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2012 (9) TMI 728 - ITAT INDORE
Interest on FDRs made out of zero coupon convertible bonds - Business income OR income from other sources - Held that:- If accompany has not commenced business, there cannot be any question of assessment of its profits and gains of business. That does not mean that until and unless the company commences its business, its income from any other source will not be taxed. The company may keep the surplus funds in short term deposits in order to earn interest. Such interests will be chargeable under section 56.
As the assessee made FDRs of the funds, therefore, making such FDRs was not at all related to the construction activity or any other capital installation, therefore, earning of interest on FDRs, before commencement of business, is income from other sources as decided in Commissioner Of Income-Tax Versus Modi Rubber Limited [1994 (3) TMI 70 - DELHI HIGH COURT] - against assessee.