIA LIMITED. THIS COMPANY WAS INCORPORATED WITH THE DIRECTION OF THE GOVERNMENT OF INDIA, MNISTRY OF COAL LETTER DATED 24 TH DECEMBER, 2009 ALLOCATING JOINTLY THE RADHKAPUR (WEST) COAL BLOCK. THE MAIN OBJECT IVE OF THE JOINT VENTURE WAS TO DEVELOP RADHIKAPUR (WEST) COAL BLOC UNDER THE CONDITION THAT THE MINING LEASE BE OBTAINING IN THE NAME OF JV COMPANY AND THE JV WOULD GIVE A BANK GUARANTEE TO THE MINISTRY OF COAL. THEREAFTER, THE JV COMPANY WAS INCORPORATED ON 29.03.2010 WITH THE MAIN OBJECT TO EXPLORE, PROSPECT, DEVELOP, EXPLOIT AND MINE THE RAHDIKAPUR (WEST) COAL BLOCK AND DEVELOP THE SAID COAL BLOCK............. AS THE INFUSION OF CAPITAL BY THE JOINT VENTURE PARTNERS WERE NECESSARY FOR DEVELOPMENT OF CO AL BLOCK, THE INTEREST EARNED ON FDS WHICH WERE MADE OUT OF SHARE APPLICATION MONEY OR SHARE CAPITAL, 'INEXTRICABLY LINKED' WITH DEVELOPMENT OF COAL BLOCK, HENCE RELATED TO DEVELOPMENT OF COAL LOCK AND CANNOT BE TREATED AS INCOME FROM OTHER SOURCES. FURTHE R AS THE INCOME IS EARNED IN A PERIOD PRIOR TO COMMENCEMENT OF BUSINESS IT IS IN THE NATURE OF CAPITAL RECEIPT AND LIABLE TO BE SET OFF AGAINST PRE - OPERATIVE EXPENSES. PLEASE REFER THE PRE - OPERATIVE EXPENSES ACCOUNT AND NOTE NO. 12 A3. HENCE, THE INTEREST OF RS.2,16,06,733/ - EARNED ON FDS ARE NOT TAXABLE AND LIABLE TO BE SET OFF AGAINST PRE - OPERATIVE EXPENSES AS CAPITAL RECEIPT. FROM THE ABOVE SUBMISSIONS, THE AO WAS NOT SATISFIED AND HE ADDED RS.2,16,06,733/ - FOR A.Y.2013 - 2014 AND RS.1,58,81,730/ - FOR THE A.Y.2014 - 2015 U/S.56 OF THE ACT, RESPECTIVELY. 4. FEELING AGGRIEVED FROM THE ASSESSMENT ORDER, THE ASSESSEE APPEALED BEFORE THE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND RELYING SOME CASE LAWS, DELETED THE ADDITIONS MA DE FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION AND ALLOWED THE APPEALS OF THE ASSESSEE. ITA NO S . 396 &397 /CTK/201 8 4 5. NOW, AGAINST THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 6. LD.DR RELIED ON THE ORDER OF AO AND HE SUBMITTED THAT T HE ASSESSEE HAS RECEIVED INTEREST INCOME ON FIXED DEPOSIT WHICH IS AN INTEREST ON FIXED DEPOSIT MADE BY THE ASSESSEE, THEREFORE, IT SHOULD BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES AS PER SECTION 56(2) OF THE ACT, WHEREAS THE ASSESSEE HAS NOT DISC LOSED IN HIS RETURN OF INCOME. IN SUPPORT OF HIS CONTENTIONS, LD. DR RELIED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SESHASAYEE PAPER & BARDS LTD., [1985] 156 ITR 542 (MAD) AND THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. [1997] 93 TAXMAN 502 (SC) . 7. ON THE OTHER HAND, LD. AR REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A) AND HE ALSO RELIED ON THE ORDER OF THE CIT(A). LD. AR ALSO FILED A WRITTEN SYNOPSIS AND THE CONTENTS OF WHICH READ AS UNDER : - THE RESPONDENT WAS ALLOCATED A COAL BLOCK VIDE LETTER DTD 25 APRIL, 2006 AND ALSO THE SAME IS DE - ALLOCATED BY THE GAZETTE NOTIFICATION DTD. 24 TH SEPTEMBER 2014.THE GENESIS OF THE ALLOCATION AND DE - ALLOCATION IS FURNISHED AS UNDER: 1. THE RADHIKAPUR (WEST) COAL BLOCK WAS ALLOCATED TO RUNGTA MINES LIMITED JOINTLY WITH OCL INDIA LIMITED AND OCEAN ISPAT PRIVATE LIMITED BY MINISTRY OF COAL VIDE ITS LETTER DATED 25.04.2006 AS MENTIONED IN THE LETTER DATED 14.02.2014. 2. A JOINT VENT URE COMPANY CONSISTING OF ALL THE THREE ALIOCATTEES AND NAMED AS 'RADHIKAPUR (WEST) COAL MINING PRIVATE LIMITED' WAS INCORPORATED ON 29.03.2010. 3. THE GEOLOGICAL REPORT AT A COST OF RS 7.66 WAS PURCHASED FROM CENTRAL MINE PLANNING & DESIGN INSTITUTE (CM PDI). 4. A BANK GUARANTEE OF RS 73.24 CRORES WAS FURNISHED ON 19.07.2010. 5. MINING LEASE APPLICATION WAS FILED ON 08.10.2010. ITA NO S . 396 &397 /CTK/201 8 5 6. THE MINING PLAN GIVING DETAILS OF PROPOSED YEAR WISE EXTRACTION ACTIVITIES WAS APPROVED BY MINISTRY OF COAL ON 23. 06.2011. 7. THE ENVIRONMENTAL CLEARANCE FOR THE PROJECT WAS RECOMMENDED BY EXPERT APPRAISAL COMMITTEE OF MINISTRY OF ENVIRONMENT & FOREST ON 3 RD JUNE 2013. THE ENVIRONMENTAL CLEARANCE WAS, HOWEVER, HELD UP DUE TO ABSENCE OF FOREST CLEARANCE - WHICH IS A PRE - REQUISITE. 8. THE APPLICATION FOR FOREST CLEARANCE WAS FILED ON 06.05.2011 AND AFTER SCRUTINY BY DISTRICT FOREST OFFICE (DFO), REGIONAL CHIEF CONSERVATOR OF FORESTS (RCCF), AND CHIEF CONSERVATOR OF FORESTS (CCF), GOVT, OF ODISHA WAS FORWARD ED TO MINISTRY OF ENVIRONMENT AND FORESTS, GOVT, OF INDIA ON 29.01.2014, WITH RECOMMENDATION FOR GRANT OF FOREST CLEARANCE. THE PROPOSAL WAS CONSIDERED BY FOREST ADVISORY COMMITTEE, MINISTRY OF ENVIRONMENT & FOREST, GOVT, OF INDIA IN ITS MEETING HELD IN FEB 2014, BUT THE CLEARANCE COULD NOT BE ISSUED DUE TO DE - ALLOCATION OF COAL BLOCK IN THE MEAN TIME. 9. THE APPLICATION FOR LAND ACQUISITION WAS FILED WITH IPICOL ON 27.1.2011 AND A PROCESSING FEE OF RS 21.31 CRORES WAS DEPOSITED WITH IDCO ON 16.02.2 011. 10. PERMISSION FOR DRAWING GROUND WATER FROM CENTRAL GROUND WATER BOARD (CGWB), NEW DELHI WAS ACCORDED ON 11.03.2012. 11. CONSENT TO ESTABLISH / OPERATE COAL MINE FROM ODISHA STATE POLLUTION CONTROL BOARD ON 09.01.2013. 12. AS THE PROGRESS OF T HE VARIOUS ACTIVITIES WERE DELAYED FROM THE TIME TARGETED MILE STONES, MINISTRY OF COAL DE - ALLOCATED THE COAL BLOCK ON 14.02.2014. 13. THE GAZETTE NOTIFICATION WAS MADE AS 'THE COAL MINES(SPECIAL PROVISION) ACT 2015 NO. 11 OF 2015, DTD 30 TH MARCH, 2015, W HICH IS DEEMED TO HAVE COME IN FORCE ON 21 ST DAY OF OCTOBER 2014 AND AS PER THE CLAUSE - 3 OF THE SAID ACT, ALLOCATION OF COAL BLOCK TO THE APPELLANT STOOD CANCELLED W.E.F. 24 TH SEPTEMBER 2014. THE FACTS SUBMITTED ABOVE SPEAK THAT AS ON DATE THERE ARE NO ACTIVITIES OF THE COMPANY. THE COAL BLOCK ALLOCATED STOOD CANCELLED. ALL THE EXPENSES INCURRED BY THE COMPANY FOR THE OPERATION OF THE ALLOCATED COAL BLOCK, HAVE GONE TO WASTE. THE LEARNED ASSESSING OFFICER WHILE DOING SCRUTINY ASSESSMENT, NOTED THAT THER E IS A FIXED DEPOSIT OF RS. 17,51,98,378/ - , ON ACCOUNT OF WHICH IT EARNED AN INTEREST OF RS.RS.2,16,06,733/ - . HE GAVE AN OPPORTUNITY TO THE APPELLANT TO EXPLAIN WHY THE SAME SHALL NOT BE TREATED AS INCOME FROM OTHER SOURCE. THE APPELLANT FURNISHED EXPLANAT ION WHY THE AMOUNT SHOULD NOT BE TREATED AS INCOME FROM OTHER SOURCES. THE LEARNED ASSESSING OFFICER WITHOUT REFUTING THE SUBMISSION OF THE APPELLANT, TREATED INTEREST EARNED AS INCOME FROM OTHER SOURCE. AS PER THE STATEMENT OF FACTS, IN THE ASSESSMENT YE AR UNDER CONTEXT, THE APPELLANT WAS IN THE PROCESS OF DOING PAPERWORK LIKE PURCHASE OF GEOLOGICAL REPORT, FURNISHING MINING LEASE APPLICATION, MINING PLAN, EFFORTS TO GET ENVIRONMENT AND FOREST CLEARANCE. HOWEVER, WHEN THE ITA NO S . 396 &397 /CTK/201 8 6 PROCESS WAS COMPLETED, THE MINING ALLOCATION WAS CANCELLED WITHOUT ANY FAULT OF THE APPELLANT. THE APPELLANT RAISED SHARE CAPITAL FROM ITS PROMOTERS TO ACQUIRE LAND THROUGH IDCO AND ALSO FURNISHED BANK GUARANTEE OF RS.73.24 CRORE. HENCE, DURING THE YEAR UNDER CONSIDERATION, THE APPELLAN T WAS IN THE PROCESS OF SETTING UP OF COAL MINE AND ITS BUSINESS HAS NOT COMMENCED. THE ASSESSING OFFICER HAS ADMITTED THAT THE APPELLANT'S ACTIVITIES HAVE NOT BEEN COMPLETED AND IT IS IN THE PRE - OPERATING PERIOD AND ONLY AFTER FINISHING ALL THE PRE - OPERAT IVE ACTIVITIES AS MENTIONED ABOVE, THE PRODUCTION OF COAL SHALL BE COMMENCED. THE APPELLANT HAS RAISED ONLY GROUND THAT WHETHER INTEREST EARNED BY THE APPELLANT FROM THE SURPLUS FUND, WHICH WAS ADMITTEDLY COLLECTED BY THE ASSESSEE FOR THE PURPOSE OF IMPLEM ENTATION OF THE PROJECT, IS A CAPITAL RECEIPT LIABLE TO BE ADJUSTED AGAINST THE PROJECT DEVELOPMENT EXPENDITURE. IN THE AUDIT REPORT, THE ASSESSEE HAS ADJUSTED THE INTEREST RECEIPT AGAINST THE PROJECT DEVELOPMENT EXPENDITURE. THE APPELLANT HAS PREPARED PRE - OPERATIVE EXPENSES FOR THE YEAR 31 ST MARCH 2013 AND ALSO FOR EARLIER YEARS INSTEAD OF PROFIT AND LOSS ACCOUNT, SINCE NO BUSINESS HAS BEEN COMMENCED. THE APPELLANT HAS DEDUCTED INTEREST OF RS.78,32,251/ - , WHICH IS INTEREST RECEIVED ON FIXED DEPOSIT FOR ISSUE OF BANK GUARANTEE AND RS. 1,37,74,482/ - FROM INTEREST RECEIVED FROM LIEN FIXED DEPOSIT FROM TOTAL PRE OPERATIVE EXPENSES. THE LEARNED ASSESSING OFFICER WITHOUT CITING ANY JUDICIAL PRONOUNCEMENT, ANNOUNCED ON THE ISSUE OF INTEREST ON FIXED DEPOSIT DUR ING THE PERIOD OF CONSTRUCTION. HE SIMPLY TREATED THE RECEIPT OF INTEREST AS INCOME FROM OTHER SOURCES. THERE ARE A PLETHORA OF JUDGMENTS FROM SUPREME COURT, HIGH COURT AND TRIBUNALS, IN WHICH IT IS ANALYZED WHETHER INTEREST DURING THE PERIOD OF CONSTRUCTI ON SHALL BE ADJUSTED AGAINST PRE - OPERATIVE EXPENSES OR IT SHALL BE TREATED AS INCOME FROM OTHER SOURCES. TO SUPPORT HIS ABOVE SUBMISSIONS, LD. AR RELIED ON THE FOLLOWING CASE LAWS : - I) INDIAN OIL PANIPAT CONSORTIUM LTD. VS. ITO (2009) 315 ITR 255 ; II) T UTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. 227 ITR 172 ; III) BOKARO STEEL LTD. 236 ITR 315 ; IV) KARNAL CO - OPERATIVE SUGAR MILLS 243 ITR 002 ; V) KARNATAKA POWER CORPORATION 247 ITR 268 ; AND VI) POSCO (INDIA) (P) LTD. ITA NOS.186,462&461/CTK/2011 8. AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD AND THE ORDERS OF AUTHORITIES BELOW, WE NOTICE THAT ITA NO S . 396 &397 /CTK/201 8 7 THE LD. CIT(A) HAS DELETED THE ADDITION AFTER RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF INDIAN OIL PAN IPAT POWER CONSORTIUM LTD. VS. ITO 315 ITR 255 AND ALSO THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF POSCO - INDIA (P) LTD. PASSED IN ITA NOS.186, 462&461/CTK/2011, VIDE ORDER DATED 14.02.2013, HAS RECORDED THE FINDINGS AS UNDER : - 5. I HA VE CONSIDERED THE MATTER CAREFULLY WITH REFERENCE TO THE FACTS AND MATERIALS ON RECORD. I HAVE ALSO GONE THROUGH THE ELABORATE WRITTEN SUBMISSION FILED BY THE ASSESSEE AND TAKEN NOTE OF THE CASE LAWS REFERRED TO AND DISCUSSED IN THE WRITTEN SUBMISSION. IT MAY BE POINTED OUT HERE THAT THE AO HAS NOT GIVEN ANY REASONS IN THE ASSESSMENT ORDER AS TO WHY THE INTEREST EARNED ON FDS SHOULD NOT BE TREATED AS CAPITAL RECEIPT AS CLAIMED BY THE ASSESSEE AND ADJUSTED AGAINST THE PRE - OPERATIVE EXPENSES. THE AO HAS ALSO NOT DISCUSSED THE REASONS AS TO WHY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF INDIAN OIL PANIPAT POWER CONSORTIUM LTD, WOULD NOT APPLY TO THE CASE OF THE ASSESSEE AND HOW THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF TUTICORIN ALK ALI CHEMICALS & FERTILIZERS LTD. APPLIES TO THE FACTS OF THE ASSESSEE'S CASE. IT IS CLEAR FROM THE ASSESSMENT ORDER THAT THE AO'S ACTION TO TAX THE IMPUGNED INTEREST INCOME IS NOT BACKED BY A SPEAKING ORDER. IN THE CASE OF INDIAN OIL PANIPAT POWER CONSORTI UM LTD. V. ITO 315 ITR 255, THE HON'BLE DELHI HIGH COURT WAS SEIZED WITH A CASE OF A COMPANY WHICH WAS IN THE PRE - OPERATIVE STAGE AND HAD PARKED A PART OF THE SHARE CAPITAL IN THE BANK IN THE FORM OF FDS. THE QUESTION BEFORE THE HON'BLE HIGH COURT WAS WHET HER THE INTEREST SO EARNED ON FDS UTILIZING SHARE CAPITAL WAS TAXABLE AS INCOME FROM OTHER SOURCES. THE HON'BLE HIGH COURT HELD THAT THE INTEREST EARNED ON FDS WAS CAPITAL RECEIPT LIABLE TO BE SET OFF AGAINST PRE - OPERATIVE EXPENSES, AND COULD NOT BE TAXED AS INCOME FROM OTHER SOURCES. IN THEIR JUDGMENT, THE HON'BLE DELHI HIGH COURT HAS CONSIDERED A HOST OF DECISIONS OF VARIOUS COURTS ON THE ISSUE INCLUDING THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASES OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LT D. AND BOKARO STEEL LTD. THE CASE OF THE ASSESSEE APPEARS TO BE SQUARELY COVERED BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF INDIAN OIL PANIPAT POWER CONSORTIUM LTD. THE RELEVANT PORTION OF THE DECISION IS INCORPORATED IN THE WRITTEN SUB MISSION OF THE ASSESSEE AND IS, THEREFORE, NOT QUOTED HERE TO AVOID REPETITION. IT IS RELEVANT TO MENTION HERE THAT FOLLOWING THE AFORESAID DECISION OF THE HON'BLE DELHI HIGH COURT, THE JURISDICTIONAL ITAT, CUTTACK BENCH, CUTTACK HAS HELD IN THE CASE OF PO SCO - INDIA (P) LTD., VIDE THEIR ORDER DT.14.2.2013 IN ITA NOS.186, 462 & 461/CTK/2011 I THAT INTEREST ON FDS MADE OUT OF SHARE CAPITAL DURING THE PRE - OPERATIVE PERIOD CANNOT BE TAXED AS INCOME FROM OTHER SOURCES AND HAS TO BE SET OFF AGAINST PRE - OPERATIVE E XPENSES BEING CAPITAL RECEIPT. RESPECTFULLY ITA NO S . 396 &397 /CTK/201 8 8 FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF INDIAN OIL PANIPAT POWER CONSORTIUM LTD. AND THE DECISION OF THE HON'BLE ITAT, CUTTACK BENCH, CUTTACK IN THE CASE OF POSCO - INDIA (P) LTD., IT IS HELD THAT THE INTEREST EARNED BY THE ASSESSEE ON FDS CANNOT BE TAXED AS INCOME FROM OTHER SOURCES. HENCE, THE ADDITION OF RS.1,58,81,734/ - IS DELETED. FROM THE ABOVE OBSERVATIONS OF THE CIT(A), WE FIND THAT CIT(A) WHILE DEALING WITH THE ISSUE HAS OBSER VED THAT I N THE CASE OF INDIAN OIL PANIPAT POWER CONSORTIUM LTD. V. ITO 315 ITR 255, THE HON'BLE HIGH COURT HELD THAT THE INTEREST EARNED ON FDS WAS CAPITAL RECEIPT LIABLE TO BE SET OFF AGAINST PRE - OPERATIVE EXPENSES, AND COULD NOT BE TAXED AS INCOME FROM OTHER SOURCES. IN THEIR JUDGMENT, THE HON'BLE DELHI HIGH COURT HAS CONSIDERED A HOST OF DECISIONS OF VARIOUS COURTS ON THE ISSUE INCLUDING THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASES OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. AND BOKARO S TEEL LTD. THE CASE OF THE ASSESSEE APPEARS TO BE SQUARELY COVERED BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF INDIAN OIL PANIPAT POWER CONSORTIUM LTD. THEREAFTER FOLLOWING THE AFORESAID DECISION OF THE HON'BLE DELHI HIGH COURT, THE JURIS DICTIONAL ITAT, CUTTACK BENCH, CUTTACK HAS HELD IN THE CASE OF POSCO - INDIA (P) LTD. HAS HELD THAT THE INTEREST EARNED BY THE ASSESSEE ON FDS CANNOT BE TAXED AS INCOME FROM OTHER SOURCES. EVEN AS PER THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CAS E OF CIT VS. VEGETABLE PRODUCTS, [1973] 88 ITR 192 (SC), WHEN TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISION ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADOPTED. ITA NO S . 396 &397 /CTK/201 8 9 ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) I N THIS REGARD AND WE UPHOLD THE SAME. HENCE, THE SOLE GROUND OF APPEAL RAISED IN BOTH THE APPEALS OF THE REVENUE IS DISMISSED. 9 . IN THE RESULT, BOTH APPEAL S OF THE REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 21 / 10 / 201 9 . SD/ - ( C.M.GARG ) SD/ - ( L.P.SAHU ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 21 / 10 /201 9 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - DCIT, CORPORATE CIRCLE - 1(2),BHUBANESWAR 2. / THE RESPONDENT - M/S RADHIKAPUR (WEST) COAL MINING PRIVATE LIMITED, 52, SAHID NAGAR, BHUBANESWAR - 751007 3. ( ) / THE CIT(A), 4. / CIT 5. , , / D R, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//