TMI Blog2013 (4) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... he interest earned by the assessee on the FDRs has intrinsic and inseggregable nexus with the work undertaken and, therefore, the interest earned by the assessee is capital in nature and shall go towards adjustment against the project expenditure and the same cannot be assessed as income from other sources. The above case is squarely applicable to the facts of the assessee's case as it is not a case where any surplus share capital money which was lying idle had been deposited in the bank for the purpose of earning interest. The deposit of money in present case was directly linked with the business activity of the company. The same is intricately connected with the business activity of the company. The interest was a capital receipt, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y evincible that the bank guarantee was furnished as a condition precedent to entering the contract and further it was to be kept alive to fulfill the obligations. Quite apart from the above, the release of the same was dependent on the satisfaction of certain conditions. Thus, the present case is not one where the assessee had made the deposit of surplus money lying idle with it in order to earn interest; on the contrary, the amount of interest was earned from fixed deposit which was kept in the bank for furnishing the bank guarantee. It had an inextricable nexus with securing the contract. The view expressed by the Tribunal cannot be found fault with. The Tribunal was therefore justified in holding that the interest earned by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s account is prepared rather a statement of preoperative expenses (pending allocation) is prepared as per schedule 4 of the annual accounts for all the expenses and interest earned on FRD has been set off with the expenses. This is, therefore, not a case where any surplus share capital money which was lying idle had been deposited in the bank for the purpose of earning interest. The deposit of money in present case was directly linked with the business activity of the company. The same is intricately connected with the business activity of the company. Hence any income earned on such deposit was incidental to the business operation activity. The interest was a capital receipt, which would got reduce the cost of asset. Hence interest earne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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