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TMI Blog2017 (8) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... of share application money before commencement of business". "On the facts and circumstances of case and the law, the Ld. CIT(A) erred in allowing relief to the assessee, by failing to follow the ratio of Apex Court laid in the decision of Tuticorin Alkali Chemicals & Fertilizers Ltd. which was preferred by the Apex Court in preference to its decision in Bokaro Steel in its later decision of Bongaigon Refinery & Petrochemicals Ltd." 3. "On the facts and circumstances of case and the law, the Ld. ClT(A) erred in giving relief to the assessee by relying upon decision of VGR Foundation of Chennai High Court which followed Bokaro Steel when the Ld CIT(A) ought to have followed the Apex Court decision of Tuticorin Alkali Chemicals which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of Tuticorin Alkali Chemicals & Fertilizers Ltd whereas the ld.CIT(A) relied on the decision in the case of VGR Foundation of Chennai High Court which followed the decision in Bokaro Steel. 3. The brief facts of the case are that the assessee filed return of income on 29.9.2009 declaring an income of Rs. 4,39,504/-. The assessee is a private limited company engaged in hotel construction and hospitality services and total Work-in-Progress as on 31.3.2009 was Rs. 38,08,01,798/-. During the year the assessee earned interest on fixed deposit to the tune of Rs. 94,07,568/- on fixed deposits comprising of Rs. 34,40,144/- from Corporation Bank and Rs. 59,67,424/- from Kotak Mahindra Bank. The said FDR were purchased out of the share a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, all the expenses incurred were capitalized as capital-work-in-progress and the appellant has not claimed any expenditure during the year. As on 31.03.2009 the total capital work in progress is Rs. 38,08,01,798/-. The appellant received share application money of Rs. 45, 13,60,0001- and Rs. 18,60,00,0001- on 12.12.2008 and 16.12.2008 from Fulda River Ltd. and from K2A Hospitality respectively. Out of this receipt of share application money, the appellant kept fixed deposits of RS.25 crores and Rs. 15,00,15,000/- on 22.12.2008 with M/s. Kotak Mahindra Bank Ltd. and M/s. Corporation Bank Ltd. temporarily, as the funds to that extent were not immediately required. The deposits earned a total interest of Rs. 94,07,568/-. The said interest was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Share application monies' are in the nature of own funds of a company. The Hon'ble Chennai High Court has followed the decisions in the case of Bokaro Steel Ltd., Karnal Co-op Sugar Mills Ltd. and Karnataka Power Corporation. Hence, looking to these judgments which are direct on the issue and squarely applicable to the appellant's case, I am of the considered opinion that interest income received on the fixed deposits generated through the money received by way of share application is not taxable as income from other sources. The facts in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. are distinguishable from the facts of the case of the appellant. Hence, the claim of the appellant to reduce the interest receipt from capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Island Star Mall Developers P.Ltd V/s ACIT ITA No.5078/Mum/2014(Mum.Trib)(AY-2010-11) dated31.7.2015 iv) M/s Kaygee Lopares India Pvt Ltd V/s ACIT in ITA No.7745 and 7745/Mum/2012(AY-2008-09 & 2009-10) dt.28.10.2015 6. The ld. AR argued that the since the said fixed deposits which yielded interest income were made out of the share application money which own money of the company and not borrowed funds by the assessee and therefore, the decision of the Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. was not applicable at all as it is distinguishable on facts. Whereas, the case of the assessee was directly covered by the above cited decisions and therefore the issue decided by the ld.CIT(A) is a reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the ld.CIT(A) and accordingly, we uphold the same by dismissing the grounds of appeal no.1 to 3. Ground no.1 to 3 are dismissed. 8. The issue raised in grounds of appeal no.4 to 6 is relating to deletion of disallowance by ld.CIT(A) of Rs. 7,14,404/- as made by the AO u/s 14A of the Act. 9. The facts of the case are that the assessee received an exempt income of dividend to the tune of Rs. 87,81,275/- which was reduced from capital work in progress as on 31.3.2009 and the AO after applying the provisions of section 14A r.w.r.8D(2)(iii) disallowed Rs. 7,14,404/- and added the same to the total income of the assessee. In the appellant proceedings, the ld. CIT(A) deleted the disallowance by observing and holding as under : "4.8 I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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