Hyderabad Metro Rail Ltd., Hyd, Hyderabad V. DCIT, Circle-2(2), Hyderabad, Hyderabad

ITA 403/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6042 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-12-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 24-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Business income; Business expenditure; Commercial expediency
• Section: 143(3)

Judgement Text

ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 1 OF 16 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS.402 & 403/HYD/2016 (ASSESSMENT YEARS: 2010-11 & 2011-12) M/S. HYDERABAD METRO RAIL LIMITED, HYDERABAD PAN: AABCH 8668 M VS DY. COMMISSIONER OF INCOME TAX, CIRCLE 2 (2) HYDERABAD FOR ASSESSEE : SHRI P.S.R.V.V. SURYA RAO FOR REVENUE : SMT. SUMAN MALIK, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THESE ARE ASSESSEES APPEALS FOR THE A.YS 2010-11 & 2011-12 RESPECTIVELY. IN BOTH THE APPEALS, THE COMM ON GRIEVANCE OF THE ASSESSEE IS THAT THE AUTHORITIES BELOW HAVE ERRED IN TREATING THE BUSINESS INCOME OFFERED BY THE ASSESSEE AS INC OME FROM OTHER SOURCES AND DISALLOWING THE BUSINESS EXPENDI TURE CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT YET COMMENCED ITS BUSINESS. THE GROUNDS OF APPEAL RAISE D BY THE ASSESSEE ARE AS UNDER: 1. THE LEARNED COMMISSIONER OF IT (APPEALS) ERRED ON FACTS AND CIRCUMSTANCES AND IN LAW IN DISMISSING THE APPEAL WHILE CONFIRMING THE ORDER OF THE ASSESSING OFFICER AND IN SUSTAINING THE ADDITIONS MADE TO INCOME AND DISALLOWING THE EXPENDITURE CLAIMED. DATE OF HEARING : 09.03.2017 DATE OF PRONOUNCEMENT : 24.03.2017 ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 2 OF 16 2. THE LEARNED CIT(A) FAILED IN PASSING A SPEAKING ORDER ON FACTS AND LAW AND BRINGING ON RECORD ALL THE SUBMISSIONS MADE AND IGNORING VARIOUS PLEAS MADE DURING THE APPELLATE PROCEEDINGS. 3. THE LEARNED CLT(A) ERRED IN UNDERSTANDING THE NATURE OF BUSINESS ACTIVITY OF THE ASSESSEE COMPANY, IN HOLDING THAT IT IS ONLY TO OPERATE MASS TRANSPORT SYSTEM AND THAT THE ASSESSEE COMPANY'S MAIN BUSINESS ACTIVITIES HAVE NOT YET COMMENCED AND THAT THE INCOME GENERATED IS NOT FROM THE BUSINESS ACTIVITY OF THE ASSESSEE COMPANY. SHE OUGHT TO HAVE APPRECIATED THE FACT AND TO HAVE HELD THAT THE ACTIVITY OF FACILITATION OF SETTING UP METRO RAIL ETC.. WHICH IS ONE OF THE OBJECTS, IS THE OBJECTIVE TAKEN UP AND PURSUED AND IT IS THE BUSINESS ACTIVITY OF THE ASSESSEE COMPANY. SHE OUGHT TO HAVE APPRECIATED THAT TO OPERATE MASS TRANSPORT SYSTEM IS ONLY ONE OF THE OBJECTS, FOR WHICH IT WAS ESTABLISHED. 04. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER IN DISALLOWING THE ENTIRE EXPENDITURE INCURRED ON FACILITATION OF SETTING UP OF METRO RAIL AND DEBITED TO PROFIT AND LOSS ACCOUNT ON THE GROUND THAT THE ASSESSEE COMPANY HAS NOT YET COMMENCED ITS BUSINESS. SHE ERRED IN HOLDING THAT THE EXPENDITURE INCURRED CANNOT BE SAID TO HAVE BEEN INCURRED FOR EARNING INCOME. SHE OUGHT TO HAVE HELD THAT THE EXPENDITURE HAD BEEN INCURRED ON ONE OF THE OBJECTS OF THE ASSESSEE COMPANY FOR WHICH IT WAS ESTABLISHED AND HENCE IS ALLOWABLE EXPENDITURE. 05. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER IN TREATING THE ENTIRE CREDITS IN PROFIT AND LOSS ACCOUNT AS INCOME FROM OTHER SOURCES IGNORING AND NOT APPRECIATING THEIR NATURE AND PURPOSE ON THE GROUND THAT THEY DO NOT FORM PART OF BUSINESS ACTIVITIES. SHE OUGHT TO ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 3 OF 16 HAVE HELD THAT THE EXPENDITURES INCURRED ARE ONLY TO EARN INCOMES SO CREDITED. 6. THE LEARNED CIT(A) ERRED IN APPRECIATING THE NEXUS BETWEEN THE EXPENDITURES INCURRED AND INCOMES EARNED APPROPRIATELY AND FAILED IN GIVING A FINDING AS TO THEIR NATURE. SHE ALSO OUGHT TO HAVE NOTED THAT THE EXPENDITURES INCURRED AND THE GOVERNMENT GRANTS AND OTHER INCOMES HAVE AN INEXPLICABLE LINK AND THAT THE GOVERNMENT GRANTS ARE GIVEN ETC. ARE EARNED ONLY TO INCUR EXPENDITURE ON FACILITATION OF SETTIN G UP OF METRO. CONSEQUENTLY AND WITHOUT PREJUDICE TO OUR PRIMARY GROUNDS, SHE OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER, IF THE GOVERNMENT GRANTS AND OTHER INCOMES ARE TREATED AS INCOME FROM OTHER SOURCES, TO TREAT THE EXPENDITURES INCURRED AS EXPENDITURE ALLOWABLE AS DEDUCTION U/S.57 AGAINST INCOME FROM OTHER SOURCES. 7. FOR THESE AND ANY OTHER GROUNDS THAT MAY BE PRAYED FOR AND ALLOWED. 2. FURTHER, THE ASSESSEE HAS ALSO RAISED THE FOLLOWI NG ADDITIONAL GROUND: WITHOUT PREJUDICE TO THE OTHER GROUNDS OF APPEAL, WHEN THE INCOMES EARNED BY WAY OF GRANTS, INTEREST ETC., ARE HELD TO BE INCOME FROM OTHER SOURCES IN TERMS OF SECTION 56, THE AO OUGHT TO HAVE EXAMINED AND ALLOWED U/S 57 VARIOUS ELIGIBLE EXPENDITURES INCURRED ON AND IN RELATION TO FACILITATION ETC., OF SETTING UP OF MET RO RAIL PROJECT AS EXPENDITURES INCURRED TO EARN THE SAID INCOMES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SPECIAL PURPOSE VEHICLE COMPANY FORMED ON BEHALF OF THE GOV T. OF ANDHRA PRADESH FOR INTERACTING WITH THE BOT DEVELOPER FOR SETTING UP AND OPERATION OF PRESTIGIOUS PROJECT OF METRO RAIL DEV ELOPMENT IN ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 4 OF 16 HYDERABAD. IT FILED ITS RETURN OF INCOME FOR THE A. YS 2010-11 & 2011-12 ADMITTING NIL INCOME. SUBSEQUENTLY, THE R EVISED RETURNS OF INCOME WERE FILED AND DURING THE SCRUTINY PROCEE DINGS U/S 143(3) OF THE ACT, THE AO NOTICED THAT THE ASSESSEE HAD ADMITTED INCOME FROM (I) GOVT. GRANT (II) INTEREST ON DEPOSI TS AND (III) OTHER INCOMES. HE ALSO OBSERVED THAT THE ASSESSEE CLAIMED ADMINISTRATIVE EXPENDITURE, M.DS REMUNERATION AND PRELIMINARY EXPENSES WRITTEN OFF AS BUSINESS EXPENDITURE. THE A O OBSERVED THAT THE ASSESSEE COMPANY IS AN INTERMEDIARY BETWEE N THE GOVT. OF A.P. AND L&T CONSTRUCTION FOR THE PRESTIGIOUS PR OJECT OF METRO RAIL DEVELOPMENT IN HYDERABAD AND THAT THE ASSESSEE COMPANY IS STILL IN THE PROCESS OF CONSTRUCTING THE INFRASTRUC TURE. THEREFORE, HE WAS OF THE OPINION THAT THE ASSESSEE COMPANY HAS NOT YET STARTED ITS BUSINESS AND THE EXPENDITURE CLAIMED IS PRE-OPERATIVE EXPENDITURE WHICH CANNOT BE ALLOWED. HE ALSO OBSERV ED THAT THE ASSESSEE HAS EARNED INTEREST INCOME ON BANK DEPOSIT S AND ALSO EARNED OTHER INCOME OUT OF ACTIVITIES WHICH ARE NOT PART AND PARCEL OF THE BUSINESS ACTIVITIES OF THE ASSESSEE A ND ALSO THAT THE EXPENDITURE DEBITED TO THE P&L A/C HAS NO CONNECTIO N WITH THE EARNING OF THE ABOVE INCOMES. THEREFORE, A SHOW CAU SE NOTICE WAS ISSUED TO THE ASSESSEE. THE ASSESSEE SUBMITTED ITS DETAILED REPLY VIDE LETTER DATED 21.01.2013, ACCORDING TO WHICH, T HE ASSESSEE WAS INCORPORATED MAINLY TO PLAN, BUILD AND COMMERCI ALLY OPERATE/FACILITATE BUILDING AND COMMERCIAL OPERATIO N OF VARIOUS MASS TRANSIT SYSTEMS AND THAT THE FIRST LIMB OF THE ACTIVITIES DOES NOT GENERATE ANY REVENUE AS IT IS ONLY TO DEVELOP O R FACILITATE TO DEVELOP THE TRANSPORT SYSTEMS. IT WAS SUBMITTED THA T FOR THE YEARS UNDER CONSIDERATION, THE ASSESSEE COMPANY HAD UNDER TAKEN ONLY THE FIRST MENTIONED LIMB OF THE ACTIVITY I.E. DEVEL OPING OR ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 5 OF 16 FACILITATING THE DEVELOPMENT OF THE TRANSPORT SYSTE M AND THEREFORE, THE ASSESSEE HAS IN FACT COMMENCED ITS BUSINESS. HO WEVER, THE AO WAS NOT CONVINCED WITH THE ASSESSEES CONTENTION S AND HELD THAT THE CORE OBJECTIVE OF THE ASSESSEE IS TO COMME RCIALLY OPERATE THE MASS TRANSIT SYSTEM AND SINCE IT HAS NOT YET ST ARTED ITS CORE ACTIVITY, IT CANNOT BE CONSTRUED THAT THE ASSESSEE HAS COMMENCED ITS BUSINESS. FURTHER, HE ALSO OBSERVED THAT THE INC OME SHOWN IN THE P&L A/C IS NOT GENERATED FROM THE BUSINESS ACTI VITY OF THE ASSESSEE. THEREFORE, HE TREATED THE BUSINESS INCOME RETURNED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES. AS RE GARDS THE EXPENDITURE INCURRED BY THE ASSESSEE, THE AO HELD T HAT THE SAME HAS TO BE DISALLOWED AS IT HAS NO CONNECTION WITH T HE EARNING OF THE INCOME RETURNED BY THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRME D THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI P.S.R .V.V. SURYA RAO, REITERATED THE SUBMISSIONS MADE BY THE A SSESSEE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE MAIN OBJECTIVE OF THE ASSESSEE WAS TO DEVELOP OR TO FACI LITATE THE DEVELOPMENT OF THE MASS TRANSIT SYSTEM AND IN ACCOR DANCE WITH THE SAID OBJECTIVE, THE ASSESSEE HAS ACQUIRED THE L AND AND PAID COMPENSATION TO VARIOUS DISPLACED LAND OWNERS. HE H AS ALSO DRAWN OUR ATTENTION TO THE DIRECTORS REPORT WHEREI N IT WAS REPORTED THAT THE TENDERS WERE CALLED FOR AND THE C ONTRACT HAS BEEN AWARDED TO L&T INFRASTRUCTURE LTD FOR BUILDING THE MASS TRANSIT SYSTEM. THUS, ACCORDING TO THE ASSESSEE, IT HAS COMMENCED ITS BUSINESS OF PLANNING AND ALSO HAS FAC ILITATED THE DEVELOPMENT OF THE MASS TRANSIT SYSTEM AND HAS INCU RRED ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 6 OF 16 EXPENDITURE FOR ACHIEVING ITS OBJECTS. HE HAS ALSO DRAWN OUR ATTENTION TO THE DETAILS OF EXPENDITURE INCURRED BY THE ASSESSEE, WHICH IS AT PAGE 51 OF THE PAPER BOOK, TO DEMONSTRA TE THAT MOST OF THE EXPENDITURE IS IN THE NATURE OF THE ADMINIST RATIVE EXPENDITURE. HE ALSO SUBMITTED THAT THE ASSESSEE HA D TO FLOAT TENDERS AND HAS INCURRED EXPENDITURE FOR EXECUTION OF SUCH PROCEDURES AND HAS ALSO EARNED INCOME BY ISSUING TH E TENDER DOCUMENTS. THEREFORE, CLEARLY THE NEXUS BETWEEN THE EARNING OF THE INCOME FROM ISSUANCE OF RSQS AND ALSO BUSINESS EXPENDITURE FOR FLOATING THE TENDERS HAS BEEN ESTABLISHED BY TH E ASSESSEE. HE ALSO SUBMITTED THAT THE PURPOSE OF GOVT. GRANT TO T HE ASSESSEE WAS ONLY TO IMPLEMENT THE PLAN OF DEVELOPMENT OF IN FRASTRUCTURE FOR THE MASS TRANSIT SYSTEM AND AS SEEN FROM THE BA LANCE SHEET OF THE ASSESSEE, THE GOVERNMENT GRANT FROM THE EARL IER YEARS HAS REDUCED WHICH ONLY ESTABLISHES THAT THE ASSESSEE HA S COMMENCED ITS BUSINESS ACTIVITIES. ACCORDING TO HIM, THE ASSE SSEE HAS UTILIZED THE GOVT. GRANTS ONLY FOR THE PURPOSE FOR WHICH THE Y HAVE BEEN GRANTED BY THE GOVT. AS FAR AS THE INTEREST INCOME ON DEPOSITS IS CONCERNED, THE LEARNED COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ASSESSEE HAS DEPOSITED THE UNUTILIZED GOVT. GRA NTS IN SHORT TERM DEPOSITS IN ORDER TO REDUCE THE OPERATION COST AND NOT TO EARN INTEREST INCOME AND THEREFORE, THE INTEREST IN COME IS ALSO DIRECTLY LINKED TO THE BUSINESS ACTIVITIES OF THE A SSESSEE AND IS TO BE TREATED AS BUSINESS INCOME. 5. AS REGARDS THE ADDITIONAL GROUND OF APPEAL, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME AR ISES OUT OF THE ASSESSMENT AND AS THE ENTIRE INCOME HAS BEEN TR EATED AS INCOME FROM OTHER SOURCES AND THE ASSESSEE THROUG H THE ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 7 OF 16 ADDITIONAL GROUND IS ONLY AN ALTERNATIVE GROUND SEE KING THAT IF THE BUSINESS INCOME RETURNED BY THE ASSESSEE IS TREATED AS INCOME FROM OTHER SOURCES, THEN THE EXPENDITURE RELATABLE TO EARNING OF SUCH INCOME SHOULD ALSO BE ALLOWED U/S 57 OF THE AC T. HE THEREFORE, PRAYED THAT THE ADDITIONAL GROUND OF APP EAL BE ADMITTED AND ADJUDICATED. 6. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. SHE SUBMITTED THAT THE MAIN OBJECT OF THE ASSESSEE COMPANY WAS NOT ONLY TO SET UP THE INFRASTRUCTURE FACILITY BUT IS ALSO TO OPERATE THE MASS TRANSIT SYSTEM. SHE SUBMITTED THAT THE ASSESSEE WAS YET TO OPERATE THE METRO RAIL SYSTEM IN HYDERABAD AND ALSO DERIVE INCO ME/REVENUE THEREFROM. THEREFORE, ACCORDING TO HER, THE EXPENDI TURE INCURRED BY THE ASSESSEE PRIOR TO THE OPERATION OF THE METRO RAIL SYSTEM, IS TO BE TREATED AS PRE-OPERATIVE EXPENDITURE AND CAPI TALIZED. SHE ALSO PLACED RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZ ERS LTD VS. CIT, REPORTED IN 227 ITR 172 FOR THE PROPOSITION THAT WH ERE THE UNUSED AND SURPLUS FUNDS ARE DEPOSITED BY THE ASSES SEE WITH THE BANKS, THE INTEREST INCOME DERIVED THEREFROM CANNOT BE TREATED AS BUSINESS INCOME. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS A SPECIAL P URPOSE VEHICLE FORMED BY THE GOVT. OF ANDHRA PRADESH FOR BRINGING INTO EXISTENCE THE METRO RAIL SYSTEM IN HYDERABAD. AS SEEN FROM TH E MEMORANDUM OF ASSOCIATION OF THE ASSESSEE COMPANY, THE MAIN OBJECTS ARE AS UNDER: ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 8 OF 16 A. MAIN OBJECTS TO BE PURSUED BY THE COMPANY ON ITS INCORPORATION:- 1. TO PLAN, BUILD AND COMMERCIALLY OPERATE AND I OR FACILITATE BUILDING AND COMMERCIAL OPERATION OF MAS S TRANSIT SYSTEMS FOR HYDERABAD AND FOR ANY OTHER ARE A BY CONSTRUCTING, FACILITATING CONSTRUCTION, TAKING OVER, LEASING, EITHER ON ITS OWN OR OTHERWISE, AND BY BUI LDING NEW TRANSIT ROUTES OF ANY MODE OR A COMBINATION OF MODES, WITH ALL ATTENDANT INFRASTRUCTURAL FACILITIE S. 2. TO PROVIDE AND / OR FACILITATE PROVISION OF MULT I MODAL TRANSPORTATION SERVICES INCLUDING OWNING, LICENSING AND OPERATING BUS ROUTES, PASSENGER AND GOODS CARRIERS, OTHER ROAD VEHICLES AND OTHER MODES OF TRANSPORT, AND PROVIDING SEAMLESS TRANSPORTATION SERVICES. 3. TO COMMERCIALLY EXPLOIT AND/OR FACILITATE COMMER CIAL EXPLOITATION OF LAND AND AIR SPACE AND OTHER AVAILA BLE OR HANDED OVER RESOURCES FOR OPTIMAL UTILIZATION OF THEIR POTENTIAL. 4. TO UNDERTAKE AND/OR FACILITATE ROAD CAPACITY IMPROVEMENT WORKS SUCH AS NEW ROADS, ROAD WIDENING, PARALLEL ROADS. SLIP ROADS, JUNCTION IMPROVEMENTS, BRIDGES, ROAD OVER BRIDGES, ROAD UNDER BRIDGES, FLYOVERS, SIGNALIZATION, BUS BAYS, PARKING FACILITI ES, FOOT OVER BRIDGES AND SUB WAYS. 5. TO UNDERTAKE AND/OR FACILITATE TRANSIT ORIENTED DEVELOPMENTAL ACTIVITIES ON ITS OWN OR ON BEHALF OF THE CENTRAL AND OR STATE GOVERNMENT OR ANY ORGANIZATION S BELONGING TO OR UNDER THE DIRECT OR INDIRECT CONTRO L OF THE CENTRAL, STATE OR LOCAL GOVERNMENTS, TO ENCOURA GE DISPERSED GROWTH AND TRANSIT ORIENTED DEVELOPMENT. 6. TO RUN TAXICABS, LORRIES, BUSSES, CARS, TRUCKS, STATION WAGONS, AIRPLANES, AIRSHIPS, MOTORS, RAILWA YS. RAIL MOTORS, VESSELS, BOATS AND ALL OTHER VEHICLES OF WHATSOEVER KIND PROPELLED BY ELECTRICITY, GAS, GASO LINE, COMPRESSED AIR, STEAM, MANUAL POWER, MECHANIZED ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 9 OF 16 POWER, OIL, CRUDE OIL, ATOMIC OR OTHER ENERGY, OR B Y WHATSOEVER OTHER MEANS FROM ONE PLACE TO ANOTHER (WHATSOEVER) FOR THE PURPOSE OF CARRYING, CONVEYING TRANSPORTING GOODS, ANIMALS, PASSENGERS, MERCHANDIS E OR OTHER THINGS, FOR THE EFFICIENT RUNNING OF THE M ASS TRANSIT SYSTEM. 8. FURTHER, ON PERUSAL OF THE OTHER OBJECTS WHICH AR E INCIDENTAL OR ANCILLARY TO THE ATTAINMENT OF THE AB OVE MAIN OBJECTS, THE ASSESSEE IS REQUIRED TO ACQUIRE, BUY, SELL FOR THE PURPOSES OR PROVIDE OR FACILITATE INVESTMENT OR RES ALE OF LAND SO AS TO DEVELOP REAL ESTATE, SHOPPING MALLS IN AND AROUN D RAILWAY STATION AND ELSEWHERE AND CARRY ON SUCH OTHER ACTIV ITIES. THUS, THE ASSESSEE MAY EITHER BUILD THE TRANSPORT SYSTEM BY ITSELF OR ACT AS FACILITATOR FOR THE BUILDING OF SUCH SYSTEM AND ALSO TO RUN OR FACILITATE TO RUN, OPERATE OR FACILITATE TO OPERATE THE SYSTEM ON COMMERCIAL LINES. TO OPERATE THE METRO RAIL SYSTEM COMMERCIALLY, THE ASSESSEE IS REQUIRED TO PLACE THE NECESSARY INF RASTRUCTURE IN PLACE AND THE ASSESSEE IS ALSO GIVEN THE OBLIGATION OF PLANNING, BUILDING AND MAKING THE SYSTEM OPERATIONAL. IN ORDE R TO PLAN THE SYSTEM, THE ASSESSEE IS REQUIRED TO SET UP AN ADMIN ISTRATIVE OFFICE AND ALSO IS REQUIRED TO DESIGN THE SYSTEM AND CALL FOR TENDERS FOR BUILDING THE NECESSARY INFRASTRUCTURE. AS SEEN FROM THE DIRECTORS REPORT PLACED IN THE PAPER BOOK, THE ASSESSEE HAD A CQUIRED THE LAND AND HAD PAID THE COMPENSATION TO THE DISPLACED LAND OWNERS AND HAS ALSO INITIALLY AWARDED CONTRACT TO ONE COMP ANY, BUT LATER ON DUE TO CERTAIN CIRCUMSTANCES CANCELLED THE CONTR ACT AND HAD CALLED FOR TENDERS FROM VARIOUS INTERNATIONAL BIDDE RS AND FINALLY AWARDED THE CONTRACT TO L&T LTD. THEREFORE, IT IS C LEAR THAT THE ASSESSEE HAS TAKEN ALL THE NECESSARY STEPS TO FACIL ITATE THE BUILDING OF METRO RAIL SYSTEM. SINCE THE ASSESSEE H AS TAKEN STEPS ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 10 OF 16 IN FURTHERANCE OF ITS MAIN OBJECTS, IT CANNOT BE ST ATED THAT THE ASSESSEE HAS NOT COMMENCED ITS BUSINESS. EVEN FROM THE PERUSAL OF THE EXPENDITURE DEBITED TO THE P&L A/C WHICH HAS BEEN DISALLOWED BY THE AO, IT IS SEEN THAT MOST OF IT RE LATES TO THE ADMINISTRATIVE OFFICE OF THE ASSESSEE AND NOT FOR M ANUFACTURING OR MAKING THE SYSTEM OPERATIONAL. 9. SIMILAR ISSUE HAD COME UP BEFORE THE HON'BLE KER ALA HIGH COURT IN THE CASE OF CIT VS. KERALA INFRASTRUC TURE INVESTMENT FUND BOARD WHEREIN THE QUESTION WAS AS TO WHETHER TH E ASSESSEE THEREIN WHO WAS TO FINANCE INFRASTRUCTURAL PROJECTS AND HAS RAISED FUNDS BUT HAD NOT ADVANCED ANY FUNDS, HAS COMMENCED ITS BUSINESS OR NOT?. IT WAS HELD THAT THE ANSWER TO S UCH QUESTIONS WILL DEPEND UPON THE FACTS OF EACH CASE. THE HON'BL E HIGH COURT HAS ALSO CONSIDERED THE JUDGMENT OF THE HON'BLE SUP REME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZ ERS LTD VS. CIT (CITED SUPRA) AND AT PARA 3 OF ITS ORDER HAS HELD A S UNDER: 3. THE ONLY QUESTION TO BE CONSIDERED IS WHETHER THE ASSESSEE CAN BE SAID TO HAVE COMMENCED BUSINESS BEFORE ACTUA L ADVANCING OF ANY FUND FOR ANY INFRASTRUCTURE PROJEC T. STANDING COUNSEL RELYING ON THE DECISION OF THE SUPREME COUR T IN TUTICORIN ALKALI CHEMICALS & FERTILISERS LTD.S CASE (SUPRA), CONTENDED THAT THE CASE HEREIN IS SIMILAR TO THE FA CTS OF THE CASE DECIDED BY THE SUPREME COURT BECAUSE AS IN THAT CAS E, INCOME EARNED BY THE ASSESSEE IS INTEREST INCOME ON DEPOSI TS MADE PRIOR TO THE COMMENCEMENT OF BUSINESS, THAT IS ADVANCING OF AMOUNTS FOR INFRASTRUCTURE PROJECTS. WE ARE UNABLE TO ACCEP T THE CONTENTION OF STANDING COUNSEL THAT FACTS IN TUTICO RIN ALKALI CHEMICALS & FERTILISERS LTD.S CASE (SUPRA) APPLY T O THIS CASE, BECAUSE THAT WAS A CASE WHERE THE COMPANY WAS ENGAG ED IN MANUFACTURE OF HEAVY CHEMICALS AND BEFORE STARTING BUSINESS, IT APPLIED SURPLUS FUND IN SHORT-TERM DEPOSITS AND EAR NED INTEREST, WHICH IS OBVIOUSLY NOT OUT OF ANY BUSINESS CARRIED ON BY IT. ADMITTEDLY THAT COMPANY WAS NOT ENGAGED IN FINANCIN G AND ON THE OTHER HAND IT WAS AN INDUSTRIAL COMPANY ENGAGED IN MANUFACTURE. THEREFORE, INTEREST EARNED BY IT CAN N EVER BE INCOME FROM BUSINESS, MORE SO WHEN SUCH INTEREST IS EARNED FROM ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 11 OF 16 DEPOSITS MADE EVEN PRIOR TO COMMENCEMENT OF PRODUCT ION BY THE COMPANY. HOWEVER, FACTS OF THIS CASE ARE ENTIRELY D IFFERENT BECAUSE THE ACTIVITY OF THE RESPONDENT IS FINANCING FOR INFRASTRUCTURE PROJECTS. IN FACT, IT RAISED FUND TO WARDS WORKING CAPITAL THROUGH PUBLIC BORROWINGS BY ISSUE OF BONDS . ADMITTEDLY, INTEREST EARNED BY THE RESPONDENT IS ON DEPOSITS OF BORROWED FUNDS RETAINED IN TREASURY ACCOUNTS AND IN OTHER BA NK ACCOUNTS. THE QUESTION AS TO WHETHER THE ASSESSEE HAS COMMENC ED BUSINESS OR WAS CARRYING ON BUSINESS WILL DEPEND UPON THE FA CTS OF EACH CASE. INFRASTRUCTURE PROJECTS THEMSELVES ARE VERY F EW AND RESPONDENT CAN FUND THE PROJECT ONLY WHEN IT CONFOR MS TO ASSESSEES NORMS FOR ELIGIBILITY. THE FUND REQUIRED FOR INFRASTRUCTURE PROJECTS IS SUBSTANTIAL AND, THEREFO RE, FUND HAS TO BE FIRST RAISED BEFORE IDENTIFYING THE PROJECT TO B E FUNDED. THEREFORE, IN OUR VIEW, RAISING OF FUND FOR PROJECT FINANCING ITSELF IS COMMENCEMENT OF BUSINESS BECAUSE FUND RAISED IS NOTHING BUT WORKING CAPITAL TO BE APPLIED FOR BUSINESS PURPOSES . RESPONDENT CANNOT BE EXPECTED TO IMMEDIATELY ADVANCE FUND BECA USE ONLY AFTER PROJECTS ARE IDENTIFIED AND THEIR ELIGIBILITY IS PROVED, IN ACCORDANCE WITH THE NORMS OF THE RESPONDENT, THEY C AN FUND A PROJECT. HOWEVER, RESPONDENT CANNOT BE EXPECTED TO KEEP THE INTEREST BEARING BORROWINGS IDLE WITHOUT ANY RETURN S, WHICH WILL LEAD TO HEAVY LOSS. THEREFORE, NECESSARILY RESPONDE NT HAD TO DEPLOY AVAILABLE FUND IN SHORT-TERM DEPOSITS TO EAR N INTEREST WHICH IS TO BE UTILISED FOR PAYING INTEREST TO THE BOND HOLDERS AND TO MEET THE ADMINISTRATIVE COST. MAY BE MONTHS, OR YEARS, MAY TAKE FOR FUNDING PROJECTS. THEREFORE IT, CANNOT BE SAID THAT BUSINESS CAN BE SAID TO COMMENCE ONLY AFTER FIRST P ROJECT IS FINANCED. IN OUR VIEW, THE BUSINESS COMMENCED WHEN THE RESPONDENT RAISED FUND FROM PUBLIC THROUGH BONDS IS SUED AND WHEN THEY WERE READY WITH THE FUND TO DEPLOY FOR IN FRASTRUCTURE PROJECTS WHICH IS THE BUSINESS OF THE RESPONDENT. T HEREFORE, IN OUR VIEW, DEPOSIT OF FUNDS IN BANKS AND TREASURY IS NOTHING BUT AN ACTIVITY DONE IN THE COURSE OF BUSINESS AND, CON SEQUENTLY, INTEREST EARNED IS INCOME FROM BUSINESS. SINCE THE ASSESSEE IS A FINANCING COMPANY, THE INTEREST EARNED BY IT ON THE FUNDS RAISED THROUGH PUBLIC BORROWINGS CANNOT BE COMPARED TO THE INTEREST EARNED ON BUSINESS LIKE MANUFACTURING INDUSTRIES AN D, THEREFORE, THE DECISION OF THE SUPREME COURT RELIED ON BY THE DEPARTMENT IS NOT APPLICABLE TO THE FACTS OF THIS CASE. THEREFORE , THE FIRST APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL HAVE RI GHTLY HELD THAT THE ASSESSEE IS ENTITLED TO ALL THE DEDUCTIONS AVAI LABLE IN THE COMPUTATION OF BUSINESS INCOME. WE, THEREFORE, UPHOLD THE ORDERS OF THE TRIBUNAL CO NFIRMING THE ORDER OF THE FIRST APPELLATE AUTHORITY. CONSEQUENTL Y, DEPARTMENTAL APPEALS ARE DISMISSED. ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 12 OF 16 10. IN THE CASE BEFORE US ALSO, THE ASSESSEE HAD AC QUIRED THE LAND AND PAID COMPENSATION TO THE DISPLACED LAN D OWNERS AND HAS FLOATED TENDERS AND AWARDED THE CONTRACT FOR BU ILDING THE INFRASTRUCTURE. THUS, THE ASSESSEE HAS STARTED ITS ACTIVITY OF PLANNING AND BUILDING THE MASS TRANSIT SYSTEM. AS O BSERVED BY THE HON'BLE HIGH COURT IN THE ABOVE CASE, INFRASTRU CTURE PROJECTS TAKE TIME TO BE COMPLETED AND THE ASSESSEE CAN OPER ATE THE METRO RAIL SYSTEM ONLY AFTER THE INFRASTRUCTURE IS BUILT. THUS, IN OUR OPINION, THE ASSESSEE HAS STARTED ITS BUSINESS OF P LANNING THE MASS TRANSIT SYSTEM, I.E. FIRST LIMB OF ITS ACTIVIT Y. 11. FURTHER, THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. GUJARAT PORTS INFRASTRUCTURE & DEVELOPMENT CO. LTD REPORTED IN (2012) 20 TAXMANN.COM 10 (GUJ.) HAS CON SIDERED SIMILAR ISSUE AT LENGTH AND AT PARAS 10 TO 17 HAS H ELD AS UNDER: 10. HAVING THUS HEARD LEARNED COUNSEL FOR THE PARTIES AND HAVING PERUSED THE DOCUMENTS ON RECORD, WE FIND THAT THE M AIN OBJECTS OUTLINED IN THE MEMORANDUM OF ASSOCIATION FOR WHICH THE RESPONDENT COMPANY WAS INCORPORATED INCLUDED BESIDES OTHERS TO UNDERTAKE AND CARRY ON THE BUSINESS OF PROMOTING, ORGANIZING, MAN AGING AND DEVELOPING IN THE STATE OF GUJARAT AND ELSEWHERE MI NOR AND MAJOR PORTS, SHIP-YARDS, JETTIES, HARBOURS AND DOCKS AS W ELL AS TO SET UP WAREHOUSES, GODOWNS, OPEN PLOTS ETC. APPERTAINING T O ANY DOCK. IT ALSO INCLUDED THE OBJECT OF SETTING UP INFRASTRUCTU RAL FACILITIES, UTILITIES, CONVENIENCES AND AMENITIES INCLUDING ROA DS, BUILDINGS, WAREHOUSES ETC. RELATING TO CARGO-HANDLING, SHIP-BU ILDING, SHIP- REPAIRING AND SHIP-BREAKING. BESIDES THESE ANOTHER MAIN OBJECT FOR WHICH THE COMPANY WAS INCORPORATED WAS TO UNDERTAKE , PROMOTE, DEVELOP, AID AND ASSIST ALL TYPES, KINDS AND FORMS OF PORT RELATED ACTIVITIES AND ALSO TO UNDERTAKE, RENDER AND PROVID E ALL TYPES OF SERVICES IN ALL MATTERS RELATING TO PORTS, JETTIES, HARBOURS, DOCKS AND SHIP-YARDS. IT ALSO INCLUDED THE OBJECT OF PROMOTIN G, DEVELOPING, UPGRADING AND ASSISTING ALL TYPES, KINDS AND FORMS OF WORKS, UNDERTAKINGS, PROJECTS OR ENTERPRISES AND CARRYING ON PORT RELATED ACTIVITIES IN THE STATE OF GUJARAT AND ELSEWHERE BY INVESTMENT IN SUCH BODIES IN THE FORM OF EQUITY PARTICIPATION, PREFERE NCE PARTICIPATION, SUBSCRIPTION OF OTHER SECURITIES OR THROUGH ANY OTH ER FORM OF FINANCIAL ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 13 OF 16 ASSISTANCE OR PARTICIPATION AND TO INVEST THE CAPIT AL OF THE COMPANY; THE MONEY RAISED OR BORROWED BY THE COMPANY. 11. TO ACHIEVE SUCH MAIN OBJECTS, THE ARTICLES OF ASSO CIATION ALSO LISTED OBJECTS INCIDENTAL AND ANCILLARY TO THE ATTA INMENT OF THE MAIN OBJECTS, ONE OF THEM BEING TO WORK AND ACT AS AGENT S OF THE GOVERNMENT, MUNICIPAL LOCAL BOARDS, RAILWAY CONTRAC TORS AND SUPPLIERS. 12. BEARING IN MIND THESE MAIN AND ANCILLARY OBJECTS O F THE COMPANY, WE WOULD NEED TO PERUSE THE MATERIALS ON RECORD. WE HAVE PERUSED THE COMPANY'S PROFILE PRESENTED BY THE COMPANY BEFO RE THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSMENT. IT EME RGES THAT THE COMPANY ENTERED INTO COLLABORATION WITH ADANI PORT LIMITED ('APL' FOR SHORT) AND SET UP A JOINT VENTURE COMPANY CALLE D GUJARAT ADANI PORT LIMITED IN WHICH THE RESPONDENT COMPANY HAD 26 % EQUITY SHARE. GENERAL PUBLIC, FOREIGN INVESTORS ETC. HELD 49% EQU ITY SHARE, REMAINING 25% EQUITY SHARE WAS HELD BY APL. DURING THE YEAR RELEVANT TO ASSESSMENT YEAR 2001-02, THE COMPANY HA D INVESTMENT OF RS.15 CRORES IN APL. BESIDES THUS CARRYING OUT JOIN T VENTURE ACTIVITIES WITH APL, THE ASSESSEE HAD ALSO UNDERTAKEN VARIOUS OTHER ACTIVITIES, AS CAN BE SEEN FROM ITS COMMUNICATION DATED 26.5.20 04 TO THE COMMISSIONER (APPEALS) AND HAD ACTIVELY PARTICIPATE D IN THE MANAGEMENT OF THE SAID COMPANY. 13. FROM THE DOCUMENTS ON RECORD, WE FURTHER NOTICE TH AT THE RESPONDENT COMPANY HAD, IN CONSULTATION WITH THE GO VERNMENT, PARTICIPATED IN DEVELOPMENT OF MUNDRA PORT. 14. ON THE BASIS OF SUCH MATERIALS, IF WE REVERT BACK TO THE DECISION OF THE TRIBUNAL UNDER CHALLENGE WE NOTICE THAT THE TRI BUNAL HAD COME TO THE CONCLUSION THAT THE ASSESSEE HAD SET UP ITS BUS INESS. WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTED NO ERROR. AS AL READY NOTED, THE MAIN OBJECTS OF THE COMPANY INCLUDED WIDE VARIETY O F SUBJECTS PRINCIPALLY CONCERNED WITH THE DEVELOPMENT OF MINOR PORTS IN AND OUTSIDE STATE OF GUJARAT. THIS COULD BE DONE BY ACT ING AS PROMOTERS, ORGANIZERS, MANAGERS AND DEVELOPERS OF THE PORTS OR ALSO THROUGH ENTERING INTO JOINT VENTURE UNDERTAKING. THE SUBSID IARY OBJECTIVE, INCIDENTAL TO THE MAIN OBJECTS ALSO ENVISAGED THE C OMPANY TO WORK AND ACT AS AGENT OF THE GOVERNMENT, MUNICIPAL LOCAL BOARDS, RAILWAY CONTRACTORS ETC. 15. IN FURTHERANCE OF SUCH OBJECTS, PRINCIPAL AS WELL AS ANCILLARY, THE ASSESSEE COMPANY HAVING ENTERED INTO A JOINT VENTUR E WITH ANOTHER COMPANY, WHICH WAS DEVELOPING PORTS AT MUNDRA, IT C ANNOT BE STATED THAT THE BUSINESS OF THE COMPANY WAS NOT SET UP. 16. IT IS NOT IN DISPUTE THAT ANY EXPENSE INCURRED PRI OR TO THE SETTING UP OF A BUSINESS WOULD NOT BE A PERMISSIBLE DEDUCTI ON. IN THE CASE OF PREM CONDUCTORS PVT. LTD. V. CIT [1977] 108 ITR 65, THE DIVISION BENCH OF THIS COURT RELYING ON AND REFERRING TO THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF WESTERN INDIA VEGE TABLE PRODUCTS ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 14 OF 16 LTD. V. CIT [1954] 26 ITR 151 OBSERVED THAT FOR DECIDING WHEN A COMPANY COULD BE SAID TO HAVE SET UP ITS BUSINESS, WHAT THE COURT HAS TO CONSIDER IS WHETHER THE BUSINESS OF THE ASSESSEE CONSISTS OF DIFFERENT CATEGORIES AND WHETHER THE ACTIVITY, WHIC H WAS STARTED EARLIER IS SAID TO HAVE BEEN THE ESSENTIAL PART OF THE BUSINESS ACTIVITY OF THE ASSESSEE. THE COURT HELD AND OBSERVED AS UND ER:- 'THUS, IT IS CLEAR IN THE LIGHT OF THE DECISIONS OF THIS HIGH COURT IN SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES' CASE [19 73] 91 ITR 170 (GUJ) AND SARABHAI MANAGEMENT CORPORATION LTD.'S CA SE [1976] 102 ITR 25 (GUJ) THAT WHAT THE COURT HAS TO CONSIDER IS, WHETH ER THE BUSINESS OF THE ASSESSEE CONSISTS OF DIFFERENT CATEGORIES AND WHETHER THE ACTIVITY WHICH WAS STARTED EARLIER THAN THE ACTUAL COMMENCEMENT OF THE PRODUCTION IN THE INSTANT CASE COULD BE SAID TO HAVE BEEN AN ESSENTIAL PART OF THE BUSINESS ACTIVIT Y OF THE ASSESSEE. THE COMPANY CAN BE SAID TO HAVE SET UP ITS BUSINESS FROM THE DATE WHEN ONE OF THE CATEGORIES OF ITS BUSINESS ACTIVITY IS STARTED AND IT IS NOT NECESSARY THAT ALL THE CATEGORIES OF ITS BUSINE SS ACTIVITIES MUST START EITHER SIMULTANEOUSLY OR THAT THE LAST STAGE MUST START BEFORE IT CAN BE SAID THAT THE BUSINESS WAS SET UP. AGAIN, AS BHAGWATI C.J. HAS EMPHASIZED IN SAURASHTRA CEMENT AND CHEMICAL INDUST RIES' CASE [1973] 91 ITR 170 (GUJ), THE TEST TO BE APPLIED IS AS TO WHEN A BUSINESSMAN WOULD REGARD A BUSINESS AS BEING COMMEN CED AND THE APPROACH MUST BE FROM A COMMONSENSE POINT OF VIEW.' 17. IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENT, THE F INDINGS OF THE TRIBUNAL AND OUR OBSERVATIONS MADE HEREINABOVE, WE SEE NO REASON TO INTERFERE. WE MAY ALSO NOTICE THAT IN THE EARLIE R YEARS, THE CASE OF THE ASSESSEE THAT IT HAD SET UP THE BUSINESS WAS NO T QUESTIONED BY THE ASSESSING OFFICER. 12. IN VIEW OF THE ABOVE JUDGMENTS AND ALSO IN VIEW OF THE FACT THAT THE REVENUE HAS NOT DISALLOWED THE BUSINE SS EXPENDITURE CLAIMED BY THE ASSESSEE IN THE EARLIER TWO YEARS, WE ARE OF THE OPINION THAT THE ASSESSEE HAS COMMENCED ITS BUSINESS AND THE EXPENDITURE HAS TO BE ALLOWED AS BUSINESS E XPENDITURE. 13. COMING TO THE NATURE OF THE INCOME EARNED BY TH E ASSESSEE, WE FIND THAT IT CONSISTS OF (I) GOVT. GRA NT (II) INTEREST ON DEPOSITS AND (II) OTHER INCOME. THE GOVT. HAS RELEA SED THE GRANT FOR ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 15 OF 16 CARRYING OUT THE OBJECTS OF THE ASSESSEE AND THEREF ORE, THE GOVT. GRANT HAS TO BE CONSIDERED AS THE BUSINESS RECEIPTS OF THE ASSESSEE. THE INTEREST ON DEPOSITS IS THE INTEREST EARNED BY THE ASSESSEE ON DEPOSITS MADE BY THE ASSESSEE OF THE UN UTILIZED FUNDS AS SHORT TERM DEPOSITS. IT IS THUS CLEAR THAT THE F UNDS ARE FOR BUSINESS PURPOSES OF THE ASSESSEE AND WHEN THEY ARE NOT IMMEDIATELY NEEDED, INSTEAD OF KEEPING THEM IDLE, T HE ASSESSEE IS PARKING THEM IN SHORT TERM DEPOSITS. THE FUNDS RECE IVED BY THE ASSESSEE ARE FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE BUT IT IS FOR COMMERCIAL EXPLOITATION OF THE UNUSED FUNDS, THAT THEY ARE PARKED AS SHORT TERM DEPOSITS. THEREFORE, WE HOLD T HAT INTEREST INCOME IS BUSINESS INCOME. THE DECISION OF THE HON' BLE SUPREME COURT IN THE CASE OF TUTOCORIN ALKALI CHEMICALS & FE RTILIZERS LTD (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. THE HON'BLE SUPREME COURT IN THE CASE OF SA BUILDERS RE PORTED IN 288 ITR (1) S.C. HAS HELD THAT WHERE THE INTEREST BEARI NG FUNDS ARE ADVANCED WITHOUT INTEREST FOR COMMERCIAL EXPEDIENCY , THEN THE INTEREST PAID ON SUCH BORROWINGS IS TO BE ALLOWED. APPLYING THE SAID PRINCIPLE OF COMMERCIAL EXPEDIENCY IN A COUNTE R SITUATION, WHERE THE ASSESSEE EARNS INTEREST ON ITS BUSINESS R ECEIPTS WHICH ARE TEMPORARILY NOT REQUIRED FOR BUSINESS, AND ARE PARKED IN BANKS FOR EARNING OF INTEREST IN ORDER TO REDUCE TH E COST, THEN THE SAME ATTAINS THE NATURE OF BUSINESS INCOME. 14. AS REGARDS THE OTHER INCOME IS CONCERNED, WE FI ND THAT THE DETAILS OF THE OTHER INCOMES ARE GIVEN IN SCHED ULE VIII WHICH IS PLACED AT PAGE 51 OF THE PAPER BOOK AND ON PERUS AL OF THE SAME, WE FIND THAT THE INCOME IS DERIVED FROM SALE OF RSQ AND RSB DOCUMENTS. THE RSQ & RSB DOCUMENTS ARE THE TEND ER ITA NOS 402 AND 403 OF 2016 HMR P LTD HYDERABAD PAGE 16 OF 16 DOCUMENTS AND ARE, THEREFORE, INEXPLICABLY LINKED W ITH THE BUSINESS OF THE ASSESSEE AND THEREFORE, THE RECEIPT ON SALE OF SUCH DOCUMENTS ALSO HAS TO BE TREATED AS BUSINESS INCOME . THE DETAILS OF THE OTHER MISCELLANEOUS INCOME IS NOT GIVEN BEFO RE US, THEREFORE, WE ARE INCLINED TO TREAT THE MISCELLANEO US INCOME AS INCOME FROM OTHER SOURCES. THE AO IS THEREFORE, D IRECTED TO COMPUTE THE BUSINESS INCOME IN ACCORDANCE WITH THE DIRECTIONS GIVEN ABOVE AND ALLOW THE INTRA HEAD SET OFF IN ACC ORDANCE WITH THE LAW. THE ASSESSEES GROUNDS OF APPEAL AS WELL A S ADDITIONAL GROUND OF APPEAL ARE TREATED AS PARTLY ALLOWED. 15. IN THE RESULT, ASSESSEES APPEALS FOR BOTH THE A.YS ARE TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MARCH, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 24 TH MARCH, 2017. VINODAN/SPS COPY TO: 1 A.RAMACHANDRA RAO & CO. CAS, 1 ST FLOOR, 3-6-69/A/11 STREET NO.1 HIMAYATNAGAR, HYDERABAD 500029 2 DCIT, CENTRAL CIRCLE 2(2) 8 TH FLOOR, IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD 3 CIT (A)-9 HYDERABAD 4 PR. CIT 2 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER