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TMI Blog2015 (6) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Therefore, in view of above, we do not find any infirmity in the order of Ld. CIT(A) and the same is upheld. - Decided against revenue. - I.T.A. No. 4300/Del/2012 - - - Dated:- 10-6-2015 - SMT. DIVA SINGH AND SHRI T.S. KAPOOR,JJ. For the Petitioner : Smt. Parwinder Kaur, Sr. DR For the Respondent : Shri K Sampath, Adv. ORDER PER T.S. KAPOOR, AM: This is an appeal filed by Revenue against the order of Ld. CIT(A) dated 14.05.2012. The grounds of appeal raised by Revenue are reproduced below: 1 . The Learned CIT (A) has erred on the facts and circumstances of the case and in law in treating the interest income of ₹ 70,75,843/- received on account of bank deposit as capital receipt instead of treating it as income under head other sources and there by overlooking the ratio laid down in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. 2. The Learned CIT(A) has erred on facts and circumstances of the case and in law in allowing to adjust interest income against preoperative expenses, however assessee had no compulsion for making fixed deposit with the bank rather it was surplus money kept with the bank to earn interest. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of total assets of ₹ 1.48 Crores, land cost is ₹ 1.21 Crores. Rest of the assets are office equipments, furniture, vehicle and computers. By no stretch of imagination, it can be said that the assessee has kept FDs worth ₹ 1389 Lakhs to acquire meager capital goods of just about ₹ 20 Lakhs. Similarly, in the list of Capital-Work-In-Progress, there is no such capital asset as has been acquired by the assessee during the year. On the other hand, it is seen that the assessee has given an advance of ₹ 11.29 Crores against Capital Contracts. The case of the assessee is not such that the assessee had no funds in its hands but it was necessary for it to procure capital goods by keeping its FDs as Margin against procurement of such capital goods, Here in this case, the assessee has not received any such capital goods and yet has given advance of ₹ 11.29 Crores as Capital Contract. There arise no question of keeping the FDs as margin money for procurement of capital goods in absence of any such capital goods acquired by the assessee during the year under consideration. Thus, the contention raised by the assessee is far away from the facts of the case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chinery by the appellant company. The additional share capital raised was for purpose of acquiring capital assets which was temporarily put in the Fixed Deposits. The appellant had spent substantial money in acquisition of land in F.Y. 2007-08 and for that purpose it has spent ₹ 68.62 lacs. This shows that the funds raised by the appellant from share holders were not idle but the same were meant for acquisition of capital assets. In view of the above it is held that funds raised by the appellant company were inextricably linked with acquisition of the capital assets. The interest received from such funds which were put in FDRs for temporary period was in the nature of capital receipts and such receipts was required to be set off against the preoperative expenses. In this regard reliance is placed on the decision of Hon'ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd. vs ITO [2009/315 ITR 0255 (DEL)INCOME OR CAPITAL--INTEREST--INTEREST EARNED PRIOR TO COMMENCEMENT OF BUSINESS ON FUNDS BROUGHT IN BY WAY OF SHARE CAPITAL FOR SPECIFIC PURPOSE--IS CAPITAL RECEIPT--LIABLE TO BE SET OFF AGAINST PRE-OPERATIVE EXPENSES--INCOME-TAX ACT, 1961. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon the order of A.O. 7. Ld. A.R. on the other hand invited our attention to Ld. CIT(A) s order at page 8 and submitted that Ld. CIT(A) has noted down the difference between the facts in assessee s case and that of the facts in Tuticorin and argued that in the case of Tuticorin, the assessee had borrowed funds whereas in the case of assessee, the assessee had raised funds by way of share capital. Moreover, he argued that funds were not surplus funds as the cost of project was more than ₹ 500 crores and during the year only ₹ 24 crores were received and these were placed temporarily in the form of bank deposits. Ld. A.R. heavily relied upon the order of Ld. CIT(A) and case law relied upon by him. In her rejoinder, Ld. D.R. submitted that in the present case, there was no compulsion to the assessee to place funds in the form of bank deposits. 8. We have heard rival parties and have gone through the material placed on record. We find that that in the case of Tuticorin Alkali Chemicals and Fertilizes Ltd., the funds which were placed in the form of FD were raised by way of loan whereas in the present case, the assessee had raised funds through share capital and in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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