TMI Blog2018 (6) TMI 1809X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to assessment year i.e. A.Y. 2012-13 which is under consideration. Considering the connectivity of issue to the additional evidences, we are of the opinion that admission of additional grounds as well as additional evidence is justified considering the set principles of natural justice. We, accordingly, admit the said additional grounds as well as additional evidences. We find relevant to remit the issue back to the file of Assessing Officer for fresh adjudication after granting reasonable opportunity of being heard to the assessee. The Assessing Officer shall pass a speaking order after considering additional evidence. Assessing Officer shall consider all the judgments cited by the assessee before us on the issue of nature of the interest receipts .Grounds raised by assessee are allowed for statistical purposes. - ITA No. 2455/PUN/2016 - - - Dated:- 6-6-2018 - Shri D. Karunakara Rao, AM For the Appellant : Shri S. N. Puranik. For the Respondent : Shri Pankaj Garg. ORDER PER D. KARUNAKARA RAO, AM This appeal filed by assessee is directed against the order of Commissioner of Income Tax (Appeals)-1, Aurangabad dated 29.07.2016 for assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier pending proceedings Appellant, therefore, prays for computation of Income under Sec. 11, 12 of The Income Tax Act, 1961. 2. As per the understanding and terms of the Government Grants, the unspent grants be invested in fixed deposit. The interest thereon will be part of the grant. Said Interest will not receipt income of the company because of overriding title of the Government same will be part of Capital Receipt corpus for specified purpose. Appellant prays the said interest should not be considered part of Income of the Company. 3. Without prejudice to Addl. Ground No. 1 2 and if it IS held that provisions of Sec. 11 12 are not applicable, even by the virtue of Principals of overriding title said interest correctly arrived at will not be income of the appellant company. 4. Without prejudice to ground above assessing officer and CIT(A) have erred in restricting the amount of Interest to Rs. 78 Lakhs to the extent adjusted in next grant installment. Appellant prays for exclusion of the amount of Interest as per certificate of the Bank obtained dated 31.03.2012. 5. Assessing officer has erred and CIT(A) has erred m confirming interest charged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Supreme of India in the case of CIT Vs. Bokaro Steel Ltd., 236 ITR 315. On considering the same, the Assessing Officer noticed, interest income did not accrue in the escrow account maintained by the assessee. Rather, assessee made FDRs through separate transactions and its FDRs earned interest income. Therefore, this being transaction held during pre commencement period of the business and the interest accrued on the FDR is taxable under head income from other sources . It is argument of the Assessing Officer that on interest accrued on FDRs, there is no control of Central Government and the control is only upon escrow account. The relevant extract from the assessment order in this regard are extracted as follows: In the light of above, it is apparent clear that in the case of assessee, interest accrued on FDRs made out of fund withdrawn from escrow account, has no link to acquire assets of company. The FDRs are made only to derive interest income out of fund lying in escrow account. Hence, interest income from FDRs is taxable under the head Income from Other Sources. Generally, escrow account is open to establish control over the payments. Lenders require escrow to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government. He also discussed the manner of earning interest on FDRs. The CIT(A) extracted a series of decisions and decided the issue against assessee. Relevant para is extracted as under: Accordingly, it was held that the interest income of Rs.6,09,35,544/- earned during the year by the assessee, from the Fixed Deposits made out of borrowed funds was rightly taxed by the AO under the head Income from other Sources . The ITAT in their decision for the earlier year had found that the interest payable on borrowed funds had no connection with the receipt of interest. Respectfully, following the above decisions and facts and circumstances of the present case, I hold that the interest of Rs.62,10,752/- has to be taxed under the head income from other sources and cannot be capitalized as done by the appellant company. The addition made by the AO is sustained and these grounds of appeal are dismissed. 7. Aggrieved with the above decision of CIT(A), assessee filed present appeal before the Tribunal with the grounds extracted above relating to correctness in confirming addition of Rs.62,10,752/-. 8. The Ld. Counsel for the assessee submitted that the assessee company is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee company in the month of February, 2017 whereas, order of CIT(A) was passed on 29.07.2016. Considering the effect of the said registration order as well as considering the facts that the provision to proviso of sub section (2) of section 12A of the Act , we find the same constitutes an important paper relating to assessment year i.e. A.Y. 2012-13 which is under consideration. Considering the connectivity of issue to the additional evidences, we are of the opinion that admission of additional grounds as well as additional evidence is justified considering the set principles of natural justice. We, accordingly, admit the said additional grounds as well as additional evidences. Thereafter, we find relevant to remit the issue back to the file of Assessing Officer for fresh adjudication after granting reasonable opportunity of being heard to the assessee. The Assessing Officer shall pass a speaking order after considering additional evidence. Assessing Officer shall consider all the judgments cited by the assessee before us on the issue of nature of the interest receipts. Considering the facts of additional evidence and provision to proviso of sub section (2) of Section 12A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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