ITA No. 197/CTK/2016. Case: Angul Sukinda Railway Ltd. Vs ITO, Ward 1(1). ITAT (Income Tax Appellate Tribunal)

Case NumberITA No. 197/CTK/2016
CounselFor Appellant: P.Venugopala Rao, AR and For Respondents: D.K. Pradhan, DR
JudgesN.S. Saini, Member (A)
IssueDirect Tax
Judgement DateApril 07, 2017
CourtITAT (Income Tax Appellate Tribunal)


N.S. Saini, Member (A), (Cuttack Bench)

  1. This is an appeal filed by the assessee against the order of CIT(A)-3, Bhubaneswar, dated 29.2.2016, for the assessment year 2012-13.

  2. The assessee has raised the following grounds of appeal:

    "1. On the facts and circumstances of the case the Assessing Officer (AO) has erred in computing the assessable income of the appellant at Rs. 38,31,340/- as against returned income of Rs. 11,91,916/-.

  3. On the facts and circumstances of the case the AO has erred in taxing a sum of Rs. 26,39,428/- being interest on mobilization advance despite the fact that the same has been credited to the cost of project and the same is capital receipt.

  4. On the facts and circumstances of the case AO eared in the taxing interest on mobilization advance without giving reasonable opportunity to the appellant.

  5. That the appellant craves leave to add or to amend the above grounds of appeal before or at the time of hearing of the appeal.

  6. For these and among other grounds to be urged at the time of hearing, adequate relief as may be deemed fit be granted in the matter."

  7. The brief facts of the case are that the assessee company is a joint venture company of Railway Vikash Nigam Ltd. (RVNL), Jindal Steel & Power Limited, State Government of Odisha & Bhusan Steel Limited, incorporated under the Companies Act, 1956. It is engaged in carrying out the new rail line works between Budhapank (Angul) to Baghuapal (Sukinda). The assessee filed return of income for assessment year 2012-13 on 25.9.2012 at an income of Rs. 11,91,916/-. The Assessing Officer found that the assessee has earned interest income of Rs. 26,39,428/- from mobilization advance paid to contractor namely Railway Vikash Nigam Ltd. The Assessing required the assessee to explain why the interest on mobilization advance earned should not be treated as income from other sources, contrary to the treatment of reducing it from capital work-in-progress as adopted by the assessee company in its book. The assessee submitted that the mobilization advance was given by the assessee company to the contractor for execution of contracts and same were not meant for earning of interest income. Hence, the interest income earned was adjusted against the capital work in progress instead of treating the same as income from other sources.

  8. The Assessing Officer was not convinced with the submission of the assessee and held that the contention of the assessee that the mobilization advance was not given for earning interest does not hold ground because the intention of the assessee was not relevant at all at the time of taxation but the nature of the receipts earned. Further, the contention of the assessee about the necessity of making mobilization advance has no nexus with the issue under consideration. Neither there was any doubt on its necessity nor was the veracity of the same questioned. But the issue under consideration was the treatment of interest on...

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