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2014 (3) TMI 299 - HC - Income TaxTaxability of interest income from investment in Portfolio Management Scheme under which the banks gave an assured earning guarantee. - Held that:- The facts of the present case are not on all fours with those in Bokaro (1998 (12) TMI 4 - SUPREME Court). - Herein the investment of the funds has nothing to do and was not inextricably linked with the construction of the project. It was an investment under the “portfolio management scheme” operated by banks under which an assured return was guaranteed by the banks. It was a conscious act of investment of funds by the assessee and if such investment results in income, the same must be brought to tax under the residual head, even if the company has not commenced its business, on the basis of Tuticorin (1997 (7) TMI 4 - SUPREME Court). Tribunal placed undue emphasis on the source of the funds instead of focussing its attention to the utilisation of the fund – whether they were invested in activities which are inextricably linked with the construction of the project. In fact, the assessee in the present case had invested the funds under the PMSV operated by the banks for an assured return. The interest income cannot, therefore, be permitted to be adjusted against the capital work in progress or the pre-operative expenses. - Decided in favor of revenue.
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