Nagarjuna Oil Corporation Ltd., CHENNAI V. DCIT, CHENNAI

MA 44/CHNY/2016

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4436 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 01-07-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 22-03-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: KARUNAKARAN
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , ! ' , # $% BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER M.A.NOS. 43 & 44/MDS/2016 (IN ITA NOS. 2141 & 2142/MDS/2015 / ASSESSMENT YEARS : 2011-12 & 2012-13 M/S. NAGARJUNA OIL CORPORATION LTD., MD CHAMBERS, NEW NO.53, OLD NO.31, DR. RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI 600 004. PAN AAACN9369E (APPLICANT) VS THE DEPUTY COMMISSIONER OF INCOME-TAX, CORPORATE CIRCLE-4, CHENNAI-34. PAN AAECS9101P ( /RESPONDENT) APPLICANT BY : SHRI KARUNAKARAN, ADVOCATE RESPONDENT BY : SHRI A.V.SREEKANTH, JCIT / DATE OF HEARING : 01.07.2016 / DATE OF PRONOUNCEMENT: 20.07.2016 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER BY THESE MISCELLANEOUS APPLICATIONS, THE ASSESSE E SEEK RECTIFICATION OF THE ORDER OF THE TRIBUNAL IN ITA NOS. 2141 & 2142/MDS/2015 DATED 17.02.2016. - - MA 43 & 44/16 2 2. THE LD. AR SUBMITTED THAT THE ASSESSEE CAME IN A PPEAL BEFORE THIS TRIBUNAL WITH REGARD TO TREATMENT GIVEN TO THE INTEREST INCOME EARNED FROM FIXED DEPOSIT. HE FURTHER SUBMI TTED THAT WHILE DISPOSING OFF THE APPEAL, THIS TRIBUNAL OBSER VED THAT THE INTEREST INCOME FROM FIXED DEPOSIT IS TO BE ASSESSE D AS INCOME FROM OTHER SOURCES ONLY AND CANNOT BE SET OFF AGAIN ST THE PRE- COMMENCEMENT EXPENSES. NOW, THE CONTENTION OF THE LD. AR IS THAT WHILE DISPOSING OFF THE APPEAL OF THE ASSESSEE , THE TRIBUNAL RELIED ON THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. SESHASAYEE PAPER AND BOARDS LTD. (156 ITR 5 42), WHEREIN IT WAS HELD THAT BEFORE COMMENCEMENT OF BUS INESS THERE IS NO QUESTION OF COMPUTING BUSINESS INCOME A ND DIRECTED THAT THE INTEREST RECEIVED BY THE ASSESSEE SHOULD B E ASSESSED AS INCOME FROM OTHER SOURCES. ACCORDING TO THE LD . AR, THERE IS A JUDGMENT IN ASSESSEES OWN CASE FOR THE ASSESSMEN T YEAR 2005-06 IN ITA NO.1938/MDS/2009, WHEREIN THE TRIBUN AL VIDE ORDER DATED 11.3.2010 FOLLOWING THE JUDGMENT OF THE SUPREME COURT IN THE CASES OF TUTICORIN ALKALI CHEMICALS LT D. VS. CIT(227 ITR 172), CIT V. KARNAL CO-OP. SUGAR MILLS LTD. (24 3 ITR 2), CIT V. BOKARAO STEELS LTD. (236 ITR 315) AND BONGAIGAON REFINERY & - - MA 43 & 44/16 3 PETROCHEMICALS LTD. (251 ITR 329), HELD THAT THE IN TEREST EARNED FROM DEPOSIT ON SURPLUS CAPITAL MONEY IS CAPITAL RE CEIPT, WHICH WOULD GO TO REDUCE THE COST OF THE ASSET. ACCORDI NG TO THE LD. AR, THE ABOVE ORDER OF THIS TRIBUNAL IS BINDING FOR THIS ASSESSMENT YEAR ALSO AND IT IS TO BE FOLLOWED. WIT HOUT PREJUDICE TO THE ABOVE, HE SUBMITTED THAT THE INTEREST EARNED WAS OUT OF AVAILABLE BORROWED FUNDS AND, THEREFORE, INTEREST P AID ON SUCH BORROWED FUNDS WAS FULLY DEDUCTIBLE FROM THE INTER EST RECEIPTS ON SHORT TERM DEPOSITS MADE OUT OF SUCH BORROWED FUNDS . 3. ON THE OTHER HAND, THE D. D.R. RELIED ON THE ORD ER OF THE TRIBUNAL. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE, THE TRIBUNAL WHILE DISPOS ING OFF THE APPEALS, METICULOUSLY CONSIDERED THE ARGUMENTS ADVA NCED BY THE LD. AR AND THEREAFTER CONSIDERING THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMI CALS LTD. VS. CIT, CITED SUPRA AND THE JUDGMENT OF THE MADRAS HIG H COURT IN THE CASE OF CIT VS. SESHASAYEE PAPER AND BOARDS LTD ., CITED - - MA 43 & 44/16 4 SUPRA, OBSERVED THAT THE INTEREST FROM FIXED DEPOSI T IS TO BE ASSESSED AS INCOME FROM OTHER SOURCES AND CANNOT BE SET OFF AGAINST THE PRE-COMMENCEMENT EXPENSES. NOW, THE CO NTENTION OF THE LD. AR IS THAT THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE WAS NOT APPRECIATED BY THE TRIBUNAL. IN O UR OPINION, WHEN THERE IS A DECISION OF HIGHER FORUM LIKE SUPRE ME COURT, THE TRIBUNAL IS DUTY BOUND TO CONSIDER THE SAME RAT HER THAN TO FOLLOW THE DECISION OF THE TRIBUNAL. FURTHER, THE LD. ARS PLEA IS THAT THE INTEREST PAID BY THE ASSESSEE IS TO BE NET TED AGAINST RECEIPT RECEIVED BY THE ASSESSEE AND BALANCE TO BE TAXED. THIS ARGUMENT IS MIS-PLACED ON THE REASON THAT THE ASSES SEE ITSELF CAPITALIZED THE INTEREST PAID AND ADDED TO THE COST OF MACHINERY. AS SUCH, THERE IS NOTHING LEFT TO REDUCE THE INTER EST PAID OUT OF INTEREST RECEIVED. IN OUR OPINION, BY THIS MISC . APPLICATIONS, THE ASSESSEE WANTS TO REVIEW THE EARL IER ORDER OF THE TRIBUNAL U/S.254(2) OF THE ACT, FOR WHICH TH E TRIBUNAL HAS NO POWER. ACCORDINGLY, THERE IS NO MERIT IN TH E - - MA 43 & 44/16 5 ARGUMENTS OF THE LD. AR AND DISMISS THE MISC. APPLI CATIONS. 5. IN THE RESULT, THE MISC. APPLICATIONS ARE DISMIS SED. ORDER PRONOUNCED ON WEDNESDAY, THE 20 TH OF JULY, 2016 AT CHENNAI. SD/- SD/- ( . . . ) ( ! ' # $ ) ( N.R.S.GANESAN ) (CHANDRA POOJARI) 1 23 /JUDICIAL MEMBER 4 23 /ACCOUNTANT MEMBER 1 /CHENNAI, >2 /DATED, THE 20 TH JULY, 2016. MPO* 2 ?4@' AB@ /COPY TO: 1. A'C4 /APPELLANT 2. /RESPONDENT 3. D (A'C4) /CIT(A) 4. D /CIT 5. @EC F /DR 6. G H4 /GF.