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TMI Blog2017 (10) TMI 1540X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the AO was not justified in making the addition denying the interest on mobilisation advance received from the contractors during the construction/project period is a capital receipt and is adjustable against pre-operative expenses. 3. Brief facts of the case are that the assessee is engaged in the business of development, establishment, financing, construction, maintenance and management of Haridaspur-Paradeep Railway Linkage Project and filed the return of income for the assessment year 2010-2011 on 18.02.2013 with total income of Rs. 8,32,11,386/- and the return of income was processed u/s.143(1) of the Act and subsequently the case was selected for scrutiny and notice u/s.143(2) & 142(1) along with questionnaire was issued. In comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny has paid money as mobilisation advance to the contractors and received interest of Rs. 2,55,60,082/- and further this amount has been set off and adjusted against pre-operative expenses as work-in-progress and also relied on the decision of Tribunal. Contra, ld. DR vehemently opposed to the submissions and submitted that the AO has rightly treated the interest income as income from other sources and the CIT(A) has discussed at length on the disputed issue and supported the order of CIT(A). 7. We have heard the rival contentions and perused the material on record. The sole crux of the disputed issue being that the assessee who is engaged in the civil construction works and management of railway linkage and has made payments of mobilisati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest income of Rs. 26,39,428/- was earned by the assessee, which was later adjusted against the charges payable to the contractor and had gone to reduce the cost of construction. Thus, I find that the interest income earned has a nexus with the contract being executed by the assessee. On the similar facts and circumstances of the case, the Hon'ble Supreme Court in the case of CIT vs. Bokaro Steel Ltd., (supra) has held that the receipt of rent, hire charges and interest from contractors were directly connected with or incidental to the work of construction of its plant undertaken by the assessee. The advance which the assessee made to the contractors to facilitate the construction activity of putting together a very large project was as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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