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2017 (11) TMI 1776 - AT - Income TaxTreatment to interest income - correct head of income - capital receipt or income from other sources - HELD THAT:- The funds deposited by the assessee with the banks are out of the equity capital of the assessee and not surplus funds and they were deposited in the bank because, the assessee was not in a position to proceed with the implementation of the project due to various bottlenecks beyond the control of the assessee. It is also to be noticed that the assessee was not paying any interest on such funds as it is its share capital which is meant were setting up of the project only. Such deposits are, in our opinion, inextricably linked with the project and are part of capital work-in-progress. The Hon’ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd. [2009 (2) TMI 32 - DELHI HIGH COURT] and in the case of CIT Vs. Facor Power Ltd. [2016 (1) TMI 461 - DELHI HIGH COURT] have reiterated the principle laid down in the case of Bokaro Steel Ltd., (supra) to hold that ‘the interest’ earned on funds primarily bought for infusion in the business could not be classified as “income from other sources”. We find that CIT(A) has followed these decisions for granting relief to the assessee. Therefore, we see no reason to interfere with the order of the CIT(A) on this issue. - decided against revenue
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