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TMI Blog2018 (7) TMI 1622X X X X Extracts X X X X X X X X Extracts X X X X ..... t is a capital income or a revenue income. The revenue categorised it as a revenue income in the assessment order, which was taken up in appeal. In first appeal relying on Commissioner of Income tax v. Bokaro Steel Ltd. [1999 236 ITR 315], the assessment order was overturned to the extent of finding the interest income received to be a capital income. The First Appellate Authority relied on Tuticorin Alkali Chemicals And Fertilisers Ltd. v. Commissioner of Income Tax [1997 227 ITR 172] and Commissioner of Income Tax v. Cochin Shipyard Ltd. [(2000) 158 CTR (Ker) 208]. The Tribunal, though noticed Bokaro Steel Ltd. [supra], did not consider the effect of the said decision. 2. The substantial questions of law arising are as follows: "(i) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was applied in setting up the factory. The Hon'ble Supreme Court held that interest income is always of a revenue nature, unless it is received by way of damages or compensation. If the capital of a Company is fruitfully utilized instead of being kept idle, the income thus generated is of a revenue nature and not an accretion to capital, was the declaration. 5. We find that a Division Bench of this Court in Cochin Shipyard Ltd. [supra] followed the aforesaid judgment. We also notice that Cochin Shipyard Ltd. was on identical facts as in the present case, wherein the assessee had entrusted work to the contractors and had advanced amounts to such contractors, for smooth commencement and completion of civil and other construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovide these would have resulted in escalation of the charges of the contractors for the construction work. 7. The advances, which the assessee made to the contractors to facilitate the construction activity of putting together a very large project was "as much to ensure that the work of the contractors proceeded without any financial hitch as to help the contractors". These facilities were found to be intrinsically connected with the construction of the steel plant. They were found to be rightly held as capital receipts and not income of the assessee from any independent source. In such circumstances, on identical facts the Hon'ble Supreme Court having held so, we have to follow the Hon'ble Supreme Court, though on facts as availab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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