PRINCIPAL COMMISSIONER OF INCOME TAX- 6 vs. M/S. NTPC TAMIL NADU ENERGY CO. LTD.

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ITA/233/2018HC DelhiDLHC01056780201823 February 2018Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE A. K. CHAWLA2 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal concurred with the CIT(A) that the interest income was inextricably linked to the setting up of the project and thus constituted business income. This followed Supreme Court and High Court precedents.

What were the facts?

The Revenue appealed against an ITAT order that held interest from mobilization advances to contractors was intrinsically connected to the assessee's business. The Assessing Officer had treated this interest as 'other income'.

What were the issues?

Whether interest derived from mobilization advances made to contractors in the course of setting up a new project is to be treated as business income or other income.

AI-generated summary — verify with the full judgment below

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$~18 & 19 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 233/2018 & CM APPL.7162/2018

PRINCIPAL COMMISSIONER OF INCOME TAX- 6..... Appellant Through: Mr.Rahul Chaudhary, Sr.Standing Counsel with Ms.Vibhooti Malhotra, Jr.Standing Counsel.

versus

M/S. NTPC TAMIL NADU ENERGY CO. LTD. ..... Respondent

Through None.

+ ITA 234/2018 & CM APPL.7163/2018

PRINCIPAL COMMISSIONER OF INCOME TAX- 6,..... Appellant Through: Mr.Rahul Chaudhary, Sr.Standing Counsel with Ms.Vibhooti Malhotra, Jr.Standing Counsel.

versus

MLS. NTPC TAMIL NADU ENERGY CO. LTD. ..... Respondent

Through None.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA

O R D E R %

23.02.2018

The Revenue’s appeal is directed against the order of ITAT, which held that the interest derived from mobilisation advance made over to the assessee’s contractors in the course of execution of the agreement for setting up of the plant and equipment in a new project,

was intrinsically connected with its business activities. The Assessing Officer (AO) brought to tax its amount as other income. Consequently, the assessee appealed to the CIT(A), who applied the ratio of the Supreme Court’s judgment in CIT Vs. Bokaro Steel Ltd., 236 ITR 315. The CIT(A) also noticed that in NTPC SAIL Power Supply Company (P.) Ltd. Vs. CIT (ITA no. 1238 decided on 17.7.2012), this Court had allowed the assessee’s claim that the interest was inextricably linked to the setting up of the project and therefore, constituted business income. The ITAT concurred with the CIT(A)’s decision in rejecting the Revenue’s appeal.

It is evident that both the lower authorities followed the ruling of the Supreme Court on the question of treatment of interest in such cases. Furthermore, this Court too has in the case of the same assessee held that similar income had to be treated as business income. Therefore, no substantial question of law arises in this appeal, hence the appeal is dismissed.

S. RAVINDRA BHAT, J

A. K. CHAWLA, J FEBRUARY 23, 2018 rc

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