TMI Blog2017 (11) TMI 1776X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are, in our opinion, inextricably linked with the project and are part of capital work-in-progress. The Hon’ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd. [2009 (2) TMI 32 - DELHI HIGH COURT] and in the case of CIT Vs. Facor Power Ltd. [2016 (1) TMI 461 - DELHI HIGH COURT] have reiterated the principle laid down in the case of Bokaro Steel Ltd., (supra) to hold that ‘the interest’ earned on funds primarily bought for infusion in the business could not be classified as “income from other sources”. We find that CIT(A) has followed these decisions for granting relief to the assessee. Therefore, we see no reason to interfere with the order of the CIT(A) on this issue. - decided against revenue - ITA Nos. 1098/H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in law and facts in treating the interest income as not taxable, ignoring the apex court decision in the case of Tutikorin Alkalie and Chemicals Fertilizers Ltd. (227 ITR 172) and Bangaigaon Refineries case and order of the Jurisdictional High Court in the case of CIt Vs. Raasi Cement Ltd., (232 ITR 554), and also jurisdictional ITAT decision of DRS Warehousing Vs ITO in ITA No. 1210/Hyd/2016. 4. Any other ground that may be urged at the time of hearing. 3. Brief facts of the case are that, the assessee companies were incorporated with the object of generation of electricity from nonconventional sources. The assessee companies were contemplating installation of windmills in the state of Karnataka for generating the electri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is proposed in the state of Karnataka and for this purpose investments have been received in the form of equity capital of the assessee companies and equity shares were issued on 13-07- 2011. It was submitted that the assessee s faced certain bottlenecks in implementing the envisaged power projects such as delays in wind resource assessment as well as evacuation and load flow studies, difficulties in contour survey in particular, wind power generation sites, inability to obtain necessary enhancement of sites capacities based on various studies of wind data. It was also submitted that these bottlenecks have stalled the project for the time being and consequently, the equity funds, which were procured for the project and were dishonest idle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8) 232 ITR 554. In the said case, the assessee therein had deposited the funds in to banks during the installation of the company and therefore the Hon ble High Court, following the decision of the Hon ble Supreme Court in the case of Tuticorin Alkali Chemicals Fertilizers Ltd. (supra), has held that interest has to be separately treated as income from other sources and cannot be taken as part of the capital structure. In the case before us, we find that the assessee has deposited the equity fund available with it with the banks as the project was stalled due to bottlenecks in implementation of the project and not to earn interest income and therefore the facts are distinguishable. Further, this decision of Hon ble High Court has not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es given by the assessee to its contractors which were adjusted against their dues of the contractors. The Hon ble Supreme Court held that the income earned by the assessee from activities which are directly connected with or incidental to the work of construction of its plant is the capital receipt and goes to reduce the capital cost of the assessee. The Hon ble Supreme Court also considered its earlier decision in the case of Challapalli Sugars Ltd., Vs CIT [1975] 98 ITR 167 (SC) to hold that in case money is borrowed by newly started company which is process of construction and erecting its plant, the interest cost on such borrowed money incurred before the commencement of production can be capitalized and added to the cost of the fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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