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2015 (5) TMI 482 - HC - Income TaxTreatment to interest income on the FDR's - ITAT treated as part of its business income - Held that:- This Court, in Indian Oil Panipat Power Consortium Ltd v. ITO (2009 (2) TMI 32 - DELHI HIGH COURT) held that where interest on money is received as share capital, and is temporarily placed in fixed deposit awaiting acquisition of land, a claim that such interest is in a capital receipt entitled to be set off against pre-operative expenses, is admissible, as the funds received by the assessee company by the joint venture partners are “inextricably linked” with the setting up of the plant and such interest earned cannot be treated as income from other sources. The reasoning in Indian Oil (supra) is in line with Bokaro Steel Ltd. (1998 (12) TMI 4 - SUPREME Court ). Similarly, the Supreme Court held that such receipts are not income in CIT v. Karnataka Power Corporation, (2000 (7) TMI 72 - SUPREME Court) and Bongaigaon v. Refinery and Petro Chemical Co. Ltd. v. Commissioner Income Tax [2001 (7) TMI 4 - SUPREME Court ]. This Court is consequently of the opinion that the Revenue’s contentions have to perforce, fail. Furthermore, the mandate of Section 117C of the Companies Act also supports this view, because a debenture debtor such as the assessee in this case, is compelled to a certain margin separately, to secure the interest of the debenture holders. - Decided against revenue. Disallowance of business expenditure - ITAT allowed the claim - Held that:- The CIT (A) reversed that finding but noticed that of that amount ₹ 7,48,700/- could not have been allowed as revenue expenditure because the above expenditure on Registrar of Companies’ fee for increase in authorized share capital could not be allowed and was also not amortizable under Section 35D (2)(c)(iii) of the Act, not being fee for initial registration of the company. The CIT’s view was supported by Brook Bond India Ltd. v. Commissioner of Income Tax [1997 (2) TMI 11 - SUPREME Court] & Punjab State Industrial Development Corporation Ltd. v Commissioner of Income Tax [1996 (12) TMI 6 - SUPREME Court]. The ITAT upheld this view. - Decided against revenue.
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