TMI Blog2015 (2) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... income is to be assessed as business income because the assessee had already commenced business. In this background the interest income was held to be not taxable. In our opinion, the facts of the assessee’s case are identical to this case and, therefore, following this decision, we hold that interest income cannot be treated as ‘income from other sources’ as since he same has been reduced from the work in progress, the same is not taxable. Therefore, we set aside the order of Ld. CIT(A) and delete the addition. - decided in favour of assessee. - ITA No. 1252/Chd/2011 - - - Dated:- 6-2-2015 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER Appellant By : Shri Tej Mohan Singh Respondent By : Shri. Jy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther noticed that assessee had received bank interest on FDRs amounting to ₹ 2,19,70,183/- These FDRs were made out of the advances received from customers. In response to the query why this interest should not be subjected to tax, it was mainly stated that assessee was developing land and constructing residential apartments in the area of Panchkula. During the year, the apartments remained under construction and were not complete and, therefore, not ready for sale. The assessee was following mercantile accounting system right form the inception and all the construction cost and related expenses were shown as work in progress and interest received was credited to such work in progress. 4. According to Assessing Officer such int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were shown as nil which makes it clear that assessee has not commenced the business, therefore, decision in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd v CIT (supra) was applicable. In this background she confirmed the assessment of income from interest and as income from other sources. 7. Before us, Ld. Counsel for the assessee submitted that assessee was in the business of development of land and construction of residential flats. The construction activity has already started after performing Bhumi Puja and, therefore, it cannot be said that business is not commenced. In the case of construction, companies business would commence the moment construction starts. Since flats were not ready for sale, therefore, all expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd v CIT Turicorin (supra). She also strongly relied on the decision of Bombay High Court in the case of CIT v Swani Spice Mills P. Ltd. 332 ITR 288 (Bom). She further relied on the decision of Hon'ble Supreme Court in the case of CIT vs Autokast Ltd 248 ITR 110 (SC). 10. We have considered the rival submissions carefully. After considering the rival submissions we find force in the submissions of Ld. Counsel for the assessee. In our opinion, the Assessing Officer is not correct in observing that assessee has not commenced its business. In case of a construction company, once construction activity starts then it can definitely be said that business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act and contrary to the decision of the apex court reported in Tuticorin Alkali Chemicals and Fertilisers Ltd. V. CIT [1997] 227 ITR 172 ? (c) Question is whether, on the facts and circumstances of the case and in law, the Tribunal is right in coming to a conclusion that the interest income received by the respondent is nothing but business income and, therefore, the same cannot be assessed as income from other sources ? 11. In that case the facts are identical to the case before us. The assessee was engaged in the business of development and construction of properties. The assessee firm had received advances from customers and money received through such advances which were not required immediately was deposited in FDRs etc. on tem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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