TMI Blog2015 (4) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... (9) TMI 13 - DELHI High Court ), which view has been endorsed by the Supreme Court. A reading of the order of the Tribunal would reveal that there can be no iota of doubt that the Tribunal failed to appreciate the finding of the Delhi High Court, in similar set of facts, which was ultimately endorsed by the Supreme Court that the receipts which are inextricably linked to the process of setting up of business could not be construed in any other manner other than in the nature of capital receipt. The Tribunal fell in error in merely stating that the decision in Bokaro Steel case (supra) is distinguishable from Tuticorin Alkali Chemicals & Fertilizers case (supra), without even understanding the scope of the decision in Bokaro Steel cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case? ii) Whether the Tribunal is correct in confirming the assessment of the said receipt under the head income from other sources by the respondent in the light of the decision of the Supreme Court in the case of Tuticorin Alkali Chemicals Fertilizers Ltd., even though the subsequent decision rendered by the Supreme Court distinguishing the above case was followed by the first appellate authority in deleting the said addition? 2. The case of the appellant/assessee is that while it intended to produce power, floated a global tender and towards sale of tender documents, during the pre-commencement period, received a sum of ₹ 12,50,000/= as part of the tendering process. According to the Department, the said amount wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the materials placed in the typed set of documents as also the judgments relied on by the learned counsel on either side which have been referred by the authorities below in coming to their respective findings. 5. The short issue that arise for consideration in this appeal is Whether on the admitted facts, the receipt of amount on the sale of tender documents should be treated as income from other sources or as capital receipt? . 6. For better appreciation of the case on hand, the reasoning of the Tribunal, as found in para-3 of its order, is extracted hereinbelow :- 3. We have considered the rival submissions made by both the sides and perused the materials available on record. It is an admitted position that the receipt by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below for better clarity:- In the case before us, the company had surplus funds in its hands. In order to earn income out of the surplus funds, it invested the amount for the purpose of earning interest. The interest thus earned is clearly of revenue nature and will have to be taxed accordingly. The accountants may have taken some other view but accountancy practice is not necessarily good law. In B. S. C. Footwears 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. 8. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... casion to take into consideration the judgment of the Delhi High Court in the case of ACIT - Vs - Indian Drugs Pharmaceuticals (1983 (141) ITR 134 (Del.)) and endorsed the view of the Delhi High Court and, finally it was held that the receipts were capital receipts and not income of the assessee from any independent source. The relevant portion of the decision of the Supreme Court is extracted hereinbelow for better appreciation :- In the case of Addl. CIT v. Indian Drugs and Pharmaceuticals Ltd. (1983 (141) ITR 134), the Delhi High Court considered a case where the work of construction of the factory of the assessee was in progress and production had not commenced. Receipts from sale of tender forms and supply of water and electrici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal fell in error in merely stating that the decision in Bokaro Steel case (supra) is distinguishable from Tuticorin Alkali Chemicals Fertilizers case (supra), without even understanding the scope of the decision in Bokaro Steel case (supra). The admitted fact in this case is that the amount received by the appellant/assessee in sale of tender documents at the pre-commencement stage is in relation to the establishment of the unit and, therefore, it could be clearly stated that it is intrinsically connected with the purpose of setting up of the unit. This Court is in agreement with the view expressed by the Supreme Court in Bokaro Steel case (supra), which has affirmed the view of the Delhi High Court in Indian Drugs Pharmaceuticals cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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