JUDGMENT

Vikramajit Sen, J.

1. These are appeals under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') preferred by the assessee against the Judgment dated 22.04.2007 passed by the Income Tax Appellate Tribunal (hereinafter referred to as the 'Tribunal') in ITA No. 2349/Del/03 and ITA No. 1573/Del/04 pertaining to Assessment Years 2001-02 and 2002-03 respectively.

2. The only issue which arose for consideration of the authorities below was as to the treatment which was to be accorded to the interest earned on monies received as share capital by the assessee which were temporarily put in a fixed deposit awaiting acquisition of land which had run into legal entanglements on account of title. The Assessing Officer had treated the interest received by the assessee in respect of the aforementioned two years as 'income from other sources', whereas the Commissioner of Income Tax (Appeals) [hereinafter referred to as the 'CIT(A)'] had accepted the stand of the assessee that the interest was in the nature of capital receipt which was liable to be set off against pre-operative expenses. In a further appeal to the Tribunal by the Revenue the Tribunal reversed the decision of the CIT(A). The Tribunal was of the view that the facts obtaining in the present case were similar to those which arose in the judgment of the Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd vs CIT; (1997) 227 ITR 172. The assessee being aggrieved is in appeal before us.

3. We have heard the learned counsel for the parties at length. Following substantial question of law arises for our consideration:

"Whether the Tribunal misdirected itself in law in holding that interest which accrued on funds deployed with the bank could be taxed as income from other sources and not as capital receipt liable to be set of against pre-operative expenses?"

We are called upon to really decide as to whether given the facts obtaining in the assessee's case it would be covered by the line of cases which follow the ratio of the decision of the Supreme Court in Tuticorin Alkali Chemicals (supra) or those which follow the ratio of the Supreme Court in the case of CIT vs Bokaro Steel Ltd; (1999) 236 ITR 315. At the outset we must note that the Supreme Court in the case of Bokaro Steel Ltd (supra) has noticed the judgment of the Supreme Court in Tuticorin Alkali Chemicals (supra). Therefore, in these circumstances it would be incumbent to note the following brief facts as recorded by the authorities below:

3.1 The assessee company was incorporated on 06.10.1999 in pursuance of a joint venture entered into between Indian Oil Corporation and Marubeni Corporation of Japan. The joint venture was conceived to set up a power project at Panipat in the state of Haryana. It was expected that the project would be set up by the end of the financial year 2000-01. In order to effectuate the purpose for which joint venture was conceived, share capital was contributed by Indian Oil Corporation and Marubeni Corporation of Japan which included Rs 20 crores by way of additional share capital.

3.2 To be noted that the assessee had taken a stand before the Assessing Officer that these funds were required primarily for purchase of land and development of infrastructure. However, due to legal entanglements with respect to title of land, which the Haryana Government was to acquire for the assessee, in the interregnum, the funds acquired by way of share capital were put in a fixed deposit with the Tokyo Mitsubishi Bank by the assessee.

3.3 The assessee earned interest in the sum of Rs 1,65,75,906/- in assessment year 2001-02 and Rs 1,54,62,098/- in the assessment year 2002-03. As mentioned hereinabove the Assessing Officer applied the ratio of the judgment of the Supreme Court in Tuticorin Alkali Chemicals (supra) and the judgment of the Supreme Court in the case of CIT vs Autokast Ltd; (2001) 248 ITR 110 and held that the interest which accrued to