2017 (7) TMI 1206

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..... "Whether in the facts and circumstances of the case and law the ITAT was justified in deleting the addition of Rs. 3,37,76,623/- made by the assessing officer on account of income from other source ignoring the fact that the assessee capitalized the interest income received from the FDR's thereby reducing the cost of fixed assets." 3. While considering the matter, tribunal has observed as under:- "4. We have heard the rival contentions and perused the material available on record. The issue under consideration for the both the years relate to treatment of the interest received prior to commencement of commercial operations of the specified mega road projects. As per the Revenue, the same is to be brought to tax under the head "income fr .....

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..... nvested in fixed deposits the income earned in the form of interest will be taxable under the head "income from other sources". On the other hand the ratio of the Supreme court judgment in Bokaro Steel Ltd.'s case (supra) to our mind is that if income earned, whether by way of interest or in any other manner on funds which are otherwise "inextricably linked" to the setting up of the plant such income is required to be capitalized to be set off against pre-operative expenses." "2.19 The facts in the instant case are pari materia with the facts of the Indian Oil Panipat (supra) and the ratio decidendi of Hon'ble Delhi High Court in that case will squarely apply to the facts of the assessee. In the instant case, undisputedly, the funds have .....

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..... come from other sources". Hence, ground no.1 of the assessee is allowed." 5. Undisputedly, there are no changes in the facts and circumstances of the case. No contrary authority has been brought to our notice subsequent to above decision of the Coordinate Bench or the fact that said decision of the Coordinate Bench has been stayed by the Hon'ble High Court. In view of the similar facts and circumstances of the case and respectfully following the decision of Coordinate Bench in assessee's own case (supra), we hold that the interest received prior to commencement of commercial operations of the specified mega road projects will be in the nature of capital receipt and will be required to be set off against the pre-operative expenditure capit .....

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