COMMISSIONER OF INCOME TAX BIHAR II PATNA Vs. BOKARO STEEL LTD

JUDGEMENT

(1.) Civil Appeal Nos. 2544-45 of 1988 pertain to assessment year 1972-73 while Civil Appeal Nos. 642-48 of 1989 pertain to assessment years 1965-66 to 1971-72. The Income-tax Appellate Tribunal had referred the following questions to the High Court for determination under Section 256(1) of the Income-tax Act, 1961:-

(2.) The assessee is a corporation wholly owned by the Government of India. It was assessed in the status of a company. The assessee-company, M/s. Bokaro Steel Ltd., was incorporated in January 1964. Its object was to construct and own an integral iron and steel works. During the assessment years under consideration, the work of construction of the company's factory and installation of the plant was in the process of completion. The company had not started any business during the assessment years in question.

(3.) We have to consider whether the amounts received by the assessee under these five heads can be treated as income of the assessee for the relevant assessment years. The Tribunal has held that all these amounts (under items 1 to 4) received by the assessee have gone to reduce the cost of construction. These are in the nature of capital receipts which can be set off against the capital expenditure incurred by the assessee during the relevant assessment years. This view has been upheld by the High Court and hence the department has come by way of the present appeals.