TMI Blog2019 (10) TMI 1317X X X X Extracts X X X X X X X X Extracts X X X X ..... C.M. Garg, JM And Shri L.P. Sahu, AM Revenue by: Shri Subhendu Dutta, DR Assessee by: Shri S.C.Bhadra, CA JUDGMENT L.P. Sahu, These two appeals filed by the Revenue against the order of CIT(A)-1, Bhubaneswar, both dated 13.08.2018 for the assessment year 2010-2011. 2. The sole issue agitated by the assessee in both the appeals is against the deleting the addition by the CIT(A) made u/s.56 of the Act by the AO of ₹ 2,16,06,733/- for A.Y.2013-2014 and ₹ 1,58,81,730/- for the A.Y.2014-2015. 3. Brief facts of the case are that the assessee company namely Radhikapur (West) Coal Mining Private Limited, is a joint venture (JV) company incorporated under the Companies Act, 1956 consisting of three co-ventures namely, (1) Rungta Mines Ltd. (2) Ocean Ispat Private Limited and (3) OCL India Limited. The main objection of the Joint Venture was to develop Radhikapur (West) coal block under the condition that the mining lease be obtaining in the name of JV company and the JV would give a bank guarantee to the Ministry of Coal, government of India. During the assessment year under consideration the assessee filed return of income on 29.09.2013 showin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on FDs are not taxable and liable to be set off against pre-operative expenses as capital receipt. From the above submissions, the AO was not satisfied and he added ₹ 2,16,06,733/- for A.Y.2013-2014 and ₹ 1,58,81,730/- for the A.Y.2014-2015 u/s.56 of the Act, respectively. 4. Feeling aggrieved from the assessment order, the assessee appealed before the CIT(A) and the CIT(A) after considering the submissions of the assessee and relying some case laws, deleted the additions made for both the assessment years under consideration and allowed the appeals of the assessee. ITA Nos.396 397/CTK/2018 5. Now, against the order of CIT(A), the Revenue is in appeal before the Income Tax Appellate Tribunal. 6. Ld.DR relied on the order of AO and he submitted that the assessee has received interest income on fixed deposit which is an interest on fixed deposit made by the assessee, therefore, it should be taxed under the head income from other sources as per Section 56(2) of the Act, whereas the assessee has not disclosed in his return of income. In support of his contentions, ld. DR relied on the decision of Honble Madras High Court in the case of CIT Vs. Seshasayee Paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posited with IDCO on 16.02.2011. 10. Permission for drawing Ground Water from Central Ground Water Board (CGWB), New Delhi was accorded on 11.03.2012. 11. Consent to Establish / Operate coal mine from Odisha State Pollution Control Board on 09.01.2013. 12. As the progress of the various activities were delayed from the time targeted mile stones, Ministry of Coal de-allocated the Coal Block on 14.02.2014. 13. The Gazette notification was made as The Coal Mines(special provision) Act 2015 No. 11 of 2015, dtd 30th March, 2015, which is deemed to have come in force on 21st day of October 2014 and as per the clause - 3 of the said Act, allocation of Coal Block to the appellant stood cancelled w.e.f. 24th September 2014. The facts submitted above speak that as on date there are no activities of the company. The Coal Block allocated stood cancelled. All the expenses incurred by the company for the operation of the allocated Coal Block, have gone to waste. The Learned Assessing Officer while doing scrutiny assessment, noted that there is a fixed deposit of ₹ 17,51,98,378/-, on account of which it earned an interest of Rs.₹ 2,16,06,733/-. He gave an op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is analyzed whether interest during the period of construction shall be adjusted against pre-operative expenses or it shall be treated as income from other sources. To support his above submissions, ld. AR relied on the following case laws :- i) Indian Oil Panipat Consortium Ltd. Vs. ITO (2009) 315 ITR 255; ii) Tuticorin Alkali Chemicals Fertilizers Ltd. 227 ITR 172; iii) Bokaro Steel Ltd. 236 ITR 315; iv) Karnal Co-operative Sugar Mills 243 ITR 002; v) Karnataka Power Corporation 247 ITR 268; and vi) POSCO (India) (P) Ltd. ITA Nos.186,462 461/CTK/2011 8. After hearing both the sides and perusing the entire material available on record and the orders of authorities below, we notice that the ld. CIT(A) has deleted the addition after relying on the decision of Honble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd. Vs. ITO 315 ITR 255 and also the decision of coordinate bench of the Tribunal in the case of POSCO-India (P) Ltd. passed in ITA Nos.186, 462 461/CTK/2011, vide order dated 14.02.2013, has recorded the findings as under :- 5. I have considered the matter carefully with reference to the facts and materials on record. I hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pre-operative period cannot be taxed as income from other sources and has to be set off against pre-operative expenses being capital receipt. Respectfully following the decision of the Hon'ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd. and the decision of the Hon'ble ITAT, Cuttack Bench, Cuttack in the case of POSCO-India (P) Ltd., it is held that the interest earned by the assessee on FDs cannot be taxed as income from other sources. Hence, the addition of ₹ 1,58,81,734/- is deleted. From the above observations of the CIT(A), we find that CIT(A) while dealing with the issue has observed that in the case of Indian Oil Panipat Power Consortium Ltd. v. ITO 315 ITR 255, the Hon'ble High Court held that the interest earned on FDs was capital receipt liable to be set off against pre-operative expenses, and could not be taxed as income from other sources. In their judgment, the Hon'ble Delhi High Court has considered a host of decisions of various courts on the issue including the decisions of the Hon'ble Supreme Court in the cases of Tuticorin Alkali Chemicals Fertilizers Ltd. and Bokaro Steel Ltd. The case of the assessee app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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