Income Tax Appellate Tribunal - Mumbai
Alpine Samsung Hcc Joint Venture, Navi ... vs Department Of Income Tax on 3 April, 2013
धकरण, मंुबई यायपीठ 'ए', मंब आयकर अपील य अ धकरण, ु ई ।
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES "A", MUMBAI सव ी डी. म मोहन, उपा य एवं आर.एस. याल, लेखा सद य, के सम ।
Before Shri D.Manmohan, VP and Shri R.S.Syal, AM ITA No.7840/Mum/2011 : Asst.Year 2008-2009 The Income Tax Officer M/s.Alpine Samsung HCC Joint Ward 22(1)-4 बनाम/ Venture, Hincon House, LBS Marg Mumbai. Vikhroli (West) Vs. Mumbai - 400 083.
PAN : AAAAA9331M.
(अपीलाथ /Appellant) ( यथ /Respondent)
ITA No.7841/Mum/2011 : Asst.Year 2008-2009
The Income Tax Officer M/s.Alpine HCC Joint Venture
Ward 22(1)-4 बनाम/
Hincon House, LBS Marg
Mumbai. Vikhroli (West)
Vs. Mumbai - 400 083.
PAN : AAAAA9814H.
(अपीलाथ /Appellant) ( यथ /Respondent)
Appellants by : Shri Rajarshi Dwivedy
Respondent by : Shri Prasad Bapat
सनवाई
ु क तार ख / घोषणा क तार ख /
Date of Hearing : 28.03.2013 Date of Pronouncement : 03.04.2013
आदे श / O R D E R
Per R.S.Syal ( AM) :
These two appeals by two different but connected assessees relate to the assessment year 2008-2009. Since common issues are raised in both these appeals, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience.
ITA No.7841/Mum/20112. The only effective ground raised by the Revenue reads as under:-
2 ITA No.7840 & 7841/Mum/2011.M/s.Alpine Samsung HCC Joint Venture & Anr.
"On the facts and circumstances of the case, the Ld.CIT(A) erred in treating the interest income of `30,57,459/- earned from fixed deposits as business income."
3. Briefly stated the facts of the case are that the assessee filed its return declaring nil income. During the course of assessment proceedings it was observed by the A.O. that the assessee is a joint venture between Alpine Bau GmbH, Austria at 51% and Hindustan Construction Co. Ltd., India at 49% established for the purpose of design and construction of NATM Tunnel including the Switchover Ramp and Ventilation Shaft in between Talkotora Garden and Budha Jayanti Park for Delhi Metro Rail Corporation Limited. The contract was awarded in the year 2007-2008 and hence it was the first year of the operation of the assessee. The A.O. noticed that the assessee followed percentage completion method for recognizing revenue from contract. Since the work done during the year did not exceed 10% of the contract value, which was in fact only at 1.83%, the assessee computed its contract work in progress for tax purposes. There is no dispute as to the adoption of percentage completion method, which has been accepted by the AO. From the details, the A.O. observed that the assessee had earned interest income from fixed deposits at `30,57,459 which was reduced from the amount shown as contract work in progress in its final accounts. On being called upon to explain as to why the interest income be not taxed under the head `Income from other sources', the assessee made submissions, which have been reproduced on page 3 of the 3 ITA No.7840 & 7841/Mum/2011. M/s.Alpine Samsung HCC Joint Venture & Anr.
assessment order. Vide these submissions, the assessee stated that it received mobilization advance and equipment advance of `36.99 crore from its client. The assessee was forced to park the funds in fixed deposit as these were used as a security against the issue of various letters of credit for the purposes of importing construction equipments required for the execution of the project. The assessee relied on the order passed by the Tribunal in the case of Nathpa Jhakri Joint Venture v. DCIT and Bechtel HCC Joint Venture v. ITO in support of its submission that interest income earned from fixed deposits made out of contractual advance was taxable as business income entitled to be reduced from the contract work in progress. Not convinced with the assessee's submissions and relying on the judgment of the Hon'ble Supreme court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT [227 ITR 172], the Assessing Officer treated the interest income of `30.57 lakh as "Income from other sources" and taxed it accordingly. The learned CIT(A) got convinced with the assessee's submissions and ordered to treat this amount of bank interest as `Business income'. The revenue is in appeal.
4. After considering the rival submissions and perusing the relevant material on record, it is observed that the interest from bank was earned on deposits which were made as security against the issue of various letters of credit for the purpose of importing construction equipments required for the execution of the project. It is not as if the assessee parked its idle funds in the bank for the purposes of earning 4 ITA No.7840 & 7841/Mum/2011. M/s.Alpine Samsung HCC Joint Venture & Anr.
some interest income. In other words, the making of fixed deposits with the bank was directly linked with the execution of project for which the assessee was set up. The judgment rendered by the Hon'ble Supreme Court in the case of Tuticorin Alkali (supra) was not rendered in the context of bank interest earned from deposits given as security or guarantee for the carrying on the business. The same, therefore, does not support the stand point of the Revenue. In our considered opinion, the amount of bank interest earned by the assessee under the present circumstances cannot be considered as `Income from other sources'. We, therefore, hold that the learned CIT(A) was justified in relying on two orders passed by the Mumbai Benches of the Tribunal as noticed supra for coming to the conclusion that the interest from bank deposits is `Business income' and not `Income from other sources'. Consequently, we approve the view taken by the learned CIT(A).
ITA No.7840/Mum/20115. Both the sides are in agreement that the facts and circumstances of this appeal are mutatis mutandis similar to ITA No.7841/Mum/2011 except for the variation in the amounts. In fact, no separate arguments were advanced by the either side. Following the view taken hereinabove, we approve the decision taken by the learned CIT(A) on this issue.
6. In the result, both the appeals are dismissed.
5 ITA No.7840 & 7841/Mum/2011.M/s.Alpine Samsung HCC Joint Venture & Anr.
Order pronounced on this 3rd day of April, 2013.
आदे श क घोषणा दनांकः को क गई ।
Sd/- Sd/-
(D.Manmohan) (R.S.Syal)
VICE-PRESIDENT ACCOUNTANT MEMBER
मंुबई Mumbai; दनांक Dated : 3rd April, 2013.
Devdas*
आदे श क त ल प अ े षत/Copy
षत of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु (अपील) / The CIT, Mumbai.
4. आयकर आयु / CIT(A)-3, Mumbai
5. वभागीय त न ध, आयकर अपील य अ धकरण, मंुबई / DR, ITAT, Mumbai
6. गाड फाईल / Guard file.
ु / BY ORDER,
आदे शानसार
स या पत त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.
उप/ Registrar)
आयकर अपील य अ धकरण,
धकरण, मंुबई / ITAT, Mumbai