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TMI Blog2018 (6) TMI 1809X X X X Extracts X X X X X X X X Extracts X X X X ..... The said grounds along with additional grounds are extracted as under: "Grounds of appeal: 1. On facts and in law, The learned CIT(A) erred in confirming the action of the learned A.O. in treating the interest income of Rs.62,10,752/- as a revenue receipt taxable as income from other sources in the hands of the appellant company. 2. The learned CIT(A) failed to appreciate that the said interest income of fixed deposits received by the appellant was a capital receipt not chargeable to tax and accordingly, the entire addition made of Rs. 62,10,752/- should have been deleted. 3. The learned CIT(A) erred in not appreciating that the fixed deposits were kept by the appellant company out of the capital contribution received from the Central Govt. and other stake holders and the interest received thereon was to be reduced from the subsequent capital contribution/grants and therefore, the interest earned of Rs.62,10,752/- could not be taxed as an income of the appellant company. 4. Without prejudice to the above grounds, the appellant company submits that the above interest income of Rs.62,10,752/- should have been reduced from the cost of the assets acquired and in no circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government to the extent of 85%, the remaining 15% had to be brought in as advance by the stake holders. The assessee took four years to generate require contribution of 15%. During the year, as per the procedure assessee opened escrow account with the Bank of Maharashtra. The Central Government released grant in aid with certain conditions attached to it. The said grant of Central Government was credited to escrow account. During the year under consideration, assessee made short term fixed deposit and earned interest income. As per Assessee, the interest receipts accrued on the said income shall be adjusted against subsequent release of grants in aid by the Central Government. The total interest accrued on the said FDR worked out to Rs.1,06,18,614/- after adjustment of sum of Rs.44,07,862/- against installment of the Government grant and balance interest income earned by assessee works out at Rs.62,10,752/-(Rs.1,06,18,614/- - Rs.44,07,862/-). 5. During assessment proceedings, the Assessing Officer proposed to tax on balance income of Rs.62,10,752/- invoking the ratio laid down by the Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp;xxxxxxxxxxxx It is worth to mentioned here that assessee himself has accepted that total grant received as well as capital contribution of shareholders are deposited in escrow account. As per Balance Sheet as on 31.03.2012, total capital contribution towards subscribed equity share and share premium is at Rs.35,10,000/- and Rs.2,70,90,000/-, respectively. Therefore, FDR is made out of government grant as well as capital contribution of share holders, and hence interest comprises of interest on grant as well as interest on capital contribution of share holders. Further, out of interest accrued on FDR upto 31.03.2012, till date a sum of Rs.62,10,752/- is not adjusted against the installment of grant. Assessee company has also failed to give the details of pending installment of grant, if any, against which remaining interest is like to be set off. Therefore, assessee's balance interest income at Rs.62,10,752/- is treated as its income from other sources and the same is added to the total income of assessee company. Initiate penalty proceedings u/s. 271(1)(C) of the Income Tax Act, 1961 for furnishing of inaccurate particulars of income." 6. Aggrieved with the above, assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the admission of additional grounds as well as additional evidence and submitted for remitting the issue back to the file of Assessing officer for fresh adjudication on the issue of computation of income of assessee in view of the change in facts relating to registration of the assessee-company u/s. 12AA of the Act. The issue of admitting additional grounds, the Ld. Counsel submitted that CIT(A) passed impugned order on 29.07.2016 whereas registration order u/s.12AA(1)(b)(i) of the Act was passed on 7th February, 2017 subsequent in time. Therefore, this document has effect on the income computed for the assessment year 2012- 13 and also due to the provision to proviso of section 12A(2) of the Act. He also relied on the various decisions in this regard i.e. applicability of benefit u/s. 12A of the Act in assessment year under appeal. The Ld. Counsel prayed for admission of additional evidence in the interest of the administration of justice. 9. On the other hand, the Ld. DR for the Revenue vehemently opposed on the admission of additional grounds as well as additional evidence furnished by assessee before us for the first time. On merit of the issue relating to taxability on int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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