M/S.ROADS AND BRIDGES DEVELOPMENT vs. ASST. COMMISSIONER OF INCOME TAX,
What did the High Court hold?
The High Court of Kerala held that the interest income from mobilization advance given to the contractor is a capital receipt. The Court followed its own previous judgment in a connected appeal (ITA No. 376/2010 dated 06.07.2018), which in turn relied on the decision in Commissioner of Income Tax v. Bokaro Steel Ltd. [(1999) 236 ITR 315]. The ratio decidendi is that such interest income is a capital receipt. Consequently, the question of law was answered in favour of the assessee and against the revenue. The appeal was allowed, with parties bearing their own costs.
What were the facts?
The assessee, M/s. Roads and Bridges Development Corporation of Kerala Limited, filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The assessment year is not explicitly stated but is implied to be similar to a connected appeal (ITA No. 376/2010). The dispute concerns the treatment of interest income received from mobilization advance given to a contractor. The procedural history indicates a prior ITAT order which is under challenge. The High Court of Kerala is hearing this appeal.
What were the issues?
1. Whether the interest income from mobilization advance given to a contractor is to be treated as a capital receipt or a revenue receipt (question of law). Assessee's contention: The assessee argues that the interest income is a capital receipt. They rely on the decision in Commissioner of Income Tax v. Bokaro Steel Ltd. [(1999) 236 ITR 315]. Revenue's contention: The revenue contends that the interest income is a revenue receipt. No specific authorities or precedents are mentioned for the revenue's argument in the provided text.
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT Vinod Chandran, J A connected appeal of another assessment year was disposed of answering the questions in favour of the assessee and against revenue by judgment in ITA No.376/2010 dated 06.07.2018. The issue raised herein is also as to the interest income from mobilisation advance given to the contractor; whether it be treated as capital receipt or revenue receipt. We held following Commissioner of Income Tax v. Bokaro Steel Ltd.[(1999) 236 ITR 315] that it is a capital receipt. Hence the question of law raised is answered against the revenue and in favour of the assessee.
The appeal would stand allowed leaving the parties to suffer their costs. K. Vinod Chandran, Judge Ashok Menon, Judge jma APPENDIX PETITIONER'S/S EXHIBITS: ANNEXURE-AOF THE ASSESSMENT ORDER DATED 23/11/2006. ANNEXURE-BOF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 14/10/2008 ANNEXURE-COF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, DATED 31/5/2010.
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