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2017 (9) TMI 737 - ALLAHABAD HIGH COURTInterest income - income earned on FDRs made out of the unutilised fund borrowed for the setting up of the business - whether should be reduced from the cost of the project instead of taxing it as an income from other sources - Held that:- Interest on Fixed Deposit Receipt has no immediate nexus with the business of Assessee company. Business is yet to commence. So long as Assessee had no business income, the interest earned can not be treated as business income. Thus in our view, it has to be treated as "income from other sources". We answer question no.1, holding that Tribunal was not justified in holding that interest income earned on Fixed Deposit Receipt should be allowed to be reduced from the cost of project instead of tax as an income from other sources. We also answer question no. 2 against Assessee company and in favour of Revenue, holding that Tribunal was not justified by not following the law laid down in Tuticorin Alkali Chemical and Fertilizers Ltd. Vs. ITC (1997 (7) TMI 4 - SUPREME Court) and Commissioner of Income Tax Vs. Indo Gulf Fertilizer and Chemical Corporation Limited (2005 (8) TMI 45 - ALLAHABAD High Court ). Similarly, question no. 3 is also answered by holding that Tribunal was not justified in taking a view so as not to allow Section 56 to be attracted in the case in hand.
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