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2015 (10) TMI 2014 - ITAT JAIPUR

2015 (10) TMI 2014 - ITAT JAIPUR - TMI - Interest earned by the appellant during pre operation period on the grant received from government of India - Held that:- Going through the serial No. 31 to 40 of the paper book and various copies of orders of Ministry of Textile about agreement of subsidy, which required to be considered before deciding the nature of interest income, therefore, we set aside this issue to the Assessing Officer and is directed to give a reasonable opportunity of being hear .....

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s on legal side of the case. The appellant had filed detailed information as to when the share capital was received and how the part of share capital was advanced to his sister concern on which no interest has been charged. Even in respect of credit transactions on account of sweep transfer in the bank account against which loan was advanced to M/s JTPL Texmart Pvt. Ltd. The ld CIT(A) has held that sweep transfer is the amount from FDRs, which were earlier got by the appellant when the requireme .....

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ainst revenue. - ITA No. 227/JP/2014, ITA No. 256/JP/2014 - Dated:- 11-9-2015 - Normal 0 false false false EN-US X-NONE .....

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ff /> SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM For The Assessee : Shri Mukesh Khandelwal (CA) For The Revenue : Shri Raj Mehra (JCIT ORDER PER: R.P. TOLANI, J.M. These are cross appeals one by the assessee and another by the department are against the order dated 28/01/201 .....

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A) has erred seriously in law and on facts in confirming the action of the ld A.O. whereby he has taxed the interest of ₹ 63,21,497/- earned by the appellant during pre operation period on the grant received from government of India. Grounds of revenue s appeal 1. In the facts and circumstances of the case, the CIT(A) has erred in restricting the addition made under the head income from other sources from ₹ 66,22,116/- to ₹ 63,21,497/- without considering the entries reflected .....

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10 at NIL income. The assessee company formed to setup a Textile Weaving Park near Kishangarh. For this it was allotted a piece of land by RIICO and got grant of ₹ 23.23 crores from the Ministry of Textiles, Govt. of India. The assessee company is to allot/sell the infrastructure in the said Textile Weaving Park to the concerns in the business of Textile Weaving. The ld Assessing Officer observed that the assessee maintained relevant records, books of account and supporting documents which .....

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ng the Hon'ble Supreme Court decision in the case of Tuticorin Alkali Chemicals Fertilizers Ltd. 227 ITR 172. The assessee replied vide letter dated 22/10/2012 which has been reproduced by the Assessing Officer on page 2-3 of the assessment order. The ld Assessing Officer was not satisfied with the explanation filed by the assessee and after considering the decision of Hon'ble Supreme Court in the case Bokaro Steel 236 ITR 315 (SC) and Tuticorin Alkali Chemicals Fertilizers Ltd. (supra) .....

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ld CIT(A) i.e. copy of minutes of the meeting of the Central Govt. about treatment of interest earned on grant amount, clarification issued by IFSL on the settled term of the Central Govt. The ld CIT(A) held that the additional evidence can be admitted in case of condition laid down under Clause a to d of Rule 46A of the Income Tax Rules, 1962 (in short the Rules). These evidences were asked to give comment by the Assessing Officer, the ld CIT(A) after considering the comment on additional evid .....

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three documents were available with the assessee before completion of assessment. The ld Assessing Officer had given proper opportunity of being heard as also that in spite of such opportunities during the assessment proceedings, such documents were not furnished. The assessee has not raised this issue before the Assessing Officer at the time of assessment proceedings that the interest amount being of capital nature is to be reduced from subsidy received and accordingly interest earned on such .....

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bsidy from Govt. of India in three installments and that such amount was kept by way of FDRs in the bank on which such interest income was earned and that making of FDRs was not at all due to any compelling circumstances which may have been imposed by the Govt. of India and that in such circumstances, such interest income is to be taxed as income from other sources. It is a settled law that the interest income from FDRs before commencing of business would ways be taxed as income from other sourc .....

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ssue. 4. Now the assessee as well as the revenue are in appeals before us. The ld AR has submitted that the additional evidence filed by the assessee had not been adjudicated/admitted under Rule 46A of the Rules. These evidences were not available with the assessee at the time of assessment order even they were dated before the date of assessment order. These evidences are going to root of the ground, therefore, same are required to be admitted as Govt. of India has granted subsidy to the appell .....

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t in the FDRs and interest earned thereon is income from other sources as held by the Hon ble Apex Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. Vs. CIT (supra), therefore, order of the ld CIT(A) may please be confirmed. However, the ld CIT(A) has reduced interest income from ₹ 66,22,116/- to ₹ 63,21,497/- without giving any opportunity to the Assessing Officer, therefore, the interest income is to be assessed at ₹ 66,22,116/-. 6. We have heard the riva .....

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the Assessing Officer and furnished all required details. Accordingly, we set aside this issue to the Assessing Officer for de novo. Hence, ground No. 1 and 2 of the assessee s appeal and ground No. 2 of the revenue s appeal are allowed for statistical purposes only. 7. The second ground of the revenue s appeal is against granting of relief of ₹ 11,67,000/- of interest disallowed against interest free loan given to the related concern. The ld DR supported that the assessee had advances of .....

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for developing various infrastructures in the textile park at Kishangarh. The assessee also stated that the loan extended to M/s JTPL Texmart Pvt. Ltd. was utilized for buying of shares in the assessee s company and because of this reason, the loan was granted without any interest. No nexus has been established by the Assessing Officer that interest bearing fund was diverted for advancing money to the sister company, therefore, charging of interest @ 12% on such fund of ₹ 97,25,000/- advan .....

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and perused the material available on the record. The ld CIT(A) has thoroughly examined this issue on facts as well as on legal side of the case. The appellant had filed detailed information as to when the share capital was received and how the part of share capital was advanced to his sister concern on which no interest has been charged. Even in respect of credit transactions on account of sweep transfer in the bank account against which loan was advanced to M/s JTPL Texmart Pvt. Ltd. The ld C .....

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verted the finding given by the ld CIT(A). Therefore, we uphold the order of the ld CIT(A) on this ground. Accordingly, revenue s appeal on this ground is dismissed. 7. In the result, the assessee appeal is allowed for statistical purposes only and revenue s appeal is dismissed. Order pronounced in the open court on 11/09/2015.

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