ITO, NEW DELHI vs. M/S. NATIONAL HIGH POWER TEST LABORATORY PVT. LTD., NEW DELHI

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ITA 392/DEL/2017Status: DisposedITAT Delhi02 September 2019AY 2013-145 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue was covered by a previous ITAT order for the same assessee in a preceding assessment year, where the departmental appeal was dismissed. Therefore, the departmental appeal was dismissed.

What were the facts?

The assessee company earned interest income on surplus funds during its pre-commencement of business period. The Assessing Officer treated this entire interest income as taxable under 'Income from other sources'. The assessee contended that it was not taxable.

What were the issues?

Whether interest income earned on surplus funds during the pre-commencement of business is taxable under Section 56 of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 56

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCHES “E”: DELHI

Before: SHRI BHAVNESH SAINI & SHRI B.R.R. KUMAR

Hearing: 14.08.2019Pronounced: 02.09.2019

This appeal by Revenue has been directed against the Order of the Ld. CIT(A)-6, Delhi, Dated 09.11.2016 for the A.Y. 2013-2014, on the following grounds :

1. “Whether in facts and circumstances of the case, the Ld. CIT(A) is legally justified in holding that interest

2 ITA.No.392/Del./2017 M/s. National High Power Test Laboratory Pvt. Ltd., New Delhi. income earned on surplus funds during the pre- commencement of business is not liable to tax u/s 56 of the Income Tax Act (the Act) ?

2. Whether in facts and circumstances of the case and in law, the ratio decidendi as laid down by Hon’ble

Apex Court in case of Tuticorin Alkali Chemicals and Fertilizers Ltd. vs CIT(1997) 227 ITR 172 (SC) and CIT vs. Coromandal Cement Ltd. (1998) 134 ITR 412 is applicable to the facts and circumstances of the case?

3. Whether in facts and circumstances of the case, the Ld. CIT(A) is legally justified in following the order of his predecessor on the issue ignoring the decision of Hon’ble Supreme Court in case of Tuticorin Alkali

Chemicals and Fertilizers Ltd. vs CIT ?”

2.

Briefly the facts of the case are that A.O. on perusal of the of Note of “Other Income” of the Statement of Profit and Loss Account observed that the Assessee Company has shown receipt of Rs.2,39,21,154/- on account of interest Income from Indian Banks. The assessee has reduced the entire receipts on account of interest from the 3 ITA.No.392/Del./2017 M/s. National High Power Test Laboratory Pvt. Ltd., New Delhi.

total expenditure during construction period and the net amount has been transferred to the capital work-in- progress. The A.O. asked the explanation of assessee as to why the interest received from the Bank be not assessed as income under the Head “Income from other sources”. The A.O. after considering explanation of assessee treated the entire interest income on FDR of Rs.2,39,21,156/- as income under the Head “Income from other sources”. The assessee challenged the addition before the Ld. CIT(A) and several decisions were relied upon in support of the contention that it is not taxable. The Ld. CIT(A) found that he has decided similar issue in preceding A.Y. 2012-2013 and addition have been deleted. The Ld. CIT(A) following his order for A.Y. 2012-2013 deleted the addition.

3.

The Ld. D.R. fairly stated that in preceding A.Y. 2012-2013 the Departmental Appeal have been dismissed by ITAT, Delhi F-Bench in ITA.No.5740/Del./2015 vide Order Dated 15.02.2019. Copy of the order is placed on record.

4 ITA.No.392/Del./2017 M/s. National High Power Test Laboratory Pvt. Ltd., New Delhi.

4.

Considering the above facts, it is clear that issue is covered by the Order of ITAT, Delhi F-Bench in the case of same assessee for preceding A.Y. 2012-2013 whereby the findings of the Ld. CIT(A) have been upheld by dismissing the Departmental Appeal. Following the same Order, we do not find any merit in the Departmental Appeal and the same is accordingly dismissed.

5.

In the result, appeal of Department dismissed.

Order pronounced in the open Court.

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