COMMISSIONER OF INCOME INCOME TAX-I vs. M/S ARAVALI POWER COMPANY PVT. LTD.

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ITA/537/2016HC DelhiDLHC01132862201619 September 2016Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MS. JUSTICE DEEPA SHARMA2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the explanation for the 480-day delay in re-filing the appeal by the Revenue could not be termed as "sufficient cause" and therefore, the delay was not condonable. Furthermore, the Court noted that the issue regarding the treatment of interest earned by the assessee prior to the commencement of its business, as capital or revenue in nature, had already been decided against the Revenue for the previous Assessment Year 2010-2011 in ITA No. 801/2015. This prior decision was based on the Supreme Court's ruling in Indian Oil Panipat Consortium vs. Commissioner of Income Tax (2009) 315 ITR 255, which considered all previous binding Supreme Court judgments on the point. Consequently, the High Court concluded that no substantial question of law arose for consideration and dismissed the appeal. The operative direction was the dismissal of the appeal.

What were the facts?

The Revenue, represented by the Commissioner of Income Tax-I, filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT). The appeal was delayed by 480 days. The assessee is M/s Aravali Power Company Pvt. Ltd. The core issue concerns the tax treatment of interest earned by the assessee prior to the commencement of its business. The Revenue contended that this interest should be treated as capital in nature, while the assessee likely argued for its revenue nature. The High Court noted that a similar issue for a previous Assessment Year (AY 2010-2011) had already been decided against the Revenue in ITA No. 801/2015.

What were the issues?

1. Whether the delay of 480 days in filing the appeal by the Revenue is condonable on the grounds of "sufficient cause"? (Question of fact) 2. Whether the interest earned by the assessee prior to the commencement of its business is capital or revenue in nature? (Question of law) Assessee's Contentions: The judgment does not record specific contentions made by the assessee. However, it implies the assessee would have argued that the interest earned prior to business commencement is revenue in nature, aligning with the High Court's previous decision. Revenue's Contentions: The Revenue urged that the interest earned by the assessee prior to the date of commencement of its business is capital in nature. The Revenue also sought condonation of the 480-day delay in filing the appeal.

AI-generated summary — verify with the full judgment below

$~3 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 537/2016 & CM No. 27787/2016

COMMISSIONER OF INCOME INCOME TAX-I ..... Appellant Through: Mr. Ruchir Bhatia, Advocate along with Mr. Puneet Rai, Advocate.

versus

M/S ARAVALI POWER COMPANY PVT. LTD. ..... Respondent

Through: Mr. Pranjal Srivastava, Advocate.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE V. KAMESWAR RAO

O R D E R %

19.09.2016

The revenue’s appeal is delayed by 480 days; the explanation for the delay in re-filing the appeal cannot be termed as “sufficient cause”. Even otherwise, the question urged i.e. the treatment of interest earned by the assessee prior to date of the commencement of its business, - whether it is capital or revenue in nature has been held against the revenue itself for the previous AY 2010-2011 in ITA No. 801/2015. This court notices that the said judgment was based upon application of the rule enunciated by the Supreme Court in Indian Oil Panipat Consortium vs. Commissioner of Income Tax reported in (2009) 315 ITR 255. In Indian Oil (supra) in turn had taken into consideration all previous binding judgments of the Supreme Court on the point. Consequently, no question of law arises; the appeal is

therefore dismissed as well.

S. RAVINDRA BHAT, J

V. KAMESWAR RAO, J

SEPTEMBER 19, 2016 sapna

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