आयकर अपील(cid:547)य अ(cid:876)धकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘A’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 415/CHD/2025 (cid:467)नधा(cid:91)रण वष(cid:91) / Assessment Year: 2016-17 H.P. Power Transmission Corp.Ltd., The DCIT/ACIT, HIMFED Bhawan, Vs Circle, Shimla.

Near Old MLA Quarters, Shimla.

èथायी लेखा सं./PAN NO: AACCH1548M अपीलाथ(cid:568)/Appellant (cid:292)×यथ(cid:568)/Respondent &

आयकर अपील सं./ ITA No. 436/CHD/2025 (cid:467)नधा(cid:91)रण वष(cid:91) / Assessment Year: 2016-17 The ACIT, H.P. Power Transmission Corp.Ltd., Circle, Shimla. Vs HIMFED Bhawan, Near Old MLA Quarters, Summerhill, Sangti,Shimla.

èथायी लखे ा सं./PAN NO: AACCH1548M अपीलाथ(cid:568)/Appellant (cid:292)×यथ(cid:568)/Respondent Assessee by : Shri Vishal Mohan, Sr. Advocate with Shri Abhinav Bijwaria, Advocate Revenue by : Shri Manav Bansal, CIT DR Date of Hearing : 26.02.2026 Date of Pronouncement : 20.04.2026 HYBRID HEARING O R D E R PER RAJ PAL YADAV, VP The assessee and the Revenue are in cross appeals against the order of ld. Commissioner of Income Tax (Appeals)

[in short ‘the CIT (A)’] dated 28.01.2025 passed for assessment year 2016-17.

2. The assessee has taken four grounds of appeal whereas Revenue has taken five grounds of appeal. A perusal of the grounds of appeal taken by the Revenue would reveal that its grievance revolves around a single issue, namely, whether interest income earned on the borrowed funds from “Asian Development Bank” is taxable or not ? This ground is inter- alia connected with Ground No.1 of the assessee's appeal wherein assessee has challenged that CIT (Appeals) has erred in confirming the addition of Rs.5,91,37,909/- which was earned by the assessee as an interest from bank deposits.

3. The brief facts of the case are that assessee is an Undertaking of Government of Himachal Pradesh. It was established on 27.08.2008 with a view to strengthen the transmission network in Himachal Pradesh and to facilitate evacuation of power from upcoming Generating Plants. The jobs entrusted to Corporation by H.P. Government inter-alia included execution of all new works, both transmission lines and Sub-Stations. It has filed its return of income for assessment year 2016-17 electronically on 16.10.2016 declaring total income at Rs.17,77,850/-. The case of the assessee was selected for scrutiny assessment and a notice u/s 143(2) was issued and served upon the assessee. The assessee has earned interest income on bank deposits of Rs.9,41,09,250/-. The ld. AO, after putting reliance upon the judgement of Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd., Madras vs Commissioner of Income Tax, Madras 227 ITR 172 has made the addition of such interest income.

4. The assessee carried the matter in appeal before the ld.CIT (Appeals). It was contended by the assessee that the total interest of Rs.9,41,09,215/- has two components ;

a) Interest on bank deposit Rs.591.38 lacs b) Interest on ADB Loan Imprest Rs.349.71 lacs

4.1 As far as the second component is concerned, it was contended that this issue is covered in favour of the assessee by the decision of the ITAT passed in assessment year 2014- 15 and 2015-16. The ld.CIT (Appeals) while following the order of the ITAT has allowed the appeal of the assessee partly and held that interest earned on ADB Loans amounting to Rs.349.70 lacs is not taxable as it is not revenue in nature whereas interest income earned on surplus funds deposited with the Bank amounting to Rs.591.38 lacs has been taxed. In other words, assessment order to this extent has been upheld.

5. The Revenue in its appeal is challenging exclusion of Rs.349.70 lacs from the total addition whereas assessee in its appeal is impugning addition of Rs.591.38 lacs.

6. With the assistance of ld. Representative, we have gone through the record carefully. We find that identical issue was considered