TMI Blog2007 (2) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... n period or during his setting up of a factory is a capital receipt and set off against expenditure incurred during the said period." 3. The issue which arises for our consideration is regarding the taxability of interest received by the assessee-company from bank deposit before the commencement of business of running of hospital. The assessee-company was in the process of setting up a modern specialist hospital, Mulakuzha, Chengannur during these three assessment years and the assessee-company had not commenced the business. The assessee received the following interest from the bank deposits in the respective assessment years:- ----------------------------------------------------------- Sr.No. Asst. Year Interest received on bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties. The learned Authorised Representative for the assessee reiterated the arguments which were advanced before the CIT (Appeals). The ld. AR also relied on the following precedents:- (i) CIT v. Bokaro Steel Ltd. [1999] 236 ITR 315 (SC); (ii) CIT v. Karnal Co-operative Sugar Mills Ltd. [2000] 243 ITR 2 (SC); (iii) Tuticorin Alkali Chemicals Fertilizers Ltd.'s case; (iv) ITO v. A.V. Photochem (P.) Ltd. [IT Appeal No. 4955 (Mum.) of 1999 (BCAJ)]; 7. Per contra, the ld. DR supported the orders of the authorities below. 8. The short controversy before us is in respect of the treatment to be given to the interest received by the assessee on the bank deposit before the commencement of its business. The assessee did not treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxed accordingly. The accountants may have taken some other view but accountancy practice is not necessarily good law. In B.S.C Footwear's case [1972] 83 ITR 269, the House of Lords had no hesitation in holding that the accounting practice for calculating its profit followed by the assessee and accepted by the revenue for 30 years could not be treated as sanctioned by law and was not acceptable for the purpose of computation of taxable income." 10. In the case of Bokaro Steel Ltd., different assessment years were involved but on the issue in respect of interest on the short-term deposit, the Hon'ble Supreme Court has held as under:- "During these assessment years, the respondent-assessee had invested the amounts borrowed by it for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... li Chemicals Fertilizers Ltd. are squarely applicable and interest earned by the assessee even during the construction period on the short-term deposit kept with the bank is assessable as an income which the Assessing Officer has done and the CIT (Appeals) has rightly upheld. We do not find any reason to interfere with the order of the CIT (Appeals) on this issue which is accordingly, confirmed. 13. In the assessment year 1995-96, the assessee has taken one more ground on the issue of limitation. The ld. AR submitted that as per instructions of his client, he is not pressing the said ground. In view of above, the said ground is rejected. 14. In the result, all the appeals of the assessee are dismissed. - - TaxTMI - TMITax - Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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