ACIT, Panchkula V. M/s Himalayan Expressway Ltd., Pinjore

ITA 900/CHANDI/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8946 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 18-07-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 15-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Capital receipt
• Section: 143(3); 194C; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.900/CHD/2015 (ASSESSMENT YEAR : 2012-13) THE A.C.I.T., VS. HIMALAYAN EXPRESSWAY LTD., PANCHKULA CIRCLE, KALKA SADAN, KALKA SHIMLA ROAD, PANCHKULA. PINJORE. PAN: AABCH9338L AND ITA NO.907/CHD/2015 (ASSESSMENT YEAR : 2012-13) HIMALAYAN EXPRESSWAY LTD., VS. THE INCOME TAX OFFICER, KALKA SADAN, KALKA SHIMLA ROAD, WARD 4, PINJORE. PANCHKULA. HARYANA. HARYANA. PAN: AABCH9338L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHWANI KUMAR GARG DEPARTMENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 09.08.2016 DATE OF PRONOUNCEMENT : 21.11.2016 O R D E R PER ANNAPURNA GUPTA, A.M . : BOTH THE APPEALS, BY THE ASSESSEE AND THE REVENUE, HAVE BEEN FILED AGAINST THE ORDER OF LEARN ED COMMISSIONER OF INCOME TAX (APPEALS), PANCHKULA DAT ED 12.10.2015 FOR ASSESSMENT YEAR 2012-13. 2 2. BRIEF FACTS RELATING TO THE CASE ARE THAT THE ASSESSEE HAD TAKEN UP A PROJECT OF NHAI FOR BROADEN ING OF SECTION OF NATIONAL HIGHWAY 22. HOWEVER, DURING TH E YEAR UNDER CONSIDERATION, THE ASSESSEE HAD NOT COMMENCED ANY COMMERCIAL ACTIVITY AS THE PROJECT WAS UNDER CONSTR UCTION. ALL THE CONSTRUCTION COST AND RELATED EXPENSES HAD BEEN CAPITALIZED. THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME DECLARING NIL INCOME. ASSESSMENT UNDER SECT ION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT) WAS COMPLETED AT AN INCOME OF RS.1,08,69,320/- BY TREAT ING INTEREST INCOME OF RS.44,86,989/- AS INCOME FROM OT HER SOURCES AND 8% OF RECEIPTS OF RS.7,97,79,144/- FROM CONTRACT BUSINESS AMOUNTING TO RS.63,82,331/-, AS I NCOME FROM BUSINESS. AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEAL BEFORE THE LEARNED CIT (APPEALS), WHO UPHELD THE ADDITION MADE ON ACCOUNT OF INTEREST INCOME OF RS.44,86,989/- AND DELETED THE ESTIMATED INCOME FRO M CONTRACT BUSINESS OF RS,63,82,331/-. 3. AGGRIEVED BY THE SAME BOTH THE ASSESSEE AND THE DEPARTMENT HAVE FILED THESE CROSS APPEALS BEFORE US . WE SHALL FIRST TAKE UP THE APPEAL OF THE ASSESSEE IN I TA NO.907/CHD/2015. ITA NO.907/CHD/2015(ASSESSEES APPEAL) : 4. THE ASSESSEE HAS PRIMARILY CHALLENGED THE UPHOLDING OF THE ASSESSMENT OF GROSS PRE-OPERATIVE INTEREST OF RS.44,86,989/- ACCRUING FROM TEMPORARY 3 INVESTMENT OF BORROWED FUNDS IN SHORT TERM DEPOSITS AS INCOME FROM OTHER SOURCES. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. THAT THE LEARNED CIT (APPEALS) HAS ON THE FACTS OF THE CASE ERRED IN UPHOLDING THE ASSESSMENT (AS INCOME FROM OTHER S OURCES) OF GROSS PREOPERATIVE INTEREST OF RS 44,86,9 89 ACCRUING FROM TEMPORARY INVESTMENT OF BORROWED FUNDS IN SHORT-TER M FIXED DEPOSITS. 2. THAT THE LEARNED CIT (APPEALS) HAS ERRED IN NOT APP RECIATING THAT THE GROSS INTEREST ACCRUING FROM THE AFORESAID INVE STMENTS WAS LESS THAN THE COST OF INVESTED FUNDS. HENCE THERE W AS NO REAL NET INCOME WHICH COULD BE CHARGED UNDER S. 4 READ WITH S. 56 OF THE ACT. 3. THAT THE LEARNED CIT (APPEALS) HAS ERRED IN UPHOLDI NG THAT THE COST OF INVESTED FUNDS WAS AN APPLICATION OF INCOME EVEN THOUGH THE COST ATTACHED TO BORROWED FUNDS FROM THEIR INCE PTION AND SUCH FUNDS HAD NO EXISTENCE SANS THE INTEREST LIABI LITY. 4. THAT THE LEARNED CIT (APPEALS) HAS ERRED IN NOT APP RECIATING THAT THE INTEREST ACCRUING FROM THE TEMPORARY INVESTMENT OF BORROWED FUNDS ONLY PARTIALLY REDUCED THE INTEREST COST OF S UCH FUNDS WHICH WAS TO BE CAPITALIZED IN TERMS OF THE MANDATORY ACC OUNTING STANDARD AS-16. 5. THAT AS-16 IS LOGICAL AND IS IN LINE WITH THE INT ERNATIONAL ACCOUNTING STANDARD IAS-23. IT IS NOT CONTRARY TO A NY SPECIFIC PROVISIONS OF THE ACT. A MANDATORY ACCOUNTING STAND ARD CAN NOT BE REJECTED UNLESS IT IS SHOWN TO BE SUCH. 6. THAT THE RULE IN TUTICORIN ALKALI [1997] 227 ITR 17 2 (S.C.) INSOFAR AS IT APPLIES TO INCOME EARNED FROM TEMPORARY INVES TMENT OF BORROWED FUNDS NEEDS TO BE REVIEWED AS THE AFORE-ST ATED GROUNDS WERE NOT ARGUED IN THE SAID CASE NOR THE MANDATORY AS-16 WAS THEN IN EXISTENCE. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR FO RGO ANY 4 OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF H EARING OF THE APPEAL. 5. THE FACTS RELATING TO THE ISSUE ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NO TED THAT THE ASSESSEE HAD RECEIVED INTEREST ON BANK DEPOSITS/FDRS TO THE TUNE OF RS.44,86,989/-. ON BE ING CONFRONTED WITH THE SAME, THE ASSESSEE SUBMITTED TH AT BEING ENGAGED IN THE CONSTRUCTION OF ROAD PROJECT O N BUILD-OWN-TRANSFER BASIS AND ITS ENTIRE CAPITAL INC LUDING BORROWED FUNDS BEING FOR THE PURPOSE OF PROJECT, TH E ASSESSEE HAD TEMPORARILY PLACED PART OF ITS FUNDS I N FIXED DEPOSITS. THE ASSESSEE SUBMITTED THAT IT WAS NOT I NVOLVED IN ANY OTHER BUSINESS OTHER THAN CONSTRUCTION OF RO AD AND NEITHER HAD ANY INTENTION OF CREATING ANY INDEPENDE NT SOURCE OF INCOME. THE ASSESSEE SUBMITTED THAT THE INTEREST EARNED BY IT WAS INEXTRICABLY LINKED WITH THE IMPLEMENTATION OF THE ROAD PROJECT AND HENCE, WAS A CAPITAL RECEIPT TO BE OFF-SET AND REDUCED FROM THE COST OF THE PROJECT. ALTERNATIVELY, THE ASSESSEE PLEADED T HAT THE INTEREST PAID DURING THE YEAR IN ANY CASE EXCEEDED THE INTEREST EARNED AND, THEREFORE, NO INCOME WAS LIABL E TO BE BROUGHT TO TAX IN THE IMPUGNED YEAR. THE ASSESSING OFFICER AFTER CONSIDERING THE ASSESSEES REPLY RELI ED UPON THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. VS. C IT (1997), 227 ITR 172 (SC) AND ASSESSED THE INTEREST INCOME AT RS.44,86,989/- AS INCOME FROM OTHER SOURCES. 5 6. BEFORE THE LEARNED CIT (APPEALS), THE ASSESSEE REITERATED ITS SUBMISSIONS MADE BEFORE THE ASSESSIN G OFFICER AND FURTHER TOOK UP AN ADDITIONAL GROUND ST ATING THAT THERE WAS NO REAL INCOME FROM FDRS. THE COST WAS ATTACHED TO THE BORROWED FUNDS FROM THEIR ORIGINATI ON, THAT THE ACCRUING RETURN WAS NOT INCOME BUT COST REDUCTION FACTOR AND THAT THE ACCOUNTING STANDARD MANDATED COST OF BORROWED FUNDS TO BE CAPITALIZED A FTER REDUCING ANY INCOME EARNED FROM THEIR TEMPORARY INVESTMENT. THE LEARNED CIT (APPEALS) AFTER CONSID ERING THE ARGUMENTS OF THE ASSESSEE HELD HAT SIMILAR ISSU E HAD ARISEN IN THE CASE OF THE ASSESSEE IN ASSESSMENT Y EAR 2011-12 ALSO WHEREIN IT WAS CATEGORICALLY HELD THAT THE ASSESSEES CASE WAS SQUARELY COVERED BY THE DECISIO N OF THE HON'BLE APEX COURT IN TUTICORIN ALKALI CHEMICAL S & FERTILIZERS LTD. (SUPRA) AND, THEREFORE, THE INCOME ASSESSED BY THE ASSESSING OFFICER WAS UPHELD. THE CIT (APPEALS) FURTHER ADJUDICATED THE ADDITIONAL GROUND RAISED BY THE ASSESSEE AND STATED THAT ALL THE ISSUES RAIS ED BY THE IN THE ADDITIONAL GROUND HAVE BEEN DEALT WITH B Y THE HON'BLE APEX COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. (SUPRA). FURTHER, THE LEARNED CIT (APPEALS) STATED THAT THE I.T.A.T. HAD DISMISSE D THE APPEALS OF THE ASSESSEE IN THE PRECEDING YEARS I.E. ASSESSMENT YEARS 2009-10 AND 2011-12. THEREFORE, O N THE ABOVE BASIS, THE LEARNED CIT (APPEALS) UPHELD THE A DDITION MADE OF RS.44,86,989/- ON ACCOUNT OF INCOME FROM OT HER SOURCES. 6 7. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES, WHILE THE LEARNED D.R. RELIED UPON THE ORDER OF THE LEARNED CIT (APPEALS). 8. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DOCUMEN TS PLACED BEFORE US. WE FIND NO INFIRMITY IN THE ORDE R OF THE LEARNED CIT (APPEALS) UPHOLDING THE ADDITION MADE FOLLOWING THE DECISION OF THE I.T.A.T. IN THE CASE OF THE ASSESSEE IN PRECEDING YEARS. ADMITTEDLY, THIS ISSU E HAS BEEN DECIDED BY THE I.T.A.T. IN THE CASE OF THE AS SESSEE FOR ASSESSMENT YEARS 2009-10 AND 2011-12 IN ITA NOS.690/CHD/2014 AND 196/CHD/2015 WHEREIN THE GROUND RAISED BY THE ASSESSEE WAS DISMISSED , HOLDI NG THAT THE CASE OF THE ASSESSEE WAS SQUARELY COVERED BY THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. (SUPR A) AS WELL AS BY THE ORDER OF THE I.T.A.T., CHANDIGARH BE NCH IN THE CASE OF H.P. CORPORATION LTD. THE RELEVANT FIN DINGS OF THE ITAT ARE AS UNDER: 11. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DECISION, IT IS CLEAR THAT THE ISSUE IS SQUARELY CO VERED AGAINST THE ASSESSEE BY THE JUDGMENT OF THE HON 'BLE SUPREME CO URT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LT D. VS. CIT (SUPRA) AS WELL AS BY THE ORDER OF THE ITAT, CHANDI GARH BENCH IN THE CASE OF M/S H.P. CORPORATION LTD. (SUPRA). WE, THEREFORE, DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CYT (APP EALS) IN HOLDING THAT THE INTEREST INCOME EARNED BY THE ASSESSEE COM PANY IS TAXABLE 7 AS 'INCOME FROM OTHER SOURCES'. THE APPEAL OF THE A SSESSEE HAS NO MERIT AND THE SAME IS ACCORDINGLY, DISMISSED. 9. IN VIEW OF THE SAME, WE FIND NO REASON TO DIFFE R WITH THE ORDER OF THE LEARNED CIT (APPEALS). THE I SSUE HAVING BEEN SETTLED BY THE I.T.A.T. AGAINST THE ASS ESSEE, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THEREFORE, DISMISSED. 10. THE APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO.900/CHD/2015(REVENUES APPEAL) : 11. IN THE APPEAL FILED BY REVENUE, THE GROUND RAISED PERTAINS TO DELETION OF ADDITION OF RS.63,82 ,331/- MADE ON ACCOUNT OF INCOME FROM CONTRACT RECEIPTS FR OM NHAI. THE GROUND RAISED BY THE REVENUE READS AS FO LLOWS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.63,82,331/- ON ACCOUNT OF INCOME FROM CONTRACT I NCOME ON CONTRACT RECEIPTS FROM NHAI, IGNORING THE FACTS OF THE CASE. 12. BRIEF FACTS RELATING TO THE ISSUE ARE THAT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED FROM FORM NO.26AS THAT THE ASSESSEE H AD RECEIVED RS.7,97,79,144/- FROM NHAI ON WHICH TDS OF RS.15,95,583/- WAS DEDUCTED. WHEN CONFRONTED, THE ASSESSEE STATED THAT THE AMOUNT RECEIVED PERTAINED TO REIMBURSEMENT OF EXPENSES FROM NHAI INCURRED ON SHI FTING OF UTILITIES AS PER THE CONCESSION AGREEMENT ENTERE D INTO 8 WITH IT. THE ASSESSING OFFICER REJECTED ASSESSEES CONTENTION BY REFERRING TO THE CONCESSION AGREEMENT AND STATED THAT THE SAME WAS TO BE REVISED EACH YEAR TO REFLECT THE VALUATION IN THE WPI IN EACH YEAR AND MOREOVER, THE RATES FOR SHIFTING OF UTILITIES SERVICES WERE TO BE APPROVED BY THE GOVERNMENT OR CONCERNED AGENCIES BASED ON PREVALENT SCHEDULE OF RATE OF THE CONCERNED STATE GOVERNMENT. THE ASSESSING OFFICER HELD THAT SINCE NO EVIDENCE WAS FURNISHED BY THE ASSESSEE EITHER REGAR DING REVISION OF THE CONTRACT OR REGARDING NECESSARY APP ROVAL OR CLEARANCE FROM THE CONCERNED AUTHORITIES, THE PAYME NT RECEIVED BY THE ASSESSEE WAS NOT AS PER THE CONCESS ION AGREEMENT. THE ASSESSING OFFICER FURTHER HELD THAT IT WAS NOT ACCEPTABLE THAT THE ASSESSEE HAD DONE ANY WORK WITHOUT EARNING ANY PROFIT. THE ASSESSING OFFICER ALSO POINTED OUT THE FACT THAT NHAI HAD DEDUCTED TAX UND ER SECTION 194C OF THE ACT ON THE PAYMENTS MADE. THER EFORE, THE ASSESSING OFFICER TREATED THE ENTIRE AMOUNT REC EIVED FROM NHAI OF RS.7,97,79,144/- AS RECEIPTS FROM CONT RACT BUSINESS AND AFTER APPLYING A RATE OF 8% AS IN THE CASE OF CONTRACTORS MADE AN ADDITION OF RS.63,82,331 TO THE INCOME OF THE ASSESSEE. 13. BEFORE THE LEARNED CIT (APPEALS), THE ASSESSEE ARGUED THAT THE PAYMENTS HAD BEEN RECEIVED AS PER T HE CONCESSION AGREEMENT AND REFERRING TO THE TERMS OF THE CONCESSION AGREEMENT. THE ASSESSEE STATED THAT THE COST OF SHIFTING OF VARIOUS UTILITIES, SUCH AS ELECTRICA L AND 9 WATER LINES, ETC., WHICH WAS NECESSARY AND AN INEXT RICABLE PART OF CONSTRUCTION OF THE HIGHWAY, WAS TO BE REIM BURSED BY NHAI. MOREOVER, UNDER THE TERMS OF CONCESSION AGREEMENT, NHAI HAD THE POWER TO SEEK CHANGES IN TH E SCOPE OF WORK DURING THE CONSTRUCTION OF THE PROJEC T. THE ASSESSEE STATED THAT SINCE SUCH ADDITIONS AND DELET IONS WERE NOT TAKEN INTO ACCOUNT AT THE TIME OF BIDDING OF THE PROJECT THE CONCESSION AGREEMENT PROVIDED FOR REIMBURSEMENT OF THE COST OF ADDITION AS WELL AS R ECOVERY FOR ANY COST ATTRIBUTABLE TO THE DELETED WORK. THU S, THE ASSESSEE SUBMITTED THAT REIMBURSEMENT FOR THE COST OF SHIFTING OF UTILITIES AS WELL AS CHANGES IN THE SCO PE OF WORK WAS AS PER THE CONCESSION AGREEMENT. FURTHER, REFERRING TO THE FACT THAT THE ASSESSEE COMPANY WAS IMPLEMENTING THE ROAD CONSTRUCTION PROJECT GRANTED TO IT BY NHAI ON BUILD-OWN-OPERATE-TRANSFER (BOT) BASIS, THE ASSESSEE STATED THAT IT WAS NOT EXECUTING ANY WORK ON CONTRACT BASIS FROM NHAI AND ALL COST OF THE PROJEC T WAS TO BE BORNE BY THE ASSESSEE AND WAS ITS CAPITAL EXPEND ITURE. THE ASSESSEE FURTHER STATED THAT THE ADDITIONAL WOR K, IF ANY, UNDERTAKEN BY IT UNDER THE TERMS OF THE CONCES SION AGREEMENT AS ALSO THE REIMBURSEMENT RECEIVED FOR TH E SHIFTING OF UTILITIES WAS INTRINSICALLY AND INEXTRI CABLY CONNECTED TO THE PROJECT BEING UNDERTAKEN BY IT AND WAS HENCE CAPITAL RECEIPT. THE ASSESSEE RELIED UPON A NUMBER OF CASE LAWS IN SUPPORT OF IITS ABOVE CONTENTION AS FOLLOWS: I) CIT V. BOKARO STEEL LTD. [1999] 236 ITR 315 (S.C.), 10 II) ADDL. CIT VS. INDIAN DRUGS AND PHARMACEUTICALS LTD 141 ITR 134(DEL), III) BONGAIGAON REFINERY AND PETROCHEMICALS LTD . V. CIT 251 ITR 329 (SC), V) CIT V. KARNATAKA POWER CORPORATION 247 ITR 2 68 (SC). 14. THE LEARNED CIT (APPEALS) AFTER CONSIDERING ASSESSEES SUBMISSIONS HELD THAT THE WORK CARRIED O UT BY THE ASSESSEE AS ALSO THE PAYMENTS RECEIVED BY IT WA S AS PER THE CONCESSION AGREEMENT AND WERE INTRINSICALLY RELATED TO THE CONTRACT WORK CARRIED OUT BY IT AND, THEREFORE WERE IN THE NATURE OF CAPITAL RECEIPTS. THE LEARNED CIT (APPEALS), THEREFORE, DELETED THE ADDIT ION MADE BY THE ASSESSING OFFICER. 15. AGGRIEVED BY THE SAME THE REVENUE HAS FILED TH E PRESENT APPEAL BEFORE US. BEFORE US THE LEARNED D. R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND STATED THAT THE PAYMENT RECEIVED BY THE ASSESSEE WAS NOT A S PER THE CONCESSION AGREEMENT, NOR AS PER RATES APPROVED BY THE GOVERNMENT AS POINTED OUT BY THE ASSESSING OFFI CER. FURTHER THE FACT THAT THE NHAI HAD DEDUCTED TDS ON THE PAYMENT MADE, COULD NOT BE BRUSHED ASIDE FOR DETERM INING THE NATURE OF THE PAYMENT. 16. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT (APPEA LS) AND STATED THAT THE LEARNED CIT (APPEALS) AFTER PERUSIN G THE CONCESSION AGREEMENT HAD CORRECTLY FOUND THAT THE PAYMENT RECEIVED BY THE ASSESSEE FROM NHAI FOR SHIF TING OF UTILITIES AND OTHER WORK WAS AS PER THE CONCESSION 11 AGREEMENT AND AT THE RATES PRESCRIBED/APPROVED BY T HE STATE GOVERNMENT AUTHORITIES. THE LEARNED COUNSEL F OR THE ASSESSEE FURTHER STATED THAT THE WORK IN CONNECTION WHICH THE PAYMENT HAD BEEN RECEIVED WAS INEXTRICABLY AND INTRINSICALLY LINKED TO THE CONTRACT WORK BEING CAR RIED OUT BY THE ASSESSEE OF ROAD CONSTRUCTION AND, THEREFORE , WAS CAPITAL IN NATURE AS RIGHTLY HELD BY THE LEARNED CI T (APPEALS). 17. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES, PERUSED THE ORDERS OF THE AUTHORITIES BELO W AS ALSO THE DOCUMENTS PLACED BEFORE US. WE FIND NO IN FIRMITY IN THE ORDER OF THE LEARNED CIT (APPEALS) HOLDING T HAT THE IMPUGNED PAYMENT RECEIVED BY THE ASSESSEE HAS BEEN IN PURSUANCE TO THE CONCESSION AGREEMENT ENTERED INTO WITH NHAI AS PER THE RATES APPROVED BY THE STATE GOVERNM ENT AND ON ACCOUNT OF WORK INTRINSICALLY AND INEXTRICAB LY LINKED TO THE ROAD CONSTRUCTION PROJECT BEING UNDER TAKEN BY IT AND HENCE, BEING REVENUE IN NATURE. THE LEAR NED CIT (APPEALS), WE FIND, HAS CORRECTLY APPRECIATED THE F ACTS BEFORE IT REFERRING TO THE CONCESSION AGREEMENT AND ITS RELEVANT TERMS DEALING WITH THE OBLIGATION OF NHAI TO BE REIMBURSED TO THE ASSESSEE THE COST OF SHIFTING OF VARIOUS UTILITIES (SUCH AS ELECTRICAL AND WATER LINES, ETC. ) AND FURTHER TO THE POWER GRANTED TO NHAI TO SEEK CHANGE S IN THE SCOPE OF WORK DURING THE CONSTRUCTION OF THE PR OJECT. THE LEARNED CIT (APPEALS) THEREAFTER ON PERUSAL OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE NOTED THAT THE 12 PAYMENT WAS MADE TO THE ASSESSEE ON ACCOUNT OF CONSTRUCTION OF FLYOVER, CONSTRUCTION OF CULVERT, S HSIFTING OF WATER SUPPLY AND STONE WATER LINES, CONSTRUCTION OF ADDITIONAL SPANS, REIMBURSEMENT OF EXPENDITURE OF P OLLS, REIMBURSEMENT OF SHIFTING OF ELECTRIC LINES AND DISMANTLING, ETC. ON THE BASIS OF THESE FACTS, THE LEARNED CIT (APPEALS) ARRIVED AT THE CONCLUSION THAT THE WO RK CARRIED OUT BY THE ASSESSEE WAS AS PER THE CONCESSI ON AGREEMENT. NONE OF THESE FACTS HAVE BEEN CONTROVER TED BEFORE US. THEREFORE, IT REMAINS THAT THE WORK CAR RIED OUT BY THE ASSESSEE WAS AS PER THE CONCESSION AGREEMENT . THE LEARNED CIT (APPEALS) FURTHER OBSERVED THAT ON THE BASIS OF LETTER ISSUED BY NHAI TO THE ASSESSEE THAT THE ESTIMATES OF VARIOUS WORK WERE BASED ON ESTIMATES COMMUNICATED TO NHAI BY PWD, HUDA, EXECUTIVE ENGINEER, SINCHAI BHAWAN, ETC. AND THUS HELD THAT T HE ESTIMATION OF WORK WAS AS PER APPROVED RATES OF VAR IOUS STATE GOVERNMENT AUTHORITIES. THESE FACTS AGAIN HA VE NOT BEEN CONTROVERTED BEFORE US. THEREFORE, THE CONCLU SION ARRIVED BY THE LEARNED CIT (APPEALS) IS RIGHT AND R EMAINS UNCONTROVERTED. THE FACT THAT THE WORK/ACTIVITIES CARRIED OUT BY THE ASSESSEE WERE PART OF THE CONCESSION AGREEMENT WHICH IN TURN WAS PART OF THE ORIGINAL CO NTRACT AWARDED TO THE ASSESSEE PROVES THAT THE WORK DONE B Y THE ASSESSEE WAS INEXTRICABLY TO THE PROJECT UNDERTAKEN BY IT UNDER THE MAIN PROJECT AND SINCE ALL EXPENSES INCUR RED BY IT ON THE MAIN CONTRACT OF ROAD CONSTRUCTION WERE CAPITALIZED, THE IMPUGNED AMOUNT RECEIVED BY THE 13 ASSESSEE WAS ALSO CAPITAL IN NATURE. THE LEARNED C IT (APPEALS) HAS RIGHTLY HELD THAT THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. BOKARO STEEL LTD . (1994) 236 ITR 315 (SC) SQUARELY APPLIES TO THE PRE SENT CASE, IN WHICH THE HON'BLE COURT HAD HELD THAT THE RECEIPTS BEING INTRINSICALLY CONNECTED WITH THE CONSTRUCTION OF THE ASSESSEES PLANT WOULD BE CAPIT AL RECEIPT AND NOT INCOME FROM ANY INDEPENDENT SOURCE. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF THE LEARN ED CIT (APPEALS) AND DISMISS THE GROUND OF APPEAL RAISED B Y THE REVENUE. 18. THE APPEAL OF THE REVENUE IS DISMISSED. 19. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E AND REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21 ST NOVEMBER, 2016 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH