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TMI Blog2009 (6) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... hi, in I.T.A. No. 4346/Del/2002 (Assessment Year 2000-2001). I.T.A. No. 84 of 2007, is directed against the order dated 30th November 2006, passed by I.T.A.T., Delhi Bench 'F', New Delhi, in I.T.A. No. 2685/Del/2003 (Assessment Year 2001-2002). And, I.T.A. No. 85 of 2007, is directed against the order dated 30th November 2006, passed by I.T.A.T., Delhi Bench 'F', New Delhi, in I.T.A. No. 3369/Del/2003 (Assessment Year 2001-2002). 2. The common questions of law involved in these three appeals are as under:- (i) Whether I.T.A.T. has erred in law in deleting addition of 2.5% on income earned by way of interest by the respondent / assessee Tehri Hydro Development Corporation (for short T.H.D.C.), claimed by it as deduction under Section 57(iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 2007. C.I.T. (A) passed its order 17.02.2003, in Appeal No. 95/HRD/2002-03, which relates to present I.T.A. No. 84 of 2007 and I.T.A. No. 85 of 2007. Said authority after hearing the parties allowed the deductions claimed by the respondent / assessee. Aggrieved by said order, revenue preferred I.T.A. No. 4346/Del/2002 before I.T.A.T.. Revenue filed I.T.A. No. 3369/Del/2003 against the order dated 17.02.2003, passed by C.I.T. (A) and assessee also filed cross I.T.A. No. 2685/Del/2003 before I.T.A.T. for increase in the percentage of deduction on expenditure. The I.T.A.T. dismissed the appeal No. 4346/Del/2002 of revenue and affirmed the order dated 13.09.2002, passed by C.I.T. (A), in Appeal No. 231/HRD/2002-03. Appeal of revenue (No. 3369 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of India enterprise, was doing its construction activities and not business activities in the relevant period and that is why the receipts from the employees and oustees in Dam area was treated by C.I.T. (A) and I.T.A.T., as capital receipts. 7. In Tuticorin Alkali Chemicals and Fertilizers Ltd. v. Commissioner of Income Tax Vol. 227 I.T.R. page 172, it has been held by the apex court that interest income is always revenue in nature unless it is received by way of damages or compensation, but it has been further held that the assessee may be entitled to capitalize the interest payable by it. It is also observed by the apex court in said case that expenditure would be taxable as indicated for the purposes of business if the assessee's bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain amounts. These are, the rent charged by the assessee to its contractors for housing workers and staff employed by the contractor for the construction work of the assessee including certain amenities granted to the staff by the assessee. Secondly, hire charges for plant and machinery which was given to the contractors by the assessee for use in the construction work of the assessee, and thirdly, interest from advances made to the contractors by the assessee for the purpose of facilitating the work of construction. The activities of the assessee in connection with all these three receipts are directly connected with or are incidental to the work of construction of its plant undertaken by the assessee. Broadly speaking, these pertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, been rightly held as capital receipts and not income of the assessee from any independent source." In view of the principle of law laid down by the apex court in Bokaro Steel Ltd. Case (supra), quoted above, we do not find any error of law committed by the I.T.A.T. in allowing the deductions to the extent of 2.5% towards administrative costs on the interest income on short term deposits, and in further holding that the interest and rent received from its employees and oustees in Dam area had a nature of capital receipt, as the construction process was still on and the respondent / assessee had yet not started the business activity. Questions of law stand answered accordingly. 9. For the reasons as discussed above, all the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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