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TMI Blog1997 (11) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... its components. An amount of Rs. 1,33,15,874 was found by him to constitute direct transfer of receipt to works-in-progress. For the reasons as in earlier years, he held the accounting principle resorted to by the assessee in treating the amount as capitalised and forming a part of its work-in-progress to be correct. He thus allowed relief to the assessee. 3. During the course of the departmental appeal, learned counsel for the assessee strongly placed reliance on an unreported judgment of the Karnataka High Court dated 11-2-1991 in ITRC No. 242/1985 in the assessee's own case for assessment year 1977-78. It is found that in the said judgment, Karnataka High Court held that interest receipts and hire charges from the contractors did not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken term loans from various banks and financial institutions. That part of the borrowed funds which was not immediately required by the company was invested in short-term deposits with banks. Such investments were specifically permitted by the Memorandum and Articles of Association of the company. The company had also deposited certain sums with the Tamilnadu Electricity Board. It had also given interest-bearing loans to its employees to purchase vehicles. For assessment year 1982-83, the company received a total amount of interest of Rs. 2,92,440. It claimed that the amount was required to be taken to the capital account and was to be reduced from the capital cost of the company. Ultimately however, the Supreme Court held as below: "Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly. The Supreme Court furthermore held that this was also not a case of diversion of income by overriding title. 4. Applying the above principles enunciated by the Supreme Court in the abovementioned case, the facts of which are more or less similar to those of the present case, we are of the opinion that there is no case for holding the interest income and also the income received by the assessee-company by way of hire charges to constitute capital receipt. The Supreme Court has clearly held that such receipts are of revenue nature only. Accordingly, we reverse the decision of the CIT (Appeals) on this issue and uphold the action of the Assessing Officer in treating the amount of Rs. 1,33,15,874 as revenue income of the assessee. 5. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as capital receipts and not as revenue receipts. He thus directed the Assessing Officer to treat the above amount as capital receipt only. 6. The ratio of the abovementioned decision of the Supreme Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. would squarely apply to the present issue also. For judging the nature of a particular receipt, what is required to be seen is merely whether the receipt pertains to capital account or revenue account. Taxability of the income will certainly not be dependent upon its destination or even on the way in which the income is generated. In the instant case, the receipt arose to the assessee on account of sale of power by it to its customers. The process of generation of power may be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired by the assessee to bear the cost in this regard. We also find that during the year, the assessee had actually made reimbursements of the above amounts to the various parent departments. Accordingly, he has considered the amount to be admissible as expenses. On the basis of the facts of the case, we agree with the findings of the CIT (Appeals). We do not interfere with the said finding. 8. In the other grounds, the Department contends that the CIT (Appeals) erred in directing the Assessing Officer to treat platform foundation, outdoor yard, structure, surge tank, tail race channel, river training wall, approach channel and also dams, spill ways, generation station and railway sidings as plant and machinery and to allow depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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