MEJA URJA NIGAM (P) LTD.,ALLAHABAD vs. INCOME TAX OFFICE WARD-2 (2), ALLAHABAD

ITA 54/ALLD/2020Status: DisposedITAT Allahabad03 March 2021AY 2015-1624 pages
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What did the Tribunal hold?

The Tribunal held that interest earned on funds during the construction period and forfeiture of earnest money from contractors are capital receipts inextricably linked to the project setup. These receipts should reduce the cost of the project rather than being taxed as income.

What were the facts?

The assessee company received interest from banks during its construction period and also interest on advances given to contractors, along with forfeiture of earnest money from contractors. The Assessing Officer treated these as income, but the assessee argued they were capital receipts to be adjusted against project costs.

What were the issues?

Whether interest earned and forfeiture of earnest money during the construction period of a company are capital receipts or taxable income. Whether the CIT(A) erred in not following previous ITAT decisions on similar issues.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 253(3)

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Cases cited in this judgment(9)Show list

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Income Tax Appellate Tribunal, ALLAHABAD BENCH, ALLAHABAD

Before: SHRI.VIJAY PAL RAO & SHRI RAMIT KOCHAR

For Respondent: Shri Parv Agrawal, CA
Hearing: 24.02.2021Pronounced: 09.03.2021

PER Bench: These two appeals, filed by assessee, being ITA Nos. 54 & 55/Alld/2020 for assessment year’s(ay’s) : 2015-16 and 2016-17 respectively are directed against two separate appellate orders both dated 24.10.2019 in appeal no. CIT(A), Allahabad/10377/2017-18 for ay:2015-16 and CIT(A), Allahabad/10448/2018-19 for ay:2016-17 , both passed by learned Commissioner of Income-tax (Appeals), Allahabad, U.P. (hereinafter called “ the CIT(A)”) . The appellate proceedings had arisen before ld. CIT(A) from two separate assessment orders dated 29.12.2017 and 30.12.2018 for ay: 2015-16 and 2016-17 respectively, both passed u/s. 143(3) of

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