9911796707
TMI Blog2014 (12) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... ome - They managed its fund for better utilization and also identify the funds from time to time for their better investment to maximizing the assessee's return - This exercise of identifying the funds is time consuming needs day to day involvement of assessee company staff and also requires allocation of resources and infrastructure. The cost attributable to involvement and was claimed as deductible against interest income on estimation basis - the other disallowances on the service charges income on gross basis - The assessee has also filed details of services charges received before the authorities expenditure attributed to the earning of service charges have been computed/allocated the assessee has also filed detail before the authority - the service charges are brought to tax under the head "Income from Other Sources" - The amount of expenditure allocated on a consistent and reasonable basis to the earning of service charges being directly related is clearly allowable - But in the present case the assessee has itself estimated the expenditure in dispute for which the assessee had not filed sufficient evidence for substantiating its claim before the Revenue Authority - asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent appeal. 4. At the time of hearing ld. Counsel for the assessee stated that during the year under appeal the assessee had disclosed income amounting to ₹ 9,24,16,178/- and claimed expenses amounting to ₹ 2,08,46,665/- which has been disallowed by the AO but the ld. First Appellate Authority on the appeal filed by the assessee given the relief by deleting the addition of ₹ 3,85,086/- made on account of difference in account of other income. 4.1 He further stated that during the course of assessment proceeding the assessee was asked by the AO to justify the expenditure in dispute and in response to the same the assessee company stated that charges claimed by the company pertained to salary and other expenses which are attributable to the interest income because office staff is deputed for activities such as dealing in bank and only a miniscule proportion of the expenses are booked against the same, the balance being capitalized. But the AO did not accept the explanation given by the assessee and as rejected the contention of the assessee by disallowing the entire claim of expenditure in dispute. He further stated that according to the provision of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of expenditure claimed by the appellant company in respect of earning interest income, (vi) details of the service charges received by the appellant company, (vii) details of expenditure attributable to the earning of services charges computed, (viii) details of other income earned by the appellant company during the year under appeal. 8. We are of the considered view that the assessee company is a limited company wholly owned by the Government of India under the administrative control of Ministry of Railways and was incorporated on 30th October, 2006 the main object of the company is to undertake planning and development, mobilization of financial resources and construction, maintenance and operation of the Dedicated Freight Corridors lines covering approximately 3328 route kilometers on the Eastern and Western Corridors. The Corporation is basically associated with Delhi Metro Rail Corporation and has provided office space to the Corporation. During the year under appeal the Corporation had income from the following items which was disclosed in the head Income from Other Sources : S.No. Particulars Amount (in Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed the entire claim of expenditures with the following remarks: As per scheme of taxation income has been divided under four broad heads of income. 4. The assessee has declared income from interest on account of deposits with the bank. The assessee had surplus money which he deposited in the bank and earned interest on this deposit. As per section 14 of the Act, income is to be computed under the specific five heads. Further, these five heads are in a sense exclusive to one another and income which falls within one head cannot be assigned to or taxed under another head - Karanpura Development Company Limited vs. CIT [(1962) 44 ITR 362 (SC)]. Further, as per section 56 of the Act, income from deposit in bank falls under the residuary head that is 'Income from other Sources'. Thus, as per the Act income has to be declared under specific heads and thereafter, there is specific scheme for claiming expenditure under each head of income. In addition to these Act clearly provides that expenditure of one head cannot be claimed against the other head. It is in the background of these specific provision of the Act that the claim of the assessee that the salary paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure so claimed. The appellant has incurred an expenditure of ₹ 17,51,41,182/- during the year. Out of that the appellant claims that expenditure to the tune of 2.5% of interest income be allowed as salary paid to staff and other administrative expenditure for earning interest income. This claim of the appellant is based on estimations and no nexus has been proved with the expenditure incurred and earning of interest income. The appellant company is engaged in the development and maintenance of dedicated freight corridor and it has received funds from ministry of railways as share capital, such money is to be utilized for development of dedicated freight corridors, however, till the work actually starts the funds so received are kept in bank as per the guidelines issued by department of public enterprise. The pre-operative expenditure incurred by the appellant has to be capitalized till the business of dedicated freight corridors actually commences. Therefore, the entire expenditure of ₹ 17,51,41,182/- has to be capitalized and no set off of such expenditure can be claimed against the interest income received from bank deposits. The claim of the appellant that 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Assessing Officer. It is seen that during the year, the appellant has received income under the head service charges receipts of ₹ 36,66,291/-. Against this income, the appellant has claimed expenditure of ₹ 8,11,987/- on the ground that it has incurred number of expenditures in the project which have been capitalized and out of such expenditure, expenditure, @ 2.5% have been claimed as expenditure incurred for earning income. It is seen that expenditure incurred by the appellant is based on estimation and there is no nexus between the earning of service charges receipts and expenditure claimed. The appellant company is engaged in the development and maintenance of dedicated freight corridor and it has received funds from ministry of railways as share capital, such money is to be utilized for development of dedicated freight corridors, however, the pre-operative expenditure incurred by the appellant has to be capitalized till the business of dedicated freight corridors actually commences. Therefore, the entire expenditure of ₹ 17,51,41,182/- has to be capitalized and no set off of such expenditure can be claimed against the receipts received from service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee company staff and also requires allocation of resources and infrastructure thereto. The cost attributable to such involvement and was claimed as deductible against interest income on estimation basis. Similarly the other disallowances of ₹ 8,11,987/- taxing on the service charges income of ₹ 36,66,291/- on gross basis. The assessee has also filed details of services charges received before the authorities below expenditure attributed to the earning of service charges have been computed/allocated the assessee has also filed detail before the authority. We are of the view that the service charges are brought to tax under the head Income from Other Sources . The amount of expenditure allocated on a consistent and reasonable basis to the earning of service charges being directly related thereto is clearly allowable. But in the present case the assessee has itself estimated the expenditure in dispute for which the assessee had not filed sufficient evidence for substantiating its claim before the Revenue Authority. Therefore, keeping in view of the facts and circumstances of the present case and as discussed above in the interest of justice. We are of the view that as ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
