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TMI Blog2015 (10) TMI 2014X X X X Extracts X X X X X X X X Extracts X X X X ..... how the part of share capital was advanced to his sister concern on which no interest has been charged. Even in respect of credit transactions on account of sweep transfer in the bank account against which loan was advanced to M/s JTPL Texmart Pvt. Ltd. The ld CIT(A) has held that sweep transfer is the amount from FDRs, which were earlier got by the appellant when the requirement of funds was there for making such loan to M/s JTPL Texmart Pvt. Ltd., such FDR amount was automatically transferred from FDR account to current account. The assessee had not advanced interest bearing fund to its sister concern, therefore, charging of interest on advance to sister concern and reduction from the pre-operative expenses was not justified. The ld DR had not controverted the finding given by the ld CIT(A). Therefore, we uphold the order of the ld CIT(A) on this ground - Decided against revenue. - ITA No. 227/JP/2014, ITA No. 256/JP/2014 - - - Dated:- 11-9-2015 - <!--[if gte mso 9]> Normal 0 false false false EN-US X-NONE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were produced during the course of assessment proceedings before the Assessing Officer. During the year under consideration, the development activities were in progress. The assessee had shown capital work in progress and pre-operative expenses. The ld Assessing Officer found that the assessee had earned interest income of ₹ 66,22,116/- during the year under consideration on temporary deposits with bank as FDRs. The Assessing Officer gave reasonable opportunity of being heard by considering the Hon'ble Supreme Court decision in the case of Tuticorin Alkali Chemicals Fertilizers Ltd. 227 ITR 172. The assessee replied vide letter dated 22/10/2012 which has been reproduced by the Assessing Officer on page 2-3 of the assessment order. The ld Assessing Officer was not satisfied with the explanation filed by the assessee and after considering the decision of Hon'ble Supreme Court in the case Bokaro Steel 236 ITR 315 (SC) and Tuticorin Alkali Chemicals Fertilizers Ltd. (supra) treated the interest income as income from other sources. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the bank on which such interest income was earned and that making of FDRs was not at all due to any compelling circumstances which may have been imposed by the Govt. of India and that in such circumstances, such interest income is to be taxed as income from other sources. It is a settled law that the interest income from FDRs before commencing of business would ways be taxed as income from other sources. He further relied on the following decisions:- (i) CIT Vs. Modi Rubber Ltd. 208 ITR 379 (Del.) (ii) CIT Vs. Mangalam Cement (1996) 217 ITR 369 (Raj.) (iii) Tuticorin Alkali Chemicals Fertilizers Ltd. Vs. CIT 227 ITR 172 (SC) (iv) Madhya Pradesh State Industries Corporation Ltd. Vs. CIT (1968) 69 ITR 824 (MP). (v) Traco Cable Co. Ltd. Vs. CIT (1969) 72 ITR 503 (Ker). (vi) CIT Vs Rajasthan Land Development Corporation 211 ITR 597 (Raj.) Accordingly, he allowed the appeal partly on this issue. 4. Now the assessee as well as the revenue are in appeals before us. The ld AR has submitted that the additional evidence filed by the assessee had not been adjudicated/admitted under Rule 46A of the Rules. These evidences were not available wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee to give interest free advances to the sister concern. Therefore, order of the Assessing Officer may please be confirmed. 8. At the outset, the ld AR has submitted that the ld CIT(A) has analysed the whole issue in depth. He further submitted that a private company was incorporated by the share holders of the assessee company to facilitate all the particulars for developing various infrastructures in the textile park at Kishangarh. The assessee also stated that the loan extended to M/s JTPL Texmart Pvt. Ltd. was utilized for buying of shares in the assessee s company and because of this reason, the loan was granted without any interest. No nexus has been established by the Assessing Officer that interest bearing fund was diverted for advancing money to the sister company, therefore, charging of interest @ 12% on such fund of ₹ 97,25,000/- advanced to sister concern is without any basis and deserved to be confirmed the order of the ld CIT(A). This was the business expediency also that the company was incorporated by the share holders of the appellant company to facilitate all the particulars for developing various infrastructures in the textile park at Kishangarh for w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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