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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
Before: ARUN KHODPIA & ARUN KHODPIA & ARUN KHODPIA
IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/ S/SHRI CHANDRA MOHAN GARG, JUDICIAL JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.12/CTK/2021 Assessment Year : 2015-16 DCIT, Corporate Circle DCIT, Corporate Circle-1(1), Vs. M/s. Radhikapur (West) Coal M/s. Radhikapur (West) Coal Bhubaneswar. Bhubaneswar. Mining Pvt Ltd., 52, Said Nagar, Mining Pvt Ltd., 52, Said Nagar, Bhubaneswar. Bhubaneswar. PAN/GIR No. No.AAECR 9135 Q (Appellant (Appellant) .. ( Respondent Respondent) Assessee by : Shri S.C.Bhadra S.C.Bhadra, AR Revenue by : Shri Manoj Kumar Goutam, Kumar Goutam, CIT (DR) Date of Hearing : 7/3/ 20 / 2022 Date of Pronouncement : 8/3 3/2022 O R D E R Per C.M.Garg g, JM This is an appeal filed by the revenue against the order of the against the order of the CIT(A),1, Bhubaneswar CIT(A),1, Bhubaneswar dated 7.11.2019 for the assessment year for the assessment year 2015-16.
The appeal is time barred by 417 days. The revenue has filed The appeal is time barred by 417 days. The revenue has filed The appeal is time barred by 417 days. The revenue has filed condonaton petition to condone the delay in filing the appeal before the petition to condone the delay in filing the appeal before the petition to condone the delay in filing the appeal before the Tribunal, stating that the limitation to file appeal before the Tribunal has Tribunal, stating that the limitation to file appeal before the Tribunal has Tribunal, stating that the limitation to file appeal before the Tribunal has expired due to the fact that the nationwide lockdown for COVID expired due to the fact that the nationwide lockdown for COVID expired due to the fact that the nationwide lockdown for COVID-19 pandemic, the offices were closed and further work pandemic, the offices were closed and further work pandemic, the offices were closed and further worked with limited workforce. It is stated that due to introduction of Vivad Se Viswas Scheme, workforce. It is stated that due to introduction of Vivad Se Viswas Scheme, workforce. It is stated that due to introduction of Vivad Se Viswas Scheme, the officers/officials were engaged in implementation of the scheme. It was the officers/officials were engaged in implementation of the scheme. It was the officers/officials were engaged in implementation of the scheme. It was
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in this backdrop that the appeal was not filed within the stipulated time period and, therefore, it is requested to condone the delay and admit the appeal for adjudication. Ld A.R. had no serious objection in condoning the delay.
After going through the condonation petition, and considering the submissions of both the parties, it appears that the delay in filing the appeal occurred due to COVID-19 Lockdown and all the Government Offices were closed at the relevant time therefore the delay of 417 days in filing the appeal by the revenue is condoned and the appeal is admitted for adjudication.
The revenue is aggrieved by the deletion of addition made by the AO amounting to Rs.1,69,25,714/- representing interest on fixed deposits.
Facts of the case are that the assessee is a joint venture (JV) company to develop Radhikapur (West) Coal Block. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had invested Rs.9,93,94,002/- in Canara Bank in shape of fixed deposits and earned interest income of Rs.1,69,25,714/- and claimed the same as exempt from tax. The Assessing Officer required the assessee to explain as to why the interest income received should not be brought to tax under the head “income from other sources”. In reply, the assessee submitted that the assessee company was incorporated with the direction of the
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Government of India, Ministry of Coal. The main objective of the joint venture was to develop Radhikapur (West) Coal Block under the condition that the mining lease be obtained in the name of JV company and the JV would give a bank guarantee to the Ministry of Coal. The assessee stated that as the development of coal mine takes substantial amount of time and the fund required, for the pre-operative activities to be undertaken phase wise, in regular interval, the company kept the amount received as share application money in fixed deposits and the FDs would be utilized for giving margin money for obtaining the BG to be submitted to Ministry of Coal and also would be encashed and utilized for the purpose of pre-operative expenses as and when required. After considering the submission of the assessee, the AO opined that the case of assessee is similar to the facts in the case of Tuticorin Alkali Chemicals & Fertilisers Ltd vs CIT (1997) 227 ITR 172(SC) and, therefore, taxed the interest income of Rs.1,69,25,714/- u/s.56 of the Act.
On appeal, the ld CIT(A) deleted the addition following the decision of ITAT in the assessee’s own case for the assessment year 2013-14 & 2014-15 in ITA Nos.396 & 397/CTK/2018 order dated 21.10.2019, wherein, it is held that interest earned on FDs during the pre-operative period cannot be taxed as income from other sources. The interest earned during pre- operative period has to be set off against the pre-operative expenses being capital receipts. Hence, the revenue is in appeal before the Tribunal.
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Ld CIT DR supported the assessment order and further submitted that in similar facts, in the case of Haridaspur Paradip Railway Company Ltd., for the assessment year 2014-15 and in the case of Angul Sukinda Railway Ltd for A.Y. 2013-14 & 2014-15, the Tribunal vide order dated 12.20.2020 in ITA No.383/CTK/2019 and order dated 3.11.2020 in ITA Nos.384 & 385/.CTK/2019, has set aside the case back to the file of the AO for fresh adjudication. Hence, following the same, the present appeal be restored to the file of the AO.
Replying to above, ld A.R. submitted that the issue is fully covered in favour of the assessee and under similar facts, in assessee’s own case for the previous two assessment years i.e. 2013-14 & 2014-15, the Tribunal has deleted the interest income received on fixed deposits. Hence, no contrary view should be taken on similar issue in different assessment years. He, therefore, urged to uphold the findings of the ld CIT(A). Ld A.R also filed copy of the ITAT order dated 21.10.2019 (supra) at the time of hearing.
On careful consideration of the rival submissions and perusing the records, we find that ITAT in assessee's own case for the assessment years 2013-14 & 2014-15 (supra) has decided this issue in favour of assessee. . We find that the ITAT has deleted the disallowance, observing as under:
“8. After hearing both the sides and perusing the entire material available on record and the orders of authorities below, we notice P a g e 4 | 7
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that the ld. CIT(A) has deleted the addition after relying on the decision of Hon’ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd. Vs. ITO 315 ITR 255 and also the decision of coordinate bench of the Tribunal in the case of POSCO-India (P) Ltd. passed in ITA Nos.186, 462&461/CTK/2011, vide order dated 14.02.2013, has recorded the findings as under :- 5. I have considered the matter carefully with reference to the facts and materials on record. I have also gone through the elaborate written submission filed by the assessee and taken note of the case laws referred to and discussed in the written submission. It may be pointed out here that the AO has not given any reasons in the assessment order as to why the interest earned on FDs should not be treated as capital receipt as claimed by the assessee and adjusted against the pre- operative expenses. The AO has also not discussed the reasons as to why the decision of the Hon'ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd, would not apply to the case of the assessee and how the decision of the Hon'ble Apex Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. applies to the facts of the assessee's case. It is clear from the assessment order that the AO's action to tax the impugned interest income is not backed by a speaking order. In the case of Indian Oil Panipat Power Consortium Ltd. v. ITO 315 ITR 255, the Hon'ble Delhi High Court was seized with a case of a company which was in the pre-operative stage and had parked a part of the share capital in the bank in the form of FDs. The question before the Hon'ble High Court was whether the interest so earned on FDs utilizing share capital was taxable as income from other sources. The Hon'ble High Court held that the interest earned on FDs was capital receipt liable to be set off against pre- operative expenses, and could not be taxed as income from other sources. In their judgment, the Hon'ble Delhi High Court has considered a host of decisions of various courts on the issue including the decisions of the Hon'ble Supreme Court in the cases of Tuticorin Alkali Chemicals & Fertilizers Ltd. and Bokaro Steel Ltd. The case of the assessee appears to be squarely covered by the decision of the Hon'ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd. The relevant portion of the decision is incorporated in the written submission of the assessee and is, therefore, not quoted here to avoid repetition. It is relevant to mention here that following the aforesaid decision of the Hon'ble Delhi High
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Court, the jurisdictional ITAT, Cuttack Bench, Cuttack has held in the case of POSCO-India (P) Ltd., vide their order dt.14.2.2013 in ITA Nos.186, 462 & 461/CTK/2011 I that interest on FDs made out of share capital during the pre- operative period cannot be taxed as income from other sources and has to be set off against pre-operative expenses being capital receipt. Respectfully following the decision of the Hon'ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd. and the decision of the Hon'ble ITAT, Cuttack Bench, Cuttack in the case of POSCO-India (P) Ltd., it is held that the interest earned by the assessee on FDs cannot be taxed as income from other sources. Hence, the addition of Rs.1,58,81,734/- is deleted. From the above observations of the CIT(A), we find that CIT(A) while dealing with the issue has observed that in the case of Indian Oil Panipat Power Consortium Ltd. v. ITO 315 ITR 255, the Hon'ble High Court held that the interest earned on FDs was capital receipt liable to be set off against pre-operative expenses, and could not be taxed as income from other sources. In their judgment, the Hon'ble Delhi High Court has considered a host of decisions of various courts on the issue including the decisions of the Hon'ble Supreme Court in the cases of Tuticorin Alkali Chemicals & Fertilizers Ltd. and Bokaro Steel Ltd. The case of the assessee appears to be squarely covered by the decision of the Hon'ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd. Thereafter following the aforesaid decision of the Hon'ble Delhi High Court, the jurisdictional ITAT, Cuttack Bench, Cuttack has held in the case of POSCO-India (P) Ltd. has held that the interest earned by the assessee on FDs cannot be taxed as income from other sources. Even as per the decision of Hon’ble Supreme Court of India in the case of CIT Vs. Vegetable Products, [1973] 88 ITR 192 (SC), when two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. ITA Nos.396&397/CTK/2018 9 Accordingly, we do not find any infirmity in the order of CIT(A) in this regard and we uphold the same. Hence, the sole ground of appeal raised in both the appeals of the Revenue is dismissed. 9. In the result, both appeals of the Revenue are dismissed.”
No contrary decision has been produced before us. Merely on the ground that the Tribunal has set aside the issue, as alleged by the P a g e 6 | 7
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department in some other cases, the same does not warrant that we depart from the decision of the Tribunal in assessee’s own case. Accordingly, respectfully following the aforesaid precedent in assessee's own case from the ITAT, we uphold the order of learned CIT(A).
In the result, appeal of the revenue is dismissed.
Order pronounced on 8 /3/2022.
Sd/- sd/- (Arun Khodpia) (Chandra Mohan Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 8 /03/2022 B.K.Parida, SPS (OS) Copy of the Order forwarded to : 1. The Appellant : DCIT, Corporate Circle-1(1), Bhubaneswar 2. The Respondent. M/s. Radhikapur (West) Coal Mining Pvt Ltd., 52, Said Nagar, Bhubaneswar. 3. The CIT(A)-1, Bhubaneswar 4. Pr.CIT-1, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// By order
Sr.Pvt.secretary ITAT, Cuttack
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