2017 (4) TMI 1551 - AT - Income Tax

Interest earned on deposits made in the pre-operative period - income from other sources - addition made to the taxable income of the assessee - HELD THAT - We are of the view that the issue is covered against the assessee by various orders of the ITAT Chandigarh bench in the case of the assessee itself. The latest order of 7th December 2016 has been placed on record in which the Tribunal following earlier orders in the case of the assessee has decided the issue against the assessee. No distinguishing facts have been brought to our notice nor any error pointed out in the order of the CIT (Appeals) in following the order of the Tribunal in the case of the assessee. The Ground of appeal No.1 raised by the assessee therefore we hold has no merit. The same is accordingly dismissed. Treating the miscellaneous income as income from other sources - HELD THAT - We are in agreement with the Ld. CIT (Appeals) that though the assessee has contended that the said receipts are incidental to the construction of the project and by virtue of the proposition laid in the case of CIT vs Bokaro Steel limited 1998 (12) TMI 4 - SUPREME COURT the same should be treated as its business income and deducted from the preoperative expenses incurred by I.T.A.T. at the same time we find that no evidences to substantiate the submissions have been filed either before the lower authorities or even before us. In view of the same we have no option but to concur with the Ld. CIT (Appeals) that the assessee has not discharged the onus cast upon him and accordingly the action of the Ld. CIT (Appeals) is upheld treating the impugned income as income from other sources.

Summary

Issues:
1. Treatment of interest earned on deposits made in the pre-operative period as income from other sources.
2. Treatment of miscellaneous income as income from other sources.

Issue 1: Treatment of interest earned on deposits made in the pre-operative period as income from other sources

The appeal was filed against the order of CIT(Appeals) upholding the interest earned on pre-operative deposits as income from other sources. The assessee, a government undertaking, had not commenced business operations but earned interest income on surplus funds. The auditors noted the interest earnings in their report. The Assessing Officer treated the interest as income from other sources, citing a Supreme Court judgment. The CIT(A) upheld this decision based on previous ITAT rulings. The ITAT concurred, stating the issue was covered by previous orders against the assessee. The appeal was dismissed as no distinguishing facts were presented.

Issue 2: Treatment of miscellaneous income as income from other sources

The Assessing Officer noted miscellaneous income earned by the assessee and treated it as income from other sources. The assessee argued that the receipts were incidental to project construction and should be deducted from preoperative expenses. However, no evidence was provided to support this claim. The CIT(A) upheld the Assessing Officer's decision, stating that the assessee failed to substantiate the submissions. The ITAT agreed with the CIT(A) that the onus was not discharged by the assessee, and the income was correctly treated as income from other sources. Consequently, the ground of appeal was dismissed, and the appeal was ultimately dismissed.

In conclusion, the ITAT upheld the treatment of interest earned on deposits and miscellaneous income as income from other sources based on the lack of evidence and failure to discharge the onus by the assessee. The appeal was dismissed in both aspects.