ROADS & BRIDGES DEVELOPMENT CORPORATION, OF KERALA LIMITED Vs. ASST COMMISSIONER OF INCOME TAX, CIRCLE

JUDGEMENT

(1.) The issue raised in the appeal is as to the nature of the interest received, on mobilisation advance made by the assessee to its contractors, whether it is a capital income or a revenue income. The revenue categorised it as a revenue income in the assessment order, which was taken up in appeal. In first appeal relying on Commissioner of Income tax v. Bokaro Steel Ltd., (1999) 236 ITR 315, the assessment order was overturned to the extent of finding the interest income received to be a capital income. The First Appellate Authority relied on Tuticorin Alkali Chemicals And Fertilisers Ltd. v. Commissioner of Income Tax, (1997) 227 ITR 172 and Commissioner of Income Tax v. Cochin Shipyard Ltd.,2000 158 CTR(Ker) 208. The Tribunal, though noticed Bokaro Steel Ltd., did not consider the effect of the said decision.

(2.) The substantial questions of law arising are as follows:

(3.) We need not labour much on the facts, since the interest income received is on mobilisation advance given to the contractors to ensure smooth commencement and completion of the work. At the end of the construction work, on payment of the entire bills, there is deduction made with respect to the interest accrued on such mobilisation advance along with deduction of advance granted. The revenue found the said income to be assessable as a revenue receipt in the subject year.