Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (12) TMI 1188 - AT - Income TaxInterest earned on deposits - “income from other sources” OR “business income” - Held that:- Undisputedly the assessee has received the grants-in-aid from the Govt. of India and the State Govt. and the assessee has placed the unutilized funds in the Escrow a/c. Since the amounts have been kept in the Escrow a/c, the funds cannot be used for any other purpose and the funds did not belong to the assessee as well. The interest income is not the income of the assessee but only goes to the increase the grantsin- aid and one of the conditions of grants-in-aid is that the unutilized amounts have to be returned to the Govt. along with the interest. Therefore, the interest income derived by the assessee is also the income of the Govt. and not of the assessee and hence it ought to have been allowed to be set off against the pre-operative expenses. The interest earned on funds primarily brought for infusion in the business could not have been classified as income from other sources. Since the income was earned in a period prior to commencement of business it was in the nature of capital receipt and hence was required to be set off against pre-operative expenses. See Indian Oil Panipat Power Consortium Ltd.case [2009 (2) TMI 32 - DELHI HIGH COURT ]
|