Aurangabad Jalna Tollway Ltd., Ahmedabad V. The ACIT, Central Circle-1(1), Ahmedabad

ITSSA 370/AHD/2013

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3868 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 18-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR BANAWARI LAL
• Assessee Lawyers: T P HEMANI
• Keywords: Capital receipt; Revised return
• Section: 143(3); 153A; 139(5); 56; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AURANGABAD JALNA TOLLWAY LTD. SADBHAV HOUSE, OPP. LAW GARDEN POLICE CHOWKI, ELLISBRIDGE ,AHMEDABAD PAN: AAGCA1318J (APPELLANT) VS THE ACIT, CENTRAL CIRCLE - 1(1), ROOM NO. 303, AAYKAR BHAVAN, AHMEDABAD (RESPON DENT) REVENUE BY : DR. BANAWARI LAL, CIT - D . R. ASSESSEE BY: S H RI T.P. HEMANI , A.R. DATE OF HEARING : 05 - 07 - 2 018 DATE OF PRONOUNCEMENT : 14 - 08 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2009 - 10 , ARI SES FROM ORDER OF THE CIT(A) - I, AHM EDABAD DATED 16 - 07 - 2013 , IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE ID. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF CASE IN CONFIRMING THE ACTION OF AO IN PASSING THE ORDER U/S 143(3) R.W.S. 153A OF THE ACT DATED 28/03/20 13 DETERMINING TOTAL INCOME AT RS. 89 , 73 , 976/ - AS AGAINST RETURNED INCOME OF RS. NIL/ - 2. THE ID. CIT (A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN TREATING INTEREST RECEIVED ON MOBILIZATION ADVANCE, GIVEN TO VARIOUS CONTRACTORS FOR CONSTRUCTION WORK AS I NCOME U/S 56 OF THE ACT, INSTEAD OF REDUCING THE COST OF THE PROJECT AN D THEREBY MAKING AN ADDITION OF RS. 89,73,976/ - . 3. THE ID. CIT (A) HAS ERRED IN LAW AND ON FACTS OF THE CASE BY NOT APPLYING THE RATIO OF THE JUDGMENT OF THE HONORABLE SUPREME COURT IN CASE OF THE BOKARO STEEL LTD 236 ITR 315 BY ERRONEOUSLY HOLDING THAT THE FACTS OF APPELLANT'S CASE DIFFERS FROM THE ABOVE I T (SS) A NO . 370 / A HD /20 13 A SSESSMENT YEAR 200 9 - 10 I.T(SS). A NO. 370 /AHD/20 13 A.Y. 2009 - 10 PAGE NO AURANGABAD JALNA T OLLWAY LTD. VS. ACIT 2 JUDGMENT, IN UTTER DISREGARD TO THE PARALLEL UNDERLYING FACTS OF BOTH THE CASES. THE APPELLANT'S FACTS ARE EXACTLY SIMILAR TO THAT OF THE SAID JUDGMENT 4. THE ID. CIT (A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ADDITION BY MISCONCEIVING THE INTEREST RECEIVED ON MOBILIZATION ADVANCE, GIVEN TO VARIOUS CONTRACTORS FOR CONSTRUCTION WORK AS INTEREST RECEIVED ON SURPLUS FU NDS INVESTED IN BANKS AS FIXED DEPOSITS. 5. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF ID. AO IN CHARGING INTEREST U/S 234B/C/D OF THE ACT. 6. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF ID. AO IN INITIATI NG PENALTY PROCEEDINGS U/S 271(1 )(C) OF THE ACT. 3. THE GROUNDS OF APPEAL 1 TO 4 OF THE ASSESSEE ARE INTERCONNECTED TO THE COMMON ISSUE THEREFORE FOR THE SAKE OF CONVENIENCE THEY ARE DECIDED TOGETHER AS UNDER. 4. THE BRIEF FACT OF THE CASE IS T HAT A SEARCH U/S. 132 OF THE ACT WAS CONDUCTED IN THE CASE OF ASSESSEE ON 5 TH OCTOBER, 2010. SUBSEQUENTLY, A NOTICE U/S. 153 OF THE ACT WAS ISSUED ON 22 ND SEP, 2011. IN RESPONSE TO NOTICE U/S. 153A, THE ASSESSEE HAS FILED ORIGINAL RETURN OF INCOME ON 14 T H DECEMBER, 2011. SUBSEQUENTLY, THE ASSESSEE HAS FILED REVISED RETURN OF INCOME ON 10 TH OCTOBER, 2012 VIDE WHICH THE ASSESSEE HAS CAPITALIZED THE COST OF INTANGIBLE ASSET UNDER DEVELOPMENT. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAS FILED ITS ORIGINAL RETURN OF INCOME SHOWING INTEREST INCOME FOR RS 89739/ - UNDER THE HEAD INCOME FROM OTHER SOURCES . HOWEVER , LATER ON THE ASSESSEE HAS FILED REVISED RETURN OF INCOME BY WITHDRAWING THE SAID INTEREST INCOME AFTER PLACING RELIANCE ON THE VARIOUS JUDI CIAL PRONOUNCEMENTS. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE COMPANY HAS INVESTED ITS SURPLUS IDLE FUND WHICH LED TO EARNING OF INCOME AND THE AS SSE SS E HAS SHOWN THE SAME CORRECTLY AS INCOME UNDER THE HEAD OTHER SOU R C E S U/S. 56 OF T HE ACT . T HE ASSESSING OFFICER HAS PLAC ED RELIANCE ON THE DECISION OF H ON BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICAL AND FERTILIZERS VS. ACI T 227 ITR 172 (SC) WHEREIN THE H ON BLE C OURT HELD THAT INTEREST EARNED ON SHORT TERM INVESTMENTS OF FUNDS BORROWE D FOR SETTING UP OF FACTORY PRE - CONSTRUCTION OF FACTORY BEFORE COMMENCEMENT OF BUSINESS HAS TO BE ASSESSED AS INCOME FROM OT HER SOURCES AND IT CANNOT BE SAID THAT INTEREST INCOME IS NOT TAXABLE ON GROUND THAT IT WOULD GO TO REDUCE INTEREST ON BORROWED I.T(SS). A NO. 370 /AHD/20 13 A.Y. 2009 - 10 PAGE NO AURANGABAD JALNA T OLLWAY LTD. VS. ACIT 3 FUN D WHICH WOULD BE CAPITALIZED. CONSEQUENTLY , THE ASSESSING OFFICER AFTER FOLLOWING THE ABOVE JUDICIAL PRONOUNCEMENTS HELD THAT INTEREST ON MOBILIZATION ADVANCES SHOULD NOT BE CAPITALIZED TO T H E COST OF PROJECT BUT IS TO BE TAXED UNDER THE HEAD INCOME FROM O THER SOURCES. THEREFORE, HE HAS MADE A DDITION OF R S. 89,73,976/ - TO THE TOTAL INCOME OF THE ASSESSEE. 5 . THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. THE RELEVANT PART OF THE FINDING O F LD. CIT(A) IS REPRODUCED AS UNDER: - 5. 1 HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE A.R. OF THE APPELLANT CAREFULLY, IN THIS CASE, IT I S SEEN THAT THE APPELLANT HAD F ILE D RETURN OF IN COME IN RESPONSE TO NOTICE U/S1 5 3A OF THE I,T. ACT DECLARING TOTAL INCOME AT RS. 89,73,976/ - ON 14,12,2011, SUBSEQUENTLY, THE APPELLANT HAS REVISED HIS RETURN OF INCOME AND FILED A REVISED RETU RN DECLARING THE INCOME AT RS. N IL THE APPELLANT , HAD EARNED INTEREST OF RS.89,7 3,976/ - ON MOBILIZATION ADVANCE WH ICH WAS KEPT IN FIXED DEPOSITS WITH BANK. THE A.R. OF THE APPELLANT HAS RELIED HEAVILY ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF INDIAN OIL PANIPAT POWER CONSTRUCTION LTD. VS. [TO REPORTED IN (2009) 181 TAXMAN 249 {DELHI) FOR THE PROPO SITION THAT THE INTEREST EARNED ON DEPOSITS DURING THE PRE - COMMENC EMENT PERIOD WAS NOT TAXABLE AS INCOME FROM OTHER SOURCES BUT WAS TO BE REDUCED FROM THE COST OF THE PROJECT. 5.1 THE CONTENTION OF THE A.R. OF THE APPELLANT IS NOT CORRECT, THE HON'BLE DELH I HIGH COURT CANNOT OVERRULE THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILI ZERS LTD, VS. CIT REPORTED IN (1 997) 22 7 1TR 172 (SC). IN FACT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD, (SURPA), TH E HON'BLE SUPREME COURT, HAS CLEARLY HELD THAT THE INTEREST EARNED BY THE ASSESSES ON SURPLUS FUNDS DURING THE PRE - COMMENC EMENT PERIOD HAS TO BE TREATED AS INCOME FRONT OTHER SOURCES AND CANNOT BE REDUCED FROM THE COST OF THE ASSET. THE DECISION OF THE HON 'BLE SUPREME COURT IN THE CASE OF CIT VS. BOKARO STEEL REPORTED IN 236 ITR 314 (SC) HAS ALSO NOT OVERRULED THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. (SUPRA). IN THE CASE OF BOKARO STEEL, THE HON' BLE SUPREME COURT OBSERVED THAT M/S, BOKARO STEEL LTD. HAD GIVEN MOBILIZATION ADVANCE TO THE CONTRACTORS WHO WERE SUPPOSED CARRY OUT THE CONSTRUCTION WORK A ND THE PROJECT FOR BOKARO STEEL LTD. ON SUCH MOBILIZATION ADVANCE, BOKARO STEEL LTD. CHARGED INTERES T WHICH THEREAFTER SET OFF AGAINST THE PAYMENT TO BE MADE TO THE CONTRACTOR AND THUS WAS NOT OFFERED AS INCOME BUT REDUCED THE COST OF THE PROJECT, IT WOULD BE NOTICED THAT THE MOBILIZATION ADVANCE GIVEN TO CON TRACTORS WAS NOT SURPLUS MONEY L YING WITH BOKA RO STEEL LTD, BUT REPRESENTED MONEY WHICH HAD ACTUALLY BEEN USED FOR THE PURPOSE OF BUSINESS BY GIVING THE SAME AS MOBILIZATION ADVANCE TO THE CONTRACTORS, THUS, THE FACTS OF BOKARO STEEL WERE COMPLETELY DIFFERENT FROM THAT OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD, (SUPRA) WHEREIN THE SUPREME COURT HAD OBSERVED THAT THE MONEY LYING WITH TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD, (SUPRA) WAS SURPLUS FUNDS. THE MONEY EARNED FROM DEPLOYMENT OF SUCH SURPLUS FUNDS HAD TO BE TREATED AS, INCOME FROM OTHE R SOURCES. 5.2 IN THE INSTANT CASE, IT IS SEEN THAT THE APPELLANT HAS RECEIVED MOBILIZATION ADVANCE WHICH IS LYING AS SURPLUS FUNDS WITH IT BECAUSE IT DID NOT HAVE ANY IMMEDIATE REQUIREMENT OF SUCH FUNDS. THE FUNDS BEING SURPLUS, THE SAME WERE INVESTED I N THE BANK AS FIXED DEPOSITS. THUS, IT CANNOT BE SAID THAT THE FUNDS WERE GIVEN TO THE BANK BECAUSE OF ANY I.T(SS). A NO. 370 /AHD/20 13 A.Y. 2009 - 10 PAGE NO AURANGABAD JALNA T OLLWAY LTD. VS. ACIT 4 BUSINESS NECESSITY. THE FUNDS WHEN THEY WERE KEPT AS FIXED DEPOSITS DID NOT HAVE ANY NEXUS WITH DIE PROJECT AT THE TIME WHEN THEY WERE IN THE FORM OF FIXED DEPOSITS. ANY PERSON MAKES FIXED DEPOSITS WITH A BANK ONLY WHEN THE FUNDS ARE SURPLUS AND NOT NEEDED FOR THE PURPOSE OF BUSINESS. THE INTEREST EARNED ON SUCH SURPLUS FUNDS INVESTED AS FIXED DEPOSITS IN BANK IS CLEARLY TAXABLE AS INCOME FROM OTHER SO URCES AS HELD BY THE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD, (SUPRA). THUS, THE FACT S OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF TUTICORIN ALAKLI CHEMICALS & FERTILIZERS LTD. (SUPRA) AND ARE COMPLETELY DIFFERENT FROM ME FACTS IN SHE CASE OF BOKARO STEEL LTD. 5.3 IT IS ALSO SEEN THAT THE APPELLANT HAD FILED A RETURN IN RESPONSE TO NOTICE ISSUED U/S I53A DECLARING AN INCOME O F RS.89,73,976/' - ON 14.12.2011. THUS THE APPELLANT ITSELF HAD ACCEPTED THE FACT T HAT THE FUNDS LYING WITH IT AND INVESTED IN FIXED DEPOSIT S WITH BANK WERE SURPLUS FUNDS. THERE IS NO ERROR IN SUCH ASSUMPTION. THE APPELLANT CANNOT LATER ON TURN AROUND AND SAY THAT THE FUNDS WERE INTRINSICALLY FINKED WITH THE BUSINESS AND WERE NOT SURPLUS FUNDS. THERE IS NO GENUINE REASON TO CHANGE THE ST AND. 5.4 AS INDICATED EARLIER IN THE ORDER THE FUNDS WERE SURPLUS FUNDS IN AS MUCH AS THEY WERE NOT NEEDED FOR THE BUSINESS. THERE WAS NO BUSINESS NECESSITY OR COMPULSION IN MAKING THE FIXED DEPOSITS IN TH E BANKS. IN VIEW OF THE ABOVE THE INTEREST EARNED ON SUCH DEPOSITS WAS CLEARLY TAXABLE AS INCOME FROM OTHER SOURCES FOLLOWING THE RATIO OF THE DECISION IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. (SUPRA). THE RELIANCE OF THE AR OF THE APPE LLANT ON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF INDIAN OIL PANIPAT POWER CONSTRUCTION LTD, VS. ITO REPORTED IN (2009) 181 TAXMAN 249 (DELHI) IS MISPLACED. THE HON'BIE DELHI HIGH COURT HAS NOT LAID DOWN ANY NEW LAW, IN FACT THEIR LORDSHIPS HAVE WHILE DECIDING THAT EASE OBSERVED AS UNDER; 'LT IS IMPORTANT TO NOTE THAT T HE TRIBUNAL WITHOUT HOLDING THAT SHE FINDING OF FACT OF THE CIT(A) THAT THE INTEREST EARNED WAS 'INEXTRICABLY LINKED' WITH THE SETTING UP OF THE POWER PLAN! REVERSES THE DECISION O F THE CIT(A) B Y MAKING A BALD OBSERVATION THAT THE ''DEPOSIT OF SHARE CAPITAL HAS NO OR VERY REMOTE CONNECTION WIT H SELLING UP OF PLANT AND MACHINERY'. THE TRIBUNAL FURTHER OBSER V ED THAT IT WAS AN INDEPENDENT INCOME EARNED IN A SIMILAR FASHION AS WAS THE C ASE IN TUTICO RIN ALKALI CHEMICALS & FERTILIZERS LTD. 'S CASE, ( SUPRA). ' 5.5 T HE ABOVE OBSERVATION MAKES IT CL EAR THAT THE DECISION HOLDS ONLY ON THE FACTS OF THE CASE. THE HIGH COURT A LLOWED RELIEF ONLY BECAUSE THE I TAT HAD NOT FOUND FAULT WITH THE FINDI NG OF FACT OF THE CIT( A) THAT *' THE INTEREST EARNED WAS INEXTRICABLY LINKED WITH THE SETTING UP OF THE POWER PLANT.' IN THIS CAS E THE FACTS CLEARLY PROVE THAT T HE FIXED DEPOSITS MADE HAD NO NEXUS WITH SETTING UP OF THE BUSINESS. THE DEPOSITS WERE MADE OUT OF SURPLUS FUNDS AND HENCE THE FACTS OF THE PRESENT CASE ARE COMPLETELY DIFFERENT. 5.6 IN VIEW OF THE ABO VE, THE ADDITION MADE BY THE A.O. OF RS. 89,73,976/ - HOLDING THE INTEREST EARNED TO B E INCOME FROM OTHER SOURCES IS CORRECT. THE SAME IS HENCE CONFIRM ED. 6 . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL CONTENDED THAT NO INCRIMINATING MATERIAL IN CONNECTION WITH THE IMPUGNED ADDITION WAS FOUND DURING THE COURSE OF SEARCH AND IN ABSENCE OF SUCH INCRIM IN ATING MATERIAL NO ASSESSME NT CAN BE MADE U/S. 153A OF THE ACT. HE HAS ALSO PLACED RELIANCE ON JUDICIAL PRONOUNCEMENTS ON SHIPRA SHIP BUILDERS PVT. LTD. VS. ACIT TAX APPEAL NO. 1281 OF 2006 AND ALSO ON INDIAN OIL PANIPAT POWER I.T(SS). A NO. 370 /AHD/20 13 A.Y. 2009 - 10 PAGE NO AURANGABAD JALNA T OLLWAY LTD. VS. ACIT 5 CONSORTIUM VS. ITO 314 ITR 255 ( DELHI ) . O N THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF CIT(A) . 7 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE FACTS OF THE CASE OF THE ASSESSEE ARE DISTINGUISHABLE FROM THE FACTS OF THE JUDICIAL PRONOUNCEMENT RELIED UPON BY IT . T HE ASSESSEE HAS FIRST TIME FILED RETURN OF INCOM E I N RESPONSE TO NOTICE U/S. 153A OF THE ACT DECLARING TOTAL INCOME OF RS. 89 , 73 , 976/ - ON 14 TH DECEMBER, 2011. SUBSEQUENTLY, THE ASSESSEE HAS FILED REVISED RETURN OF INCOME DECLARING INC OME AT RS. NIL. THE ASSESSEE HAD EARNED INTEREST INCOME OF RS. 89,73,976/ - ON FUND WHICH WAS KEPT IN FIXED DEPOSIT WITH BANK. WE HAVE NOTICED THAT LD. CIT(A) HAS E LABORATED IN HIS FINDINGS THAT H ON BLE SUPREME COURT IN THE C ASE OF TUTICORIN ALKALI CHEM ICAL AND FERTILIZERS VS. ACIT 227 ITR 172 (SC) HELD THAT THE INTEREST EARNED BY THE A SSESSEE ON SURPLUS FUND DURING THE PRE - COMMENCEMENT PERIOD HAS TO BE TREATED AS INCOME FROM OTHER SOURCES AND CANNOT BE REDUCED FROM THE COST OF ASSETS. IT IS ALSO NOTICE D THAT ASSESSEE HAS RECEIVED MOBILIZATION ADVANCES WHICH WAS LYING AS SURPLUS FUND AND THE SAME WAS INVESTED IN THE BANK AS FIXED DEPOSIT. THESE FA C T S DEMONSTRATE THAT THE F UND WAS TEMPORARILY INVESTED IN THE BANK AS THE SAME WAS NOT USED IN THE BUSINESS F O R A TEMPORARY PERIOD. THEREFORE, THE INTEREST EARNED ON SUCH SURPLUS FUND INVESTED AS FIXED DEPOSIT WAS TREATED AS TAXABLE INCOME FROM OTHER SOURCES AS HELD BY THE SUPREME COURT IN THE ABOVE CITED DECISION. THE MAIN THRUST OF THE SUBMISSIONS RAISED BY THE LEARNED COUNSEL OF THE ASSESSEE IS, IF INCOME IS EARNED, WHETHER BY WAY OF INTEREST OR ANY MANNER OF FUNDS WHICH ARE OTHERWISE, INEXTRICABLY LINKED TO THE SETTING UP OF THE PLANT, SUCH INCOME IS REQUIRED TO BE CAPITALIZED TO BE SET OFF AGAINST PRE - OPER ATING EXPENSES. FOR BUTTRESSING THIS CONTENTION, THE ASSESSEE HAS RELIED UPON THE JUDGMENT OF HON BLE DELHI HIGH COURT IN THE CASE OF INDIAN OIL PANIPAT POWER CONSORTIUM VS. ITO 314 ITR 255 . WE ALSO MADE REFERENCE TO THE DECISION OF HON BLE GUJARAT HIGH C OURT IN THE CASE OF SHIPRA SHIP BUILDERS PVT. LTD. VS. ACIT TAX APPEAL NO. 1281 OF 2016. IN AN ANALYSIS OF THE RETURN, WE I.T(SS). A NO. 370 /AHD/20 13 A.Y. 2009 - 10 PAGE NO AURANGABAD JALNA T OLLWAY LTD. VS. ACIT 6 FIND THAT ASSESSEE FAILED TO DEMONSTRATE INEXTRICABLE LINKAGES OF THESE FUNDS WITH THE SETTING UP ITS INFRASTRUCTURE. IN THIS CONNE CTION, WE WOULD MAKE REFERENCE TO THE FINAL OBSERVATIONS OF THE ASSESSING OFFICER IN PARA 5.4 WHICH READS AS UNDER: - 5.4 FOR SUCH CAPITALIZATION THE ASSESSEE COMPANY HAS PLACED RELIANCE ON THE SUPREME COURT DECISION IN THE CASE OF CIT VS. BOKARO STEEL 236 ITR 314 WHEREIN THE CHARACTER OF SUCH RECEIPTS WAS HELD TO BE CAPITAL IN NATURE AS LONG AS THE BORROWED FUNDS ARE INEXTRICABLY CONNECTED WITH THE CONSTRUCTION ACTIVITY. THE ASSESSEE FURTHER SUBMITTED THAT THE INTEREST EARNED BY INVESTING BORROWED CAPITAL IN SHORT TERM DEPOSITS IS AN INDEPENDENT SOURCE OF INCOME NOT CONNECTED WITH THE CONSTRUCTION ACTIVITIES OR BUSINESS ACTIVITIES AND THUS THESE RECEIPTS ARE INEXTRICABLY LINKED WITH THE SETTING UP THE CAPITAL STRUCTURE OF THE ASSESSEE COMPANY AND THEY MUST, THEREFORE, BE VIEWED AS CAPITAL RECEIPTS GOING TO REDUCE THE COST OF CONSTRUCTION. THE ASSESSING OFFICER HAS OBSERVED THAT INTEREST EARNED ON BORROWED CAPITAL EARNING CONNECTED WITH THE CONSTRUCTION ACTIVITIES OR BUSINESS ACTIVITIES, IT WAS PURELY A SUR PLUS FUND. IN THE SECOND FOLD OF SUBMISSION, ASSESSEE HAS CONTENDED THAT NOTHING WAS FOUND DURING THE COURSE OF SEARCH AND THEREFORE NOTICE ISSUED UNDER SECTION 153A IS INVALID. THOUGH IT IS PERTINENT TO OBSERVE THAT SEARCH WAS CONDUCTED ON 05 - 10 - 2010, N OTICE U/S. 153A WAS ISSUED ON 22 ND SEP, 2011 AND ASSESSEE HAS FILED ITS RETURN U/S. 153A ON 14 - 12 - 2011. IN THIS RETURN, ASSESSEE HAS INCLUDED INTEREST INCOME. IT HAS REVISED ITS RETURN ON 13 - 03 - 2013 WITHDRAWING INTEREST INCOME. IT IS PERTINENT TO OBSER VE THAT DUE DATE FOR FILING OF REGULAR RETURN WAS 30 TH SEP, 2009 FOR THIS ASSESSMENT YEAR. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, RETURN WAS FILED WHEREIN INTEREST INCOME WAS INCLUDED, NOTICE U/S. 143(2) COULD BE ISSUED AND SERVED UPON THE ASS ESSEE WITHIN SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED. FOR ARGUMENT SAKE, IF CONTENTION OF THE LEARNED COUNSEL IS TAKEN AT FACE VALUE, THAT RETURN FOR ASSESSMENT YEAR 2009 - 10 WAS FILED BEFORE 30 TH SEP, 2009, THEN, AT THE MOST, NOTICE U/S. 143 COULD BE BEFORE SEP, 2010 AND IF THAT NOTICE WAS NOT SERVED, THEN, FOR THAT YEAR COULD BE CONSTRUED AS FINAL. IF THE NOTICE ISSUED U/S. 153A IS QUASHED ON THE CONTENTION THAT NO INCRIMINATING MATERIAL WAS FOUND, THEN, IT CANNOT REVISE THE RETURN U/S. 139(5) AND THE ORIGINAL RETURN FILED BEFORE 30 TH SEP, 2009 INCLUDING THIS INTEREST INCOME COULD NOT BE DISTURBED. IN THAT CASE ALSO, THIS ADDITION WOULD BE CONFIRMED. F URTHER THE ASSESSEE HAS STATED THAT NO I.T(SS). A NO. 370 /AHD/20 13 A.Y. 2009 - 10 PAGE NO AURANGABAD JALNA T OLLWAY LTD. VS. ACIT 7 INCRIMINATING MATERIAL IN CONNECTION WITH THE ABOVE ADDITION WAS FOUND DURING THE COURSE OF SEARCH THEREFORE NO SUCH ADDITION CAN BE MADE U/S. 153A OF THE ACT. AS ALREADY STATED WE HAVE NOTICED THAT THE FACTS OF THE CASE OF THE ASSESSEE ARE DIFFERENT AS THE ASSESSEE HAD NOT F ILED ANY ORIGINAL RETURN OF INCOME AND FIRST TIME THE ASSESSEE HAS FILED RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 153A OF THE ACT DECLARING TOTAL INCOME AT RS. 89,73,976/ - ON 14 TH DECEMBER, 2011. T HIS ISSUE WAS NEVER DECIDED U/S. 143 ( 3 ) OF THE ACT. T HIS ISSUE WAS ARISEN ONLY DURING THE COURSE OF ASSESSMENT WITH REFERENCE TO SECTION 153A OF THE ACT AS THE ASSESSEE ITS ELF HAS FILED RETURN OF INCOME I N RESPONSE TO NOTICE U/S 153A DECLARING INCOME AT RS. 89 , 73 , 976/ - ON 14 TH DECEMBER, 2011. THE ASSESSING OFFICER O N VERIFICATION OF THE RETURN FI L E D IN RESPONSE TO NOTICE U/S. 153A OF THE ACT HAS NOTICED THAT ASSESSEE HAS REVISED ITS ORIGINAL RETURN OF INCOME BY SHOWING INCOME AT RS. N IL AFTER CLAIMING INTEREST RECEIPT OF RS. 89 , 73 , 976/ - AS CAPITAL RECEIPT. T HE ASSESSEE HAS FILED RETURN OF INCOME ONLY IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT. IT IS NEITHER THE CASE OF THE ASSESSEE WHEREIN THE ASSESSEE HAS DISCLOSED ANY PARTICULAR OF INCOME BEFORE FILING THE AFORESAID RETURN OF INCOME IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE ACT NOR ANY REGULAR ASSESSMENT PROCEEDINGS HAS BEEN CONCLUDED. THEREFORE, THE CONTENTION OF THE ASSESSEE OF LINKING THE ADDITION W ITH INCRIMINATING MATERIAL IS NOT RELEVANT. AFTER CONSIDERING THE ABOVE FA CTS AND THE DETAILED FINDING OF LD. CIT(A), WE DO NOT FIND ANY REASON TO INTERFERE IN THE DECISION OF LD. CIT(A) , THEREFORE, THE APPEAL OF THE ASSESSEE IS DISMISSED. 8 . THE GROUNDS OF APPEAL NO. 5 OF THE ASSESSEE PERTAINING TO CHARGING OF INTEREST U/ S 234B/C /D IS DISMISSED AS THE SAID INTEREST IS TO BE CHARGED MANDATORILY AS PER LAW. 9 . THE GROUND OF APPEAL NO.6 OF THE ASSESSEE REGARDING INITIATING OF PENALTY PROCEEDINGS IS PREMATURE AT THIS STAGE THEREFORE THE SAME STANDS DISMISSED. I.T(SS). A NO. 370 /AHD/20 13 A.Y. 2009 - 10 PAGE NO AURANGABAD JALNA T OLLWAY LTD. VS. ACIT 8 10 . IN TH E RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 14 - 08 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 14 /08 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,