IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H”, MUMBAI BEFORE SHRI RAJESH KUMAR, HON'BLE ACCOUNTANTMEMBER AND SHRI RAMLAL NEGI, HON'BLE JUDICIALMEMBER ITA NOs. 2472, 2473& 5752/MUM/2018 (A.Ys: 2013 – 14, 2014-15& 2015-16)

Assessee by : Shri J.P. Bairagra Department by : Shri B. Srinivas Date of Hearing : 08.02.2019 Date of Pronouncement : 20.03.2019

O R D E R

PER RAJESH KUMAR (AM)

The above titled appeals have been preferred by the assessee against the orders dated 20.02.2018, 20.02.2018 & 28.08.2018 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment years 2013 – 14, 2014-15 & 2015-16 respectively.

The grounds raised by the assessee are as under: -

AY 2013-14:

“1. On the facts and circumstances of the case and in law, the Commissioner of Income Tax - (Appeals) has erred in upholding that a sum of Rs.44.45 Crores is not a capital receipt. In doing so, the CIT(A) has erred in upholding that the sum of Rs.44.45 Crores is taxable, both for the purposes of normal computation as well as computing book profits U/S.115JB of the Income Tax Act. The receipt of Rs.44.45 Crores being in the nature of a capital receipt (since income was earned prior to commencement of business, it was a capital receipt and was required to be set off against pre-operative expenses), the same is not liable to tax both under the normal provisions of Income Tax as well as for the purposes of computing book profits U/S.115JB of the Income Tax Act, the addition made should be deleted.

2. The appellant reserves its right to add to, alter, amend, modify or delete any of the grounds taken in this appeal.

2. The assessee has challenged the order of ld CIT(A) on the ground that Interest of Rs. 44.45 Cr has wrongly been held to be revenue receipt by ld CIT(A) by ignoring the fact that the interest was received on the FDRs/ICDs during the period prior to the commissioning of the port terminal at Karanja Creek which has to be reduced from the pre-operative capital expenditure as the development of the port is till under progress and not commissioned.

3. The fact in brief are that the assessee company was incorporated under the Companies Act, 1956 to develop, operate multipurpose port terminal at Karanja Creek, Chanje Village, Taluka Urban, Distt. Raigad, Maharashtra, India on 14^th May, 2010. For the purpose of the port terminal project, the assessee raised share capital to the tune of Rs. 449.86 Cr in the month of October, 2010 as foreign inward remittance from M/S Karanja Terminal and Logistics (Cyprus) Ltd. a Cypriot Intermediate company which was incorporated on 31^st August, 2010. The IPO was raised for the specific purpose of developing multipurpose port terminal facility and logistics facility at Karanja Creek. However, the port terminal could not be developed as envisaged and planned as it was delayed for various reasons beyond the control of the assessee and therefore the unutilized funds as received from the IPO were put in fixed deposits and ICDs with banks and non-Banking finance companies till the resumption of development work of the port terminal and other facilities at Karanga Creek.During the year, the assessee received interest of Rs. 44.45,12,424/- which was credited to profit and loss account resulting into book profit of Rs. 44,34,01,132/-. The assessee, however, treated the said interest as capital in nature and did not file any return of income for the instant year.

4. Thereafter, the case of the assessee was re-opened u/s 147 of the Act by issuing notice u/s 148 dated 19.8.2015 which was served upon the assessee on 26.8.2015. In compliance to the said notice, the assessee filed return of income on 23.9.2015 declaring inc