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TMI Blog2018 (4) TMI 1999X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the work-in-progress and are capital receipts and not income of the assessee from an independent source. Here, in this matter, the very purpose of assessee receiving Rs. 157 crores from RINL was to increase the paid up share capital in furtherance of their business and such an amount accrued interest during the period of their study for acquiring coal mines, during which period on day to day basis the assessee incurred an expenditure. Assessee is entitled to net of the interest paid against the interest received and the balance to reduce the work-in-progress. The interest received in this matter is not taxable under the head Income from other sources . Accordingly, the grounds of appeal are allowed and the learned AO is directed to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount, which earned an income of Rs. 11,45,19,580/-. Since RINL demanded interest, the assessee had to pay a sum of Rs. 11,14,73,651/- and after netting of expenses and interest earned, the company transferred the net expenditure of Rs. 8,60,96,334/- under the head of capital work-in-progress bringing the total balance to Rs. 12,97,07,336/- as capital work-in-progress as on 31.3.2012. In the circumstances, assessee filed their return of income for the Asstt. Year 2012-13 showing the income as nil. 3. During the scrutiny, learned AO noticed that the interest earned by the assessee was Rs. 11,45,92,550/- whereas the interest paid by the assessee was Rs. 11,14,73,651/-, as such after netting the same, he brought a sum of Rs. 31,18,559/- to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es below. 5. Perused the material on record in the light of the submissions on either side. In so far as the facts are concerned, absolutely there is no dispute. The assessee received Rs. 157 crores from RINL and kept Rs. 156 crores in FD account in the process of acquiring coal mines for the conduct of their business. The FD accrues some interest out of which the assessee had to pay back interest to RINL on their demand. Now the question is whether the assessee is entitled to net all the interest received against the interest paid and whether the assessee is entitled to reduce the work-in-progress to the extent of the net interest by treating it as business income. 6. In the case of Bokaro Steels Ltd. (supra), the Hon ble Apex court held t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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