TMI Blog2018 (5) TMI 1868X X X X Extracts X X X X X X X X Extracts X X X X ..... terference. Accordingly, the appeals filed by the assessee are allowed. - I.T.A. Nos.165 & 166/Bang/2018 - - - Dated:- 23-5-2018 - SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER For the Appellant : Shri G.S. Prashant, Advocate For the Respondent : Shri G. Guruswamy, CIT (D.R) ORDER Per Shri Inturi Rama Rao, A.M. : These are the appeals filed by the assessee company directed against different orders of Commissioner of Income Tax (Appeals)-1, Bangalore dt.31.8.2017 for the Assessment Years 2013-14 2014-15. Since the issue involved in both the appeals is identical, we proceed to dispose of both these appeals vide this common order. For the sake of convenience and clarity, the facts relevant to Assessment Year 2013-14 in ITA No.165/Bang/2018 are stated herein. 2. The grounds raised by the assessee for A.Y. 2013-14 are as under : 3. The brief facts are as under : 3.1 The assessee is a company incorporated under the provisions of Companies Act, 1956, a joint venture between the Bharatiya Reserve Bank Note Mudran Private Limited and Securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee s factory. As the funds were not immediately required, the respondent-assessee made deposits with bank on which assessee earned interest. This interest income was treated as abatement of capital cost of the project/factory by the assessee-company in the books of account, whereas the AO was of the opinion that the same should be treated as revenue receipt and brought to tax placing reliance on the decision of the Hon ble Supreme Court in the case of Tuticorin Alkali Chemicals Fertilizers Ltd. (supra). The decision of the Hon ble Supreme Court in the case of Tuticorin Alkali Chemicals Fertilizers Ltd. (supra) was distinguished by the Hon ble Supreme Court in the case of Bokaro Steel Ltd. ((236 ITR 315)(SC) wherein it was held that the ratio of the decision of the Hon ble Supreme Court in the case of Tuticorin Alkali Chemicals Fertilizers Ltd. (supra) is not applicable where interest receipt is directly connected with or incidental to working of construction of the assessee s plant. The decision of the Hon ble Supreme Court in the case of Bokaro Steel Ltd. (supra) was followed subsequently in the case of CIT vs. Karnal Co-operative Sugar Mills Ltd. (243 ITR 2). An i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than for a particular scheme i.e., the said amount cannot be diverted for any other purpose other than for which it was sanctioned as per the Government Order dated 23.1.2007. Thus, the emphasis made by the revenue that the assessee-company being engaged in trading activities cannot be considered as a nodal agency of the State Government and the interest earned on the grants by the assessee-company has to be treated as income is not acceptable in view of the specific directions issued by the State Government regarding the utilization of the amount granted and on the interest accrued thereon. 10. The Tribunal relied on the Judgment of this Court in the case of Karnataka Urban Infrastructure Development Finance Corpn.'s case (KUIDC) (supra) wherein it is held that: The material on record shows that the very purpose of constitution of the assessee was to act as a nodal agency for implementation of mega-city scheme worked out by the Planning Commission. Both the Central and the State Governments are expected to provide requisite finances for implementation of the said project. The funds from the Central and State Governments will flow directly to the specialis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st appellate authority. The finding given by the Tribunal is purely a question of fact. We do not find any substantial question of law involved in this appeal and therefore, this appeal is liable to be dismissed at the stage of admission itself. 11. In Tuticorin Alkali Chemicals Fertilizers Ltd.'s case (supra), the Apex Court has held that: There is another aspect of this matter. The company, in this case, is at liberty to use the interest income as it likes. It is under no obligation to utilise this interest income to reduce its liability to pay interest to its creditors. It can re-invest the interest income in land or share, it can purchase securities, it can buy house property, it can also set up another line of business, it may even pay dividends out of this income to its shareholders . 12. In the case of Karnataka Power Corpn. (supra), the Apex Court following the Judgment of Bokaro Steel Ltd's case (supra) has held that interest receipts and hire charges from contractors are in the nature of capital receipts . 13. In the case of Bongaigaon Refinary Petrochemicals Ltd., v. CIT [2001] 251 ITR 329/119 Taxman 488 the Apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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