Case Law Details
Angul Sukinda Railway Ltd. Vs ITO (ITAT Cuttack)
We find that during the course of assessment proceedings the assessee explained before the AO with regard to interest on mobilization advance is a capital receipt, therefore, it has been reduced from the capital work-in-progress and in case of interest earned on fixed deposit/flexi deposits is a business income, therefore, it has been treated as a revenue income. The AO did not accept the claim of the assessee and treated the same as income from other sources. In appeal, the CIT(A) accepted the claim of the assessee in regard to interest on mobilization advance but he did not agree with the interest received on fixed deposits/flexi deposits and upheld the action of AO holding that the AO has rightly treated the interest earned on FDR & Flexi Deposit as income from other sources.
We observe from the balance sheet for both the assessment years under consideration that the share application money pending for allotment is also appearing and we have decided the similar issue in the case of M/s Haridaspur Paradip Railway Company Limited Vs. DCIT in ITA No.383/CTK/2019, order dated 12.10.2020, in which the issue of share application money were pending for allotment has been remitted back to the file of AO
In the impugned case, on perusal of the orders of the authorities below as well as the submissions made by both the sides before us, we observe that the assessee has deducted the expenses from the interest and surplus has been transferred into the reserve and surplus account. Before the AO the assessee has also offered it as a business income in the form of written submissions, which has been incorporated by the AO in the assessment order. We found substance on the submission of the ld. CIT-DR. As the issue being similar to the case of Haridaspur Paradip Railway Company Ltd.(supra), therefore, we also remit the issue to the file of AO on the same directions given therein along with some additional direction to the AO for examination as to whether the income which has been transferred into the reserve and surplus account and its utilization, either for revenue purpose or for capital expenditure. The AO is also directed to decide the issue as per law after providing reasonable opportunity of being heard to the assessee. The assessee is also directed to avoid taking any unnecessary adjournment and cooperate with the AO for early disposal of the case. We order accordingly.
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